Hey Guys,
The market had an enormous rebound day yesterday. It's gone up about 180 points in the last 24 hours.
Since my strategies are almost all buying strategies, you would think I would have felt great about the market's major upward movement. But interestingly, I had some moments of discomfort yesterday. The reason was because after hitting so many stoplosses by the opening bell yesterday and reducing my market exposure, it felt like I was missing out as the market went back up.
Yet if I hadn't put stoplosses in place, and the market had continued to tank, it could have been a much deeper drawdown. So at times stoplosses can be like a savior, and at other times it can be like pulling the plug at the wrong time. Apparently yesterday was the latter, although I'm not sure I would have guessed that at the opening bell.
One interesting note about stoplosses: in back tests, the average profit per trade for my core stock trading strategy was higher when no stoploss was used. But there is a tradeoff, as always with trading, and the tradeoff is that the drawdowns were deeper. So in other words, sometimes it pays off not to use stoplosses, but there is more risk involved. I support you no matter how you decide to handle your stoplosses, but I'll continue to handle mine like normal. Even though I felt discomfort at times yesterday, the reality is that I'm in lockstep with the back test. That's my main intention and I can take comfort in honoring that even when the short term results aren't particularly fun.
There were no new trades today. The DAL position I had from the low-priced account hit its profit target this morning. I also closed out my GSL stock position today since it reached its time limit. That one was a small loss.
If you have any questions or feedback, I'd love to hear from you.