Hey Guys,
The market had a volatile day yesterday that saw it head in both directions at different times. Right now, the S&P 500 is down about 10 points from where it closed yesterday.
Both my accounts took hits over the last 24 hours. I had three different stock trades reach their stop losses. And I had three option trades that reached their time limits, and all three ended up in the red.
That's not the type of week any of us wants. It's not fun to live through losing trades like that.
What I often do at times like that is zoom out and try to look at the big picture. What we know from the backtest research is that it's totally normal for there to be losing trades and periods of drawdowns with strings of losing trades. In real time, it's hard to live through and can feel gloomy, but the research shows that losing trades like these are bound to happen, despite the long-term backtested edge. It helps me to be aware of that bigger picture. It still can be hard to live through, though, especially since there is real risk involved.
I took on new trades today. Both were in the stocks account. I bought shares of NTAP and more shares of DDOG. I already had an existing stock position for DDOG, but I bought another helping of it because it qualified for my Double Down strategy. Even though I have two positions for the same ticker symbol, I treat them like two totally separate trades. I don't "merge" them. Each one has its own separate exit rules and is independent of each other.
If you have any questions, just reply directly to this email.
Eric