Week of July 31
Summer doldrums or 4600 and beyond?
Recap of last weeks action:
We had one of our best trading weeks the entire year last week. I started the week with a bearish bias, and had some weekly puts. I was wrong and took a 60% loss on the puts. Oh well. That’s trading. No one bats 100, hell no one bats even 90 or 80. The difference between traders who extract money out of the market at will, and those who keep blowing up their accounts is how they handle their losses.
The pro trader takes a loss and its water off a ducks back. It’s the cost of doing business. They look at taking a loss like a restaurant owner looks at spending money to buy food. It’s an inevitable part of the process. Trading is just a game of probabilities when it comes down to it. You can’t predict the outcome of the next trade. Impossible. You can, however, predict the outcome of the next 10 or 50 or 100 trades if you have a system and an edge.
So I, and alot of my followers start the week off bearish, and wrong. We take our L, it makes a small dent in our YTD profits. Frankly I don’t give a fuck. Was I panicking on Twitter, or sending you guys a million other trades to “make our money back”? No.
I just sat there, I accepted the loss, I was ok with it. It didn't feel good, but I know in my bones I can take money out of the market. So I sit and wait, with no plans to do anything really.
Thursday comes along. We rally post GDP print to new 52 week highs. Then the news of the BoJ YCC tweak comes out from Nikkei in the afternoon. More on the BoJ later. But by this point I am salivating. I know my patience is about to be rewarded. I will make not only my money back from the plus but much much more.
.Ive been eyeing this trade for a long time. I posted my thoughts on the BoJ and YCC on Sunday night, days before the leak and fintwit suddenly started caring. This is in the very forefront of my mind. I eat sleep and breathe markets and I was prepared and ready for when the opportunity came along. Strength in stillness. Sit and wait, opportunities will arise. If you score a big win from markets, chill out and wait patiently for the next trade. Same with losses. Don’t go machine gun style putting on 10 trades a day, throwing shit against the wall and seeing what sticks.
The calls went up to 4.00 from 1.00. The real money was in forex if you trade that, USDJPY made a 300 pip round trip. If you dont trade FX directly, there are of course ETFs that do basically the same thing. In this case FXY or YCL is the leveraged version.
I always try and offer what I think will be most useful and ultimately profitable for my fellow traders. For me that is NOT tossing out 10 different trades a day and then only posting the 1 or 2 winners. I am to take as few losses as possible. People mistakenly assume the worst part of a loss is the money you lose. No. It is instead the negative frame it puts your mind into. It’s the tilt. I like to win, and win often, and win big. I dont like the psychological toll of strings and strings of losses.
I sent you my thesis. I said USDJPY rallies, SPX rallies. Gave you the ticker strike and expiration. All you had to do was click buy. Onto next week.
Next move for markets?