Constant Struggle, and the Plan

Today the market rocketed higher because the policy makers assured that Greece will be spared from default.  It really doesn’t matter what the news is, if the market wants to go up, it will find a news to go up.  As the SPY daily MACD has been indicating, the market does not want to go down short term.  As the price dipped, the MACD did not budge.  It does look more and more like the target set by the 3 rectangles will be reached in time, with the yellow oval as area to add to the short position.

My constant struggle these days is that, OK, I’ve vowed to trade according to one system (see Pigs Get Slaughtered) where I stick with its current bias until the system changes direction.   I’ve been closing one eye to all the short term technical indicators and try to hang on to my short positions, and not allowing ANY longs.   My biggest fear is that once I get out of position, the market would ditch the technical indicators and make new low without me.  But look what has happened?  A huge bear flag lasting more than a month.   Hindsight being 20/20, I could have recycled my short positions many times over during this period.  But no one can trade with highsight, and for me, I have the jinx that refuse to leave.

What do I do?  Being a full time trader, I feel the need for actions.   If I am to become a long term buy-and-hold swing trader, I might as well go back to my old full time job and still be able to accomplish the same.  So here’s my plan as a compromise:

  1. Limit the core positions that follow the primary trend up to, say, 50% of my portfolio.  That is, no more exclusivity.
  2. Allow myself smaller shorter term trades with the remaining.  If they happen to be counter-trend trades, they’d be acting like hedging.  Smaller trades because I know I will be shaken out more easily, knowing that I am being naughty trading against the primary trend.

I think as long as I recognize the above as my intentional compromise, I should be able to have more peace within myself.   If SPY goes down from here, at least my core short position, albeit no greater than 50% of my portfolio, would catch the ride.  If SPY goes up from here, my shorter term trade will ease some pain, as well as the otherwise boredom.    If SPY reaches the 125 target area, then the shorter term trades will join my core short position and short the heck out of it.

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One Response to Constant Struggle, and the Plan

  1. Vangeli says:

    Well put. I am in the same situation. Shorts at one end and longs at the other but still making money in between. Was also naughty and did not follow the bias therefore sitting with quite a few open positions. In my case I pray for bad news and good news at the same. Figure that one out! Good luck to all

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