This is the bottom—look at the Kangaroo tail! I should double down! Oh, no, a new low for the day . . . but on low volume. Hey, maybe a bullish divergence is forming. . . . It is. Whew, now we rebound.
[10 minutes later] . . . I hate this stock. Man, I should have sold at the open. I had a hunch. Wait, is that a descending wedge? . . . and now a bullish engulfing bar? . . . What!? A new low!? I can’t stand this anymore.
Sell, the stock price rebounds, and the bottom is in.
- Use smaller positions with less money at risk during volatile bear markets.
- Hooking a trade is the easy part. Safely netting it is a different story. The secret to proper trade management is in acquiring the ability to take nothing more and nothing less than what the market is willing to give.
- Do your due diligence, plan your plan, use good money management,put the money at risk, and then have confidence in the outcome, realizing that you will be stopped out one out of three times. Let your system operate
despite the daily ups and downs. - Don’t be myopic when managing a trade. List the areas of resistance as well as the areas that could propel the move. Then watch the volume to determine the extent of the run.
- Volatile markets require and demand that the trader stay calm and control his emotions if he is to be successful. Absence of this quality is precisely why both bulls and bears quite frequently are decimated in major bear markets.
- Stand aside in choppy markets, or shorten your holding period. Lower your expectations. Wait patiently for the set-up.
- Don’t chase stocks in a tired market ready for a pull-back.
- Remember the tendency for the market to post 3-, 5-, and 8-day reversal patterns.
- Be patient in a market that is oversold! You can usually get your price. If not, scratch the trade. It’s okay. Move on to the next opportunity. Wait for the market to show strength before leaning into it with larger positions.
- Mistakes are part of the game. Analyze them just enough to understand what went wrong and what could have been prevented—don’t dwellon them. This degree of introspection is healthy and constructive toward progress.
- Self-ridicule and obsessively dwelling on losses are, on the other hand, destructive and will take you out of sync, leading to more mistakes the next time around.
- In golf, each hole is a game within a game that is opened and closed. Each trade should be the same: opened and closed. You’ll know you are progressing when a birdie follows a double bogey.
- The words “coulda,” “woulda,” and “shoulda” should be discarded. They suck energy and blow holes in your mind. Leave them out of your vocabulary.
- The market takes no prisoners and is merciless to both bulls and bears.
- In volatile conditions, a trader’s account value gets hurt far less than his psyche. It’s important to make logical, calm decisions in the midst of despair following a mistake or a big loss. Those moments tend to be the very
turning points that magnify account value. - When the pattern changes, sell and run. Don’t talk yourself into staying. The market will show you something you will always regret tomorrow. It’s okay to be wrong and change your mind.
- A stock (or market index) won’t go down simply because we’re afraid it will—not any more than it will go up because we hope it will. Stay the course if the Trading system continue to guide.
- What can you do well in the context of what you usually do poorly? Identify both your positive personality and trading characteristics as well as the negative ones. Capitalize on the former; minimize the latter.