| | | | Two Ways to Avoid This Trading Trap
Author: Corey Snyder, Publisher
"Money ain't got no owners... only spenders."
- Omar Little, The Wire (2002)
Frankly, it's without a doubt the most impactful "affirmation" I use while trading the financial markets, although I've since subbed out a couple of words for the sake of context…
After all, I don't carry a pump shotgun underneath my trench coat and rob drug dealers…
"Shares don't have owners… only holders."
The change is marginal, but the influence is psychological. That's the part of the trade that usually defeats us.
But I've found over time that investors become enamored with a stock and begin falling in love.
(This applies less to large caps.)
This doesn't mean you need to be cold to your positions. In fact, you'll probably have more conviction if you're not.
But whether or not we're position, swing, or day trading, there's a part of our brain that's subject to rationalizing our way into the loss column - and this is a result of becoming a fan rather than a trader…
For example, there are now print-on-demand e-commerce websites that SPAM various online groups and message boards.
What are they selling?
T-shirts… coffee mugs… bumper stickers… even gym apparel - all with ticker symbols printed on them.
This is harmless. But it's a commentary on where some folks are in the market today. They may not be overtaking the exchanges, but there's certainly enough of them to warrant creating a business to market cheap wares.
Now, I don't like losing on a trade, although I accept that it's part of the business... But if my infatuation with a company overrides my understanding of the end goal, I should also accept losing most of my account.
But there are two things that will help anyone get around this…
First, you have to know what you're getting yourself into.
And by that I mean you need to understand the plan behind the trade and why the trade is being taken.
Really think about it too… If you're swinging a position, does the stock have a specific price target? Will you take off the position based on candlesticks or moving averages?
The same goes for if the trade goes south.
How far do you let it fall? Do you exit on a pattern break? Maybe you cut out based on a dollar amount…
Whatever your method, there must be a clear comprehension of how you manage the trade.
Second - and this is much more important than the first - you want to understand just how driven you are by emotions.
For instance, my good friend trades the OTC markets almost exclusively. And it's nothing for him to see a position down 50% or more…
But his trades are so well thought out and planned that the swings matter very little. He understands the environment - and the down days shift his emotional state for all of a split second...
This is about not just control, but command over your emotional state.
After all, the "buy-and-hold" crowd fares well since they're not subject to the daily emotional swings of the trade… They're about as close to true "owners" as you can get.
But when you're a "holder," you have to respect and treat stocks accordingly.
Now, there's no perfect method, and copying someone else's will never guarantee you a spot in the 1% club…
But diving into the points mentioned above will help you rethink the next trade you take... hopefully, to the upside.
Keep moving,
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| | | | | | | Market volatility creates market panic. And for professional traders, that means opportunity. But how do you adjust your trading plan to hit your goals?
Options Coach Chris Hood talks about the current market sell-off and the methodology behind moving around your options trades for more profits.
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| | | FINAL PRINTS: The Major Indices Wrap-Up |
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| Index
S&P 500
Dow Jones
NASDAQ
Russell 2000
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| Weekly +/-
-26.33
-395.30
-108.24
-55.51 |
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| % Change
-0.59%
-1.11%
-0.73%
-2.50% |
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| Close
4,441.67
35,120.08
14,714.66
2,167.60
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| % YTD
+18.25%
+14.75%
+14.17%
+9.76%
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| | | MARKET WHISPERS: The Weekend Scoop
- Foot Locker's COVID Clothing Line - The shoebox referees at Foot Locker (FL) are feeling a sense of job security according to the company's latest earnings report. On Friday, CEO Richard Johnson told investors during the earnings conference call that "we have got the uniform of the consumer," referring to the shift in attire due to lockdowns and work-from-home policies. But the company's earnings beat may provide a view into the next quarter's earnings as Foot Locker anticipates back-to-school shopping to further sales. The hot ticket item? Crocs (CROX)... Alright, scientists, step up the vaccine work.
- Another SPAC Deal Gone Bad - Mudrick Capital Acquisition Corp. II (MUDS) investors found themselves mired in the SPAC's ticker symbol Friday when the blank-check company announced that baseball card maker and NFT dealer Topps Co. was bowing out of the deal. According to the two companies, Topps Co.'s agreement with Major League Baseball and its players will not be renewed despite decades of being the number one trading card maker. Surely, there's a little league association in need of a partner somewhere.
- Bill Ackman's "Holding" Company - Even after the Universal Music Group deal fell through, Legendary investor Bill Ackman is still holding onto a little over $4 billion of investor funds through his SPAC Pershing Square Tontine Holdings (PSTH). But a new lawsuit is challenging that and demanding Ackman to return money to investors. Ackman let investors know that the SPAC still has time left to find another deal but the lawsuit would create difficulties. Ackman now says that investors will receive their capital if the SEC approves a SPARC (special purpose acquisition rights company). The approval would let Ackman continue searching for a target company while investors would receive $20 and one warrant per common share with the option to invest once a prospective merger target is announced. Let's hope it's something more exciting than Universal Music Group.
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| | | | | | | HIT OR MISS: Who's on Deck for Earnings
- Monday, August 23rd - JDcom Inc. (JD), Riot Blockchain (RIOT), Palo Alto Networks (PANW), Dada Nexus Limited (DADA), Fanhua (FANH), Smart Share Global (EM), Akoustis Technologies (AKTS)
- Tuesday, August 24th - Pinduoduo (PDD), Best Buy Co. (BBY), Medtronic (MDT), Urban Outfitters (URBN), Nordstrom Inc. (JWN), Toll Brothers (TOL), Intuit Inc. (INTU)
- Wednesday, August 25th - Express Inc. (EXPR), Dick's Sporting Goods (DKS), Ulta Beauty (ULTA), Splunk Inc. (SPLK), NetApp (NTAP), Snowflake (SNOW), Salesforce (CRM), Autodesk (ADSK)
- Thursday, August 26th - Xpeng (XPEV), Abercrombie & Fitch (ANF), Coty Inc. (COTY), Hello Group (MOMO), Burlington Stores (BURL), Dollar Tree (DLTR), Dollar General Group (DG), HP Inc. (HPQ), Vmware Inc. (VMW), Peloton (PTON), Workday (WDAY), Gap Inc. (GAP)
- Friday, August 27th - Kanzhun Limited (BZ), Big Lots, Inc (BIG), Hibbett, Inc. (HIBB), MOGU Inc. (MOGU), Borr Drilling Limited (BORR)
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| | | Enjoying Dawn Report? Learn something, made some money?SHARE YOUR STORY WITH US OR TELL US HOW TO SERVE YOU BETTER.Let us know at info@rogueinvesting.com |
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| | | | | | | | | | Copyright © 2020 Rogue Investing. All Rights Reserved. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Rogue Investing.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for any trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. By downloading this book your information may be shared with our educational partners. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Rogue Investing.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. An InvestPub Company. |
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| HIGH RISK WARNING Trading foreign exchange, stocks, options, or futures on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade, you should carefully consider your objectives, financial situation, needs and level of experience. RogueInvesting.com provides general advice that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.You should seek advice from an independent financial advisor. Past performance is not necessarily indicative of future success. |
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