What To Do When It All Goes Wrong

2016-02-23 | Taylor Letterman

I walked in this morning to an indices market which was slightly lower. The bond market was slightly higher but trading over a full point off their overnight highs. What the hell was that all about? Nothing was making a bit of sense. The yen and gold were higher. Again…why were the bonds trading lower?

I thought about selling the bond market when in this case it should be going up. If I listen to my gut instinct, I could have made good money in a short period of time going short.

Instead, I waited and then sold the bonds in the hole. Needless to say that bond trade was a loser.

The point of this article is this: last week every trade I made was spot-on. My timing was impeccable, and Mr. Market paid me smartly.

This week my timing is off, and Mr. Market is making me pay financially. The psychological games begin to swirl around in my head. I have been at this game long enough to know what I need to do.

  1. After getting beaten up psychologically and financially, I needed a “feel good” factor. I just contacted my clearing house today and requested a big fat check. Ahhhh … that feels better.
  2. I will not trade for the remainder of the day. A big weight has just been lifted off my shoulders…”cash is a position TLP.”
  3. When I do begin to trade again, I have taken enough money out of my trading account which will force me to cut back the amount of contracts I will initiate on any given trade.
  4. This will, in turn, reduce the amount of risk I am willing to take on any given trade.
  5. And when you put all those trading pieces of the puzzle back together again, this will help me get my head back into the game.
  6. At the end of the day, this trading game we play is just as much psychological as it is actual. It is all about the 5-inch gap between our ears. Master the 5-inch gap and Mr. Market throws money at you…other people’s money…the best kind.

Get more of Tony LaPorta’s powerful commentary on Simpler Futures.