The Daily Market Forecast
Thursday’s Best S&P Turning Points Results: The short breakout below 3925.50 stopped out.
Quick Tip: Losing streaks…
It’s Friday and likely this will be a losing week for me… and I’m unconcerned.
Losing should not affect you financially or psychologically. You’ve determined how much you can lose before you react emotionally, and you’re disciplined to limit your loss to that number on every trade. If not, you’re destined to fail.
That risk number can change. You can increase it when you’re doing well and decrease it when not. A common formula for that change in risk is the Fixed Percentage rule. Simply this: risk the same percentage of your trading account on each trade, usually no more than 2%. This way you’ll risk more and gain more as the account grows and vice versa.
But what if you do get anxious or upset in a losing streak? Here’s a quick checklist you can use when that happens:
1. Was the risk amount within your psychological tolerance?
2. Did you follow the strategy rules precisely?
3. Has the drawdown happened before?
4. Was the prior drawdown equal or less?
5. Are you feeling confident in your strategy edge?
Stop when your answer is “no” and fix the problem. That may be easier said than done but until you do, moving on through the checklist is ineffective.
If you get to the end and you’ve lost confidence in your strategy it’s time to halt the strategy. Continue to “paper trade” it, document results, and re-start live trading if/when it comes out of the drawdown.
The World Sentiment Index: (+100/-100) PLUMMETS from +7 to -64 with most major world markets bearish on increasing volatility. Historically it’s a coin toss where the day will end up, but the down days are twice as big as the winning days.
Catalysts: Consumer Sentiment @ 10:00. Bearish: Yield curve inversion, FedEx forecasts gloom. Bullish: Hearing crickets (Is that a contrarian signal?).
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Short 3923.25 stop 3928.25.
If the short fails, buy the breakout on a retracement to 3927.50 stop 3922.50.
Trade Fearlessly,
Mike Siewruk
P.S. Multiple strategies, software tools, teammates, and coaching. Learn why you should join our team here. For a personal consultation to assess fit (without selling) email me for an appointment: mike@thedailymarketforecast.