Weekly Perspectives August 30, 2020 – Trading One Form of Regret for Another Regret

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Weekly Perspectives August 30, 2020 – Trading One Form of Regret for Another Regret

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Here is your weekly newsletter — perspectives on trading and financial markets.

Click here for the previous edition.    


 

 

Excess Speculation 

 

I hope you’re enjoying the Labour Day long weekend.

In case you missed it, this past week the markets had their biggest correction since June and removed some of the speculative excesses that had been building up over the past few weeks.

If you’ve been tuning into the videos then you know that for the past few weeks I’ve have been describing the market as a runaway train with everything seemingly firing on all cylinders.

What was going to be the catalyst to change the current narrative?

I’ve often spoken about the importance of timing. That is – when things occur – and as such the new month always carries some risk as it often marks a good opportunity for buyers/sellers to wrest control from the other side.

Up until Wednesday, the market continued its unabated move until Thursday when the better than expected jobless claims # threw a wrench into the mix followed by Friday’s positive employment report.

The question now going into this shortened holiday trading week is – was this simply a pullback that brings us to more reasonable valuations or is this the start of something bigger?

In this week’s video I discuss:

  • How the better than expected jobless claims # and Employment report played into the market sell-off
  • How the charts have changed drastically this past week
  • The similar structure in the VXX this past week with the sell-off in June
  • The clear technical levels to watch this coming week to see if we getting continued selling
  • The importance of trade structure and good trade location
  • How Ethereum (ETHUSD) buyers got taken for a ride
  • Trade ideas for the coming week


Now watch this week’s Weekly Outlook video to see the setups and levels we’ll be watching as well as the technical outlook for the VXX SPY QQQ IWM DIA EEM TSX TLT GLD MGC BTCUSD EEM and more for the week of Weekly Market Outlook For September 7 – 11, 2020.

 

What I’m Thinking About

What we call the beginning is often the end. And to make an end is to make a beginning. The end is where we start from. 

– T. S. Eliot

 

No, Robinhood Traders Aren’t Affecting the Stock Market

The recent run-up in equities has been widely attributed to the so-called “Robinhood” effect. 

Interestingly the data doesn’t actually back this up phenomenon?

Rather, popularity on Robinhood is not predictive of price changes, but it is predictive of what will make the headlines.

 

Trading One Form of Regret for Another Regret

A lot of our of day to day trading decisions are driven by the desire to avoid regrets.

For instance, our desire to not feel the regret of losing money causes us to take off our trades early thereby missing the larger moves.

Or our desire not to get low ticked and regret getting stopped out before the move happens often causes us to not take our intended stops.  

Regret, in one form or another, is pretty much inevitable (in trading). And it’s our reaction to this regret that makes the difference. 

I often remind the traders that I coach that they are the “captain of their ship”.

This means taking ‘psychological responsibility’ in trading – and being prepared for the emotional experience.

In the end, we can never avoid regrets.  Rather it is about being consciously aware of what form of regret we will choose to experience based on our actions and being ok with that decision. 

 

Stay strong, and happy trading!

Houston

PS – Were you forwarded this email? Subscribe here.

PPS – Don’t forget to join us on our Facebook Group and exchange trading ideas between meet-ups – https://www.facebook.com/groups/montrealtraders/

 

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Weekly Perspectives August 30, 2020 – Trading One Form of Regret for Another Regret

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