Avoiding losses is as important as making profits in the long run…

Avoiding losses is as important as making profits in the long run…

With one breath, with one flow, You will know Synchronicity

A sleep trance, a dream dance, A shared romance, Synchronicity

A connecting principle, Linked to the invisible
Almost imperceptible, Something inexpressible
Science insusceptible, Logic so inflexible
Causally connectible, Yet nothing is invincible  — The Police

The markets and most stocks in them are simply trading by program right now.  Like color by number, the broader markets and darn near every stock on my screen has an intraday chart that looks just like this:

Market Chart

That’s some synchronicity in those intraday charts there.   Look, I’m going to keep harping on the importance of not trading for the sake of trading.  The markets and most stocks right now are being driven by animal spirits more than usual.  When the broader markets are driving the action, it becomes harder to game individual stocks.  And so there’s no reason to force things right now.  I’ll continue to use wide scales to both buy and sell both common and options.  But one of the main reasons you guys pay me for this service is to help you not lose money in addition to trying to help you make big money.  The two concepts are inseparable over time.  I know a lot of traders who are like this guy, who sends me his content for free every day because I used to have my own TV show:

As of Friday, September 9, our system is down 817 pips in closed trades since we started on May 24th and about 40% from the peak value.  This week has been tough for our system as well as all my accounts. The past two weeks have been among the toughest weeks since we started trading this system nearly four years ago.  I have lost six figures of my own capital this week, alone… so everyone is feeling the pain. The main culprit for these hard times is the financial mess that we currently have on our hands.  It’s making it very difficult to predict the market. —

Cody back again.  You guys know that I basically agree with him that the current macro environment and the volatility around the world making these markets very tricky to trade and game in the near-term here.  But whereas we have stepped back and been patient and allowed the markets to play this phase out without killing our portfolios with big drawdowns (a “drawdown” means that your portfolio has fallen from its peak value), I know a lot of traders who just kept playing the same game they’d been playing all year…and now are sitting on devastating losses.  They had big gains and they will again someday I’m sure.  But avoiding a 40% drawdown is the same as having a 40% drawdown and then an 70% rebound. (If you had $100k and lost $40k on a 40% drawdown, you’d have to make almost 70% on your new $60k base to get back to $100k.)   Like I said, avoiding losses is as important as making profits in the long run.So guys, I’m proudly sitting on my hands right now and letting our positions play out as we wait for our next set of pitches.  I’ll be back with a near-term best-guess markets outlook next.