Nice open in the markets. Pushing to new highs. No doubt I wish I could have held for these extra gains and it just shows just how “disillusion” I was for selling early. But, this makes for a great example highlighting the downside associated with selling on the way up. No one can sell consistently at the top, so either you sell early or you sell late. And depending on your trading strategy, you have to be okay with that otherwise the second guessing and regret will drive you crazy. I like being proactive with the market because it makes me feel more in control and it lets me trade the market on my terms, rather than a more defensive approach where I get pushed around by the market’s twists and turns.
And this gets to a money management aspect of trading. I’ve always found it fairly easy to pick winning stocks. But in my experience the harder part is keeping those gains. I’ve had more round trips than I care to remember, so that is why I try to be more proactive in harvesting profits. But that is my approach to the markets. Other people are swinging for the fence and they plan on holding for 12, 18, 24 months. Both styles can be highly successful, so it really comes down to a trader’s personality and aptitude for determining which style suits them best. For me, I know another winning trade is always just around the corner, so that is why I worry less about squeezing out all the profit from each trade and am more concerned about capturing and keeping profits when I am right.
No doubt people disagree with me and that is great. This is what makes markets. Without a diverse set of opinions, the markets wouldn’t work. The more views there are, the more efficient the market is.
And this is also a great time to point out that a person also needs to follow their own plan and not trade blindly based upon what someone else is doing.
As for the market’s price action, this bounce is further placating nervous holders, showing them again that the best course of action is to hold through the dips. But remember, if most of the nervous holders are not rushing for the exits the next time we sell off, then the selling we will be seeing is real selling. When other people start getting complacent is when you need to become more alert. In the markets it is often more profitable to be the fool standing out by yourself than it is to run with the pack.
Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer who has successfully traded stocks and options for more than a decade. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, structural engineering, small business consultant, collegiate instructor, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.