Trade The Journey

Trade The Journey

Dedication!

Top of the Morning!

I hope everyone is healthy and in good spirits. It’s hard to argue that things have changed in America. Many are taking to the streets to protest their view of what America should be. Others think America is fine as it was.

In the past week, we saw the first black/Indian woman selected as a vice-president candidate, as Joe Biden looks to become President. I won’t get into Politics as the subject tends to be subjective. But I will say that for the two steps we have taken backward this a step forward.

As the economic reports trickle in from the last couple of months, we can see that the economy is slowing. The virus continues to maintain its presence throughout the United States. Some states are seeing their numbers fall, while others are witnessing numbers and deaths reaching all-time highs.

The economy was trudging along with the help of the Federal Reserve and government stimulus needed to keep households afloat. With the lack of agreement on the new stimulus sorely needed in communities around the US, the economic rebound is in question. Eviction protection is now in jeopardy.

Most say the stock market’s rebound to near pre-pandemic levels is evidence of a disconnect between main and wall street. Retail trading platforms continue to see a surge in membership and profitability. Traders now track the movement of stocks on Robinhood to track potential stocks in play. Meaning traders now make trades based on the flow of money in and out of shares traded heavily on Robinhood.

 

The theory is that Robinhood traders are less experienced and prone to make novice mistakes.

 

When I first began investing, I opened a Robinhood account. I still use it, so there is truth to less experienced traders or investors preferring Robinhood instead of the traditional trading platform.

I primarily use thinkorswim for short-term trades and Robinhood for swing trades.

I would never day trade on Robinhood.

The stock market has to be one of the greatest illusions of all time. It’s the one profession besides gambling that doesn’t have any requirements for participation. If you have the money, you can participate.

I have found the stock market to be the most challenging endeavor I have ever undertaken. Like most, I thought the economies rebound would be slow and painful. That scenario didn’t occur. I watched the stocks hit basement lows in amazement. Almost all of the stocks retreated to multi-year lows.

If you’d believed differently, the opportunities available to you were almost endless. Of course, this review is in hindsight.

However, with the government’s inability to slow down the virus enough for a safe reopening, most businesses are in limbo. Without millions of people producing or consuming as they usually would, the economy could see lasting damage.

States unable to balance their budgets will have to make extreme cuts and possibly raise taxes. All of this spells trouble for the market, which has discounted a quick rebound and vaccine. More immediate is the market’s hope for the senate and congress to come to an agreement on a stimulus plan.

They are about one trillion dollars apart.

If they don’t agree soon, we could see a severe reaction.

As I become more experienced, I have learned that consistent profitability isn’t the only goal we should aspire to reach. Not losing too much when everyone is losing their shirt is just as important if not more.

I’m a big fan of trading psychology, and I believe it makes the ultimate difference in a trader’s success. Everyone has varying amounts of skill, talent, and knowledge. The hard part about trading is planning for events that haven’t happened. This becomes doubly hard if the event you strategized for doesn’t happen and the one you thought impossible, occurs.

With this event, I feel I should have been more flexible mentally to capture the extreme volatility in the market. I became attached to the perspective of economic upheaval without regard to timing or intervention.

I should have made a wider consideration of the Federal Reserve, the economic fallout from the virus, and the eagerness of administration to make all things appear to be the best in history. My underlying outlook is still bearish but that does not mean the market will fall tomorrow or the next month. Things may remain neutral to bullish in the short-term.

Widening my expectations will serve me well in this volatile market.


This Past Week:

This past week was rough, and I find myself dipping into my savings more often. Naturally, I feel the pressure to enter the market and take a dangerous chance.

I feel competent but not ready. Trading virtually and trading with your life savings on the line are significant opposing views. How could you trade with some objectivity if your life savings are on the line?

So I must be actively patient.

This week deserves the grade of a “C” for steadiness.

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