Trade The Journey

Trade The Journey

Learning to Trade

Welcome to Trade the Journey!

I hope everyone is healthy and attentive to current events taking place in whatever country you reside in. The current crisis seems as if it’s just beginning, which means the recognization of opportunities will be delayed. Times like these make the future uncertain.

If you peruse my other posts, you will see that I have remained bearish on the Market and the economy. I think that the Federal Reserve has and will continue to prop up the economy. Not only is this an election year, but the Coronavirus is also ravaging the United States with no end in sight.

Now, they are encouraging the schools to reopen.

There are talks of this Coronavirus wave being only the first of an eventual second more deadly wave. Makes you wonder what the lasting effects on the Economy this virus will have. Without the Federal Reserve intervention, the forbearance extended to renters both commercial and residential, and the unemployment insurance increase, where would be?

Around the world, countries are facing the same dilemma. How do we safely reopen the economy with no vaccination in sight?

How can wearing a mask be enforced to slow the unprecedented rise in Coronavirus cases here in the United States?

Here in the United States, everyone has freedom of choice, and some people feel that a mask infringes upon those freedoms. Understandable to a certain extent, especially if you aren’t at risk. With Capitalism, everyone operates in their own best interest, which ultimately leads to the greater good for all.

However, this crisis requires different ideals than a capitalistic society needs to be successful. Everyone has to sacrifice for the greater good for all. And with these capitalistic roots, the virus has continued to reign supreme.

Until we break from the greater good for “I” instead of “We”, we will continue to see an increase in the number of Coronavirus cases. Unfortunately, when talking about the Coronavirus, we are indirectly speaking about the health of the economy.

Without a full operation, our economy will suffer. The success of our economy is built on the sentiment of the consumer. To measure the economy, I try to assess consumer spending and borrowing habits.

Are people safeguarding their income or spending it loosely?

With this information, I can begin to move further along in the process of valuing a company for investment or trade.

Some companies are better suited for investment, others for trade. Visit some of my previous post on the difference between investment and trade.


Trading

When I first began trading, I had no inner knowledge of the Market or the companies I was trading. I like everyone watched CNBC and Bloomberg to listen to the analysts talk about companies of interest. I’d then enter the stock symbol into my thinkorswim trading platform and immediately see the pattern indicating bullish sentiment.

With no hesitation, I’d enter the trade and watch the trade turn against me. Hopeful that the stock would return to its previous level, I’d proceed to take a significant loss. It seemed as if the Market knew I was entering into a position and conspired against me.

For a long time, I believed that the Market had it in for me. Why did my position turn against me shortly after entering?

Over time, I realized that everyone saw the pattern and thought the same thing. The position would continue to be profitable, and over time the riches would flood in.

What really happens is that everyone that could buy the stock did. Seeing the price movement slowing, people begin to sell, and if no one is interested in buying at lower prices, the stock continues to fall.

Ultimately, I and everyone else that brought at the height of positivity and bullish sentiment are stuck holding the bag. The professionals sold on the way up, meaning as the price rose to new heights, they begin to sell.

They know that eventually, stock sentiment changes or slows because nothing lasts forever. You could also say that everyone that wanted to buy was sold too and with no new buyers entering, there was no one to sell too.

 

Understanding this is apart of trader psychology and market understanding.

 

The ironic part is that trend following is going with the crowd. Identifying where the stock is going before the public, is a part of profitable trading.

In understanding the crowd, we ultimately understand ourselves. This is a reality in trading because we can only trade what we perceive. Impatience happens to be a personal trait that I have traded several times before instead of the stock.

I did not wait for a setup to develop. I traded my impatience and entered the position immediately. Patience means actively waiting for an opportunity to enter a position when optimal.

Imagine millions of people trading in the same manner without having a deeper understanding of what it means to trade.

I’ll be writing more about my trading experiences in the future.


This past week in Review:

My income has continued to fluctuate from not enough to none. Luckily, I’ve been practicing personal restraint for some time now. Unfortunately, no one knows when things will return to normal.

I’m thankful I have a place to stay and food to eat.

If things continue or worsen, all industries may be affected. I’m keeping a watchful eye on the economy. Active saving will continue to be the motto for the foreseeable future.

I’d like to give myself a “C+” for this past week.

Since there are no sure things, I clarify my entry and exit before entering a trade.

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