Trade The Journey

Trade The Journey

Mind Games


Everything is opening back up due to the vaccinations and the improvement in hospitalizations and deaths across the country. Only 13% of the population is vaccinated. Texas led the charge, and the rest of the country is slowly following.

The gym opens tomorrow, and I am unsure of what to do. Like most people, I continued exercising at home and on the beach.  I want to return to the gym and other places I frequented, but I may have to play it safe for now.

People are tired and weary of continued lockdown and are eager to resume their everyday lives. There are clear signs that this virus will continue to mutate and perhaps become deadlier. The irony of the Coronavirus is that the remedy to its spread is a concern for others. Some will say I am oversimplifying a complex issue but think about the message doctors have, “Wear a mask to protect yourself and others.

I respect others’ perspective of declining to wear a mask, so I stay at home mostly. America’s society is built on capitalism with the prevailing thought that what’s best for me is ultimately best for others. Will the country continue its recovery with the third round of stimulus checks and America’s opening up?

The indexes have hit all-time highs fueled by a renewed interest in the stock market and the fear of missing out. The general public is being lured into the idea of easy profits and a never-ending rise in equity values.

Seeing commercials advertising the ease of trading is both misleading and manipulative. Maybe I am bitter about seeing people become instant millionaires with nothing more than a tip on Reddit or Twitter. I’ve placed one or two trades in an attempt to make easy profits but to no avail. That’s the cold reality of trading, “All it takes is the click of a mouse and you could be in a winning trade.

It doesn’t matter if you’ve spent months, weeks, days, minutes, or seconds analyzing that trade, the market doesn’t care.

I view the market as a functioning system of mass psychology where value is traded and discovered. To be a trader means to function as a psychologist of patterns and traders. You have to think beyond your typical reaction to market movements and anticipate how the trader on the side of your trade will react. Essentially your trading the trader.

Mind games are apart of market activity – Naive to this fact, so was I. I mistakenly thought the market was buying on pullbacks and selling on rallies, which it is. However, it’s also about the disguise that the pullback and rallies may be displaying like bull and bear traps.

With experience, the trader will become aware that their money is a slight drop in the bucket of money moving in and out of the market. The average trader is dependant on large funds and institutions for the large movements in the market. However, we have the same advantage a small company has over its large established competitor, the freedom to be nimble in a continually changing market.

This means we as traders must be flexible in the manner in which we manage our positions. We never know what force is behind the movement and how far it might go.

Fortunes are made by buying low and selling too soon.

Selling too soon is a skill that must be learned and practiced to execute without reservation. I practice this skill using a simulator. The reason I advocate practicing selling too soon is that you need to see the average amount of times you profit by holding a position anticipating a top.

A simulators’ primary purpose is to help you become attuned to market movement, learning what the market is likely going to do.

It’s a psychological skill to release and accept. I can tell you from experience that it never feels good watching the stock rise after a premature exit. However, it always feels better to exit a stock early before a severe drop in its price.

Case in Point:

I brought Celsius at eight dollars and watched it rise to above seventy dollars. I read the annual report and liked their management style of limiting debt on their balance sheet while making progressive moves. They changed their strategy to adapt to the new internet retail environment and formed beneficial relationships with gyms and online grocery retail sites.

Watching the stock rise made me feel good about my trading and investing skills. I clipped the position on a pullback at twenty-one dollars but brought it back quickly. As it continued to rise, I continued to watch.

I’d say about three months ago; I began having doubts about its continued rise above its all-time high. On the monthly chart, it rose almost vertically. About two weeks ago, I sold out of the position. The stock continued to rise.

I was sure that my decision-making was faulty. Some stocks pulled back due to rising yields and fears of higher inflation. I thought the same of this stock.

On a positive earnings release last week, the stock dropped close to fifteen dollars on the day.

The daily chart is below:

Monthly Chart below:


Did I see that significant sell-off before it happened? Of course not; I just took my profits on looking at an overextended market and stock. The stock also could have pulled back and made a significant move upwards.
I’m okay with that scenario as well.

The ultimate goal of trading is to profit, not prove my skills as some great market forecaster.

I turned a perception of value into a profit that I can touch, making it real. That very fact is still amazing to me, I trade perceptions of value.

This past week:

The cash flow crunch has ended. I now have some breathing room but make no mistake about it; the road ahead will be challenging. I’m still unsure of what to make of the vaccine progress and the reopening. If the numbers begin to increase, will we face another lockdown?

I heard a report that Dr. Faucci is worried about a new strain emerging out of New York. Until the pandemic is entirely under control, I’m saving a larger than needed portion of my income and stock market profits.

Volatility is here to stay in the markets for the time being. I advise all traders and investors to be careful.

This past week deserves a grade of a “C+” for steadiness and improvement.

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