Trade The Journey

Trade The Journey

Put on the Trade!

Top of the Morning!

Hopefully, you’re as optimistic as I am about the economy reopening. A little over a year ago, the world changed one more time. Most of the economic indicators are pointing towards a continued recovery.

People are eager to return to their normal lifestyle of consuming and enjoying. Nothing wrong with that. Some of the companies that did well during the lockdown now face questions about their continued revenue growth. Most of the workforce will be returning to their offices as people continue to be vaccinated.

How will this return affect companies like zoom or Peloton? The future isn’t easy to predict. How will we recover from the Virus? And will the Virus remain a constant threat? Some countries are seeing a surge in infections and deaths like India. Will the Virus continue to mutate and possibly evade the vaccination’s protection?

Answers to these questions are uncomfortable. Another lockdown or anything similar could send this country into a tailspin. I will remain cautious until the Virus is entirely under control, which I suspect won’t be for some time.

Put on The Trade:

Putting on the trade is one of the easiest actions for most people to complete. You press the button, and you are in the trade. If you’re a beginner, completing this action could get your adrenaline flowing. Market action tends to mesmerize. I remember watching the charts, attempting to predict the next candle. It was like a game to me, and I wanted to be involved when I saw stock move up.

As you learn more, entering a trade becomes a little more complicated. There’s more to consider than pressing a button.

What are more reference points?
Where should I place my stops?
What is the trend? Short? Long-Term?
When are earnings?
Any significant news events?
Where did the stock last encounter resistance, how did it react?
What is the character of the stock? Fast-riser or slow-stepper?

Those are some of the questions running through my mind when placing a trade. This level of preparation is far different than when I first started. The ironic part is that to return to the beginner’s level of placing a trade without fear or hesitation; you have to recondition your mind. You have to understand that uncertainty will always remain regardless of the amount of preparation.

You will make mistakes. Trading is a constant game of readjustment.

I chose two trades to monitor this week. The first is CCO; I spotted it breaking through a sideways range on high volume. The move continued higher on steady volume. I decided to place a limit order to enter when the stock pullbacks to around $2.45. I figured the move was a bit extended and would pull back a little, but it hasn’t yet.

Impatient, I moved my limit order to enter higher. I thought this was a bad idea, so I moved my stop again to enter back to $2.45. It closed on Friday at $2.48. Now, I am reconsidering the trade. Should I wait to enter and cancel my limit order to enter?

I fear that CCO will move a lot further than $2.45, and I’ll be catching a falling knife. Because of my time horizon for a trade, I may have to cancel my stop and watch what happens.

The second trade is CVA, which I saw on my watchlist. After a good earnings report, CVA broke through a downward sloping trend line I drew.

I have a resistance area and a stop order in. This is a short-term trade but this trade may have a little farther up to go.

20 and 50 SMA (simple moving averages) broke through the 200 SMA. Volume mostly below the average except during events like earnings mainly. The 200 SMA is turning up slowly. I like to think of the 200 days as equal to 10 months due to there being 21 days in the average trading month. A long-term trend of buying is showing. The shorter-term moving averages are now sideways.

Cash Flow Management:

This past week was okay in terms of cash management, however, I am still a bit disappointed in how poorly I am in limiting my “usuals”. I call my usual purchases, products, or services I am in the habit of purchasing. I purchase these items regularly and often, that there almost like bills.

I have to do better. My goal is to have most of my income after bills go towards savings and investments.

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