Trade The Journey

Trade The Journey

Trade Management Skills!

I hope all is well. It seems like everything is returning to the new normal. Last night’s Canelo Alvarez fight had over seventy thousand people in attendance. Very few people in attendance wore a mask. I enjoyed the fight, even though it’s beginning to look like Alvarez has a problem with mobile southpaws.

Inflation is evident in the economy, especially in building materials like lumber. Yields remained near the levels of the previous week. The question lingering on everyone’s mind is “When will the Federal Reserve raise the rates?”

Raising the rates means increasing the cost of the money. However, they also help to slow down an economy growing at a rapid pace. People are already filling the effects of higher prices and increasing borrowing costs resulting in slower home purchasing growth and higher building costs for contractors.

The Federal Reserve has remained adamant in its perspective of increasing yields being transitory. Janet Yellen had to retract or clarify statements concerning the Fed and the need to raise rates.

Most people are unaware of business cycles and how they work. It states that the economy moves in cycles, rising, peaking, falling, and recuperating, and then growing again. Business cycles are hard to forecast because of the unknown variables in the Future. Unforeseen events like pandemics and terrorist attacks are impossible to see a few years before.

We don’t know if the economy has peaked or entered into the recession until after it has occurred because of the time it takes to collect and present the data. If you don’t have the time to study the data, there are other ways to gauge the health of the economy.

Are people voicing their displeasures with rising prices? It could be a signal that inflation is beginning to affect spending. Or maybe the market is reaching new highs?

There are many ways to perform your observational analysis of the economy. By keeping your attention on the sentiment or overall feeling of people around you, you can remain a step ahead of others. When rates are low, it’s an optimal time to refinance or purchase a new home. When rates are high, maybe its time to place your money into high-yielding fixed-income securities.

Unfortunately, keeping a vigilant eye on the health of the economy can be exhaustive. It’s best to find a couple of publications you can follow that summarize current events and market health in a way you understand.

I following briefing.com- Stock and Bond Updates, TD Ameritrade, Bloomberg, Trading Economics, stockcharts.com, and Reuters.


My focus on the entry is becoming less critical as I gain more experience trading. Trade Management and exits are proving to be the most challenging.

Once you enter the position, the real work begins of managing your trade to its finish. After my last drawdown, I made it a point always to put in stops. I kept my position open in CCO and CVA from the previous week, and both positions ended the week in the green.

CVA has continued to drift sideways after its bullish rise as a result of its positive earnings report. CCO has been a little more challenging to manage.

I watched CCO drift towards my stop several times. On one of the days, the price came within two cents of my stop. I was afraid my stop order would be triggered, and I’d be out of the trade.

It never happened, so I decided to let the market close my position through my stop. I was tempted to move my stop more than once, but I refrained.

As the CCO price drifted toward my stop, buyers stepped in and lifted it up. My confidence in the trade was tested many times.

The stop I placed provided me with an objective point to exit the trade without risking more than I was willing to lose. A stop is an extra layer of protection for the many swings in the market and your emotional & psychological state.

 

I know I would. It’s natural for us to be optimistic towards the Future and transfer that same perspective to trading. You may escape a catastrophic drawdown for some time, but eventually, you’ll pay the price.

I find the most challenging part of trading to be self-control, both in psychology and emotion.

I know this trade is going to work. Should I move my stop lower? Am I looking at both sides of the trade? Bullish or Bearish? Am I looking for news or website comments to validate the trade? Am I tilting the charts to favor my perspective? When and where should I move my stops to lock in my profits?

Trading is a difficult business to be successful in continuously. It usually isn’t exciting or thrilling if you’re completing the process correctly. Great trading is boring, and I recognize that managing your trade is not where the money is made, but where the money is prevented from being lost in large amounts.

I look forward to the day where I can manage my trade through a system. As I continue to experiment and track my results, I am confident I will find a trading system that complements me.

I enjoy the critical thinking that trading involves; every day is a new day. Stay tuned because as I learn, I will share.


Cash-Flow Management:

I’m doing a little better managing my cash flow. I find the biggest hindrance to successful cash flow management to be the competition between your present self and future self.

Either you’re enriching your future self or further indebting your future self. What we do in the present determines our Future. Of course, I don’t always think of my purchases in these terms, but I try to, especially with large purchases.

The more you save, the more your future self will thank you for the reduced stress involved in living paycheck to paycheck. I can’t tell you how many times I’ve dipped into my savings to avoid using my credit card.

All it takes is a continued effort to be better, and you’ll do better. Good things sometimes take time.

Cash-Flow Grade: C
Reason: Continued effort.

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