This Is The Lesson I’ve Stressed For Many Years
The last few days have introduced some sorely needed volatility for us
HVTers, however, after speaking with a
number of people and reviewing my own trades, it occurred to me that a fair
amount of them were done based on feel and instinct rather than a cut-and-dry
setup which followed a set of rules. The main reason is simply the degree of
emotion in the marketplace. Trades/investments are not always based on charts
and technical levels, sometimes they are done purely out of fear and greed.Â
This is good and bad. Good because the trades that unfold are pretty robust,
bad, because if you are relatively new to trading, especially
HVT, the standard rules may not apply to all situations. I really
cannot offer an immediate solution to this dilemma. However, there is a lesson
in this, and it relates back to something I have advocated and stressed to many
colleagues and mentors over the years:
Practicing the same thing over and over again allows
one to achieve that level of feel so that the very act itself becomes second
nature.
The last few weeks and months have certainly tested all traders’ resolve. However, if you stuck to your game plan (yes, I deviate from time to time, I am
human), you were able to gain a perspective on the market’s dynamics that now
allow you to take full advantage of the price action we are experiencing
currently. Those that have been playing musical chairs with their trading
approach cannot dovetail back into HVT as
easily.
I have made these comments many times in my column, however, we all need
reinforcement of the basics from time to time.
Based purely on speculation, I think it is safe to say that if we do in fact
commence the war against Iraq at the 48th hour (8:00 PM EST tonight), the trading
will become quite chaotic on Thursday and Friday. For those of you who may
trade FX, you may want to be monitoring your stations. I expect some pretty wild
price action. Naturally, the Swiss Franc,
which has sold off hard in the last few days, may come under decent buying
pressure as news emanates from Iraq, especially if a few unexpected scenarios
develop. Referring mainly to longer-term trades (ones that last a few hours),
bonds or a proxy (TLT) will offer the same
type of trade setups, i.e., flight-to-quality trades. So, even if there are not
any HVT trades from time to time, you should
be on the lookout for Iraq-related trades.
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* indicates a level that is more significant
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