Overview:

The purpose of this article is to provide some insight into potential upcoming trades and portfolio management across several markets. I also want to add that we are making some updates for the new year.  Many may have noticed on your dashboard there is a chat box now.  This is close to being finished and will provide an opportunity to communicate trades faster, enabling some daytrading during certain times, etc.  We also revised how how we post our trades.  The current trade sheets is now indicative of the position size in lieu of a standard 1200 trade size.  We wanted to be consistent to finish out the year, but for the new year we will actually post the position size.

One reason for this is many think that trading Litecoin or a less expensive coin will provide greater returns.  This is incorrect.  Trades are based on risk not profits.  Whether we are looking for a 15% move in Litecoin or a 5% move in Bitcoin the profits should be the same.  The higher the reward the smaller the position to reduce risk.  This is critical to understand in order to be a successful trader over the long haul. 

Cryptos:

Unfortunately the decision to close out our trade ended up being the wrong decision, however, we would rather lose small than chance a greater loss.  On the bright side the market is showing signs of strength.  The stock market is also showing signs of a nice reversal and we can start to be more aggressive with trades.   

Trading:

I’m not going to regurgitate all the psychological stuff we mention over and over to try and fluff anything.  Trade long enough you will inevitably close positions before a move, or miss a move completely when the market surprises.   I am going to state this though.

If you want to be good at trading and investing you must learn to wait.  Nothing more nothing less.  The most difficult thing for traders initially is controlling the impulsive nature of wanting to be in every trade or trading daily.  Anyone that has played poker for any amount of time understands this.

The guy playing every hand at the table almost always ends up losing.  Sometimes you throw winning hands away, but how often have you said after throwing a hand away that hit, “wow thank God I wasn’t in that I would have lost my butt”.  Same goes in trading, it is easy to see what would have happened after the players or market shows its hand.

Investing:

We mentioned last week, in our SC Weekly “Can You Handle The Risk”, that if you are willing to take the pain of a pullback, adding a small position in a coin you are looking to add is not unwarranted.  Everyone’s financial means and portfolios are different and just because we do not take additional risk does not imply you as an investor cannot.  The purpose of our articles is to provide an assessment of the market and to emphasize risk management.  In the end it is each individual’s decision on whether they can take the risk or not.

The important thing to keep in mind is that the market is still capable of pulling back.  We personally have added at higher prices and there is a point you have to say, I am going to wait until conditions improve.  I gave up a long time ago trying to buy the bottom of markets.  Of course we would have loved to go all in at 3200 but I also would love to have shot a 76 on the course this weekend as well.  

One reason we do not sell inventory is we are already in when the bull market resumes.  I am not trying to pick the bottom but position myself for a bull run.  Over time I have found it is just best to fade the market, adding periodically and not worry about being right and trying to time a bottom.  In the long term, risk management and cost averaging is a proven method, and its easier than being perfect.  The other reason we are not adding aggressively is we bought some Bitcoin at 3550, we want to buy lower, or wait for the market to improve before adding risk.  

Stocks:

The NFP and Powell speech Friday was exactly what the market wanted to hear.  After it appeared we were destined for a 50% pullback the market has shown a bullish reversal pattern and is setting up to move higher.   We can also start to look for some long positions and be more aggressive with our options strategy. 

 

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1 Response
  1. amussic@gmail.com

    Thanks for the info. Great stuff as allways. I am looking to get in to MSFT, 3M, JNJ with small position. For adding into new stock on monday is it still better to wait till the end of the day or just wait out the first 30min

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