Wednesday, March 31, 2010

If.. then.. else...

The biggest invention in computer language was the
statement If condition true then do something otherwise do something else. This is also critical in investing and trading. Many times what I found myself doing is I start of with a If condition that is true and am thrilled to rush into a position. What becomes increasingly difficult is even after the condition is not true any more and another exactly opposite condition has come to stay, I tend to get traders paralysis and eventually a "It will come back" or "I am in it for long term" syndrome. There are quite a few simple things that have come to help me. Stop loss, Stop Loss, Stop Loss. Nothing works better. It is the only thing that make me feel better when I loose on a trade. When I look back at a trade and find how much I saved because I only lost a very little it make me feel like a winner. Simultaneously looking at different time frames keeps me focused on the trend rather than narrowly looking at every tick of the trade. I keep Daily, 30min, 15min and 1 min chart all up at the same time. It is being aware of the forest while looking for he tree. For it is the tree that gives the fruit albeit bitter sometimes.

Today's market. We are still under the negative KOD influence on FAS. We have a lower low and lower high on FAS another negative. In the 15 min chart the 77 DOMA crossed the 172 DOMA to the down side that is another negative in FAS. In the 30 min FAS back tested the 77 DOMA and fell and is close to going thru a secondary trend line another negative for FAS. In daily chart everything is cool. DOMA is far away. Trendline is intact. RSI is at 70 and PPO is +6. Longer term I continue to be bullish. And short term I am partying with the bears.

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