I have been very bad at updating my blog recently. Last week I felt down all week — I suspect owing to the lack of endorphins — I have been avoiding excercise while I wait for my sprained ankle to mend.
On Monday I took profits to lock in a gain for the month. I was up 2 risk units, but a bad Treasuries trade — very bad, since there was not a good fundamental reason for it — too me down to 1 risk unit, and I wasn’t prepared to risk a down month. I think this was the wrong decision. Not only do I hate having to stay out of the markets now, but the two trades I had, long sugar and short gold, have moved as I was expecting, dramatically in the case of gold. Monthly thinking may have made sense when I didn’t have much faith in my process, but now it is just stupid. It requires not only that I trade with positive expectation, but that gains happen earlier in the month. There is no reason to assume that that will be the case.
The Treasuries trade was daft. I was overconfident, having called a rally in the equity market correctly. I tried to play it by shorting treasuries, but they didn’t move as much; then they turned around and I closed the trade for no loss. Then treasuries broke upwards, and I went long. This was the mistake. Upside breakouts have not worked well in this market, and I didn’t think enough about the fact that this was a bet on a proper turnaround in the risk rally — I was overexcited about the effect of deflation on bond yields, which is a long-term thing and not something the market is focussing on today.
My other daft trade this month was a fat-fingered trade in wheat — I should have made 2 risk units, but made only 1.
Nonetheless, I am still up 1 risk unit, which covers my trading costs (ex. me) for the month. I am feeling more confident that I can get to a point of being a good trader. If I had held my gold position, as I should have, that would have given me another risk unit; if I had not messed up the wheat trade, another again. Even with my losses this month, that would have left me up three risk units, which would have been a good result. These are not wishful-thinking what-ifs — the only reason they didn’t happen is that I departed from my process.