Trader Petri is off on an adventure this week, but the market waits for no man! In this slightly longer double whammy post, Petri cautions against revenge trading in a very volatile market, and talks about his upcoming Wall Street adventure.
Wrestling a bear market
I guess by now you’ve deducted that I am bearish, probably in general because of my personality, but more-so due to current market conditions. In my view we have had two different technical signals telling us that we are in a bear market. As yet, we’ve had nothing to tell us that the bear market has ended and that we’re back in bull mode. Yes, some TV channel was running the seven-year bull market anniversary story, but according to two different technical methodologies, we are still in bear market territory.
I haven’t been trading long compared to many others, so I’ve never actually seen a crash or even a bear market. Of course, that’s only if you ignore the bear market in resources and mining stocks we’ve been seeing for the last few years.
However, as far as the books and stories go, this place is trading exactly like a bear market should. Painful, continuously lower grinds followed by extremely sharp rallies that catche everyone out. Even some of the old hands are saying that this is probably the most unpredictable and difficult market they have ever seen. If you have been feeling the pain but have survived, I take my hat off to you, sirs and madams. Not many make it to the other side of markets like these. Well done.
Resilience and emotional control has never been more important. This market can get under your skin and staying sane can be a real struggle. Adapting to this market is important and trading smaller can give you a better chance of doing so.
I’ve been watching some traders take ever-increasing trade sizes as they try to revenge trade their losses back. This is folly! We need to remember that this is a long-term game and that our aim is to make small amounts of money consistently. Trading smaller now might not make you a lot of money, but it could save your account.
Imagine you catch a 15% move on a stock in one day with some serious volume! Sounds nice, but in reality you are far more likely to get caught on the wrong side of that 15% move with some serious volume, freeze, ignore stops, get pushed to the absolute limit of what you can take, and get burned. Trust me, this has happened to me a few times this year already. Rule-based trading is the name of the game now (it always is, I suppose) and the utmost caution is required.
The big Wall Street adventure
With the help of a few friends, I have managed to arrange access to the New York Stock Exchange trading floor for a short period of time. Not the tour of the exchange, but the actual trading floor! In the pit (if you can still call it that) with real traders, trading real stock with real money for real clients. Bloomberg calls this place the centre of the financial universe… and I am fortunate enough to be going there to absorb every last bit of knowledge and experience that I can.
I probably won’t be able to track down too many traders and asset managers who will be willing (or able) to endure my incessant questioning for too long, but that won’t stop me from trying anyway. After many emails over an almost three year period, I have somehow managed to get an offer from Mike Bellafiore to join in on one of SMB Capital’s 11am mentoring sessions.
HOLY SMOKES, MAN! I get to sit in on a mentoring session at SMB Capital in. the. flesh! I have no idea what to expect. All I know is that I am taking a notepad, a few pens (for backups) and an open mind. I am going to learn as much as I can from people who are some of the best traders in the entire world! And I promise to share the lessons that I learn with you guys. Even though it is only one day with SMB, it feels like a dream coming true. I mean, be mentored by Mike Bellafiore… check!
This market is still crazy, so keep being careful and don’t break it while I am gone.