Don't Give it Back

Unless you are a high frequency trading firm, it is just not possible to make money every single day.  There will be many days, usually when the market is in an uptrend, where the market is hard to predict short-term.  Trying to predict those daily fluctuations is like gambling.  Sure you can win, but the expectation after transaction costs is negative.

Know your strengths and weaknesses.  My strength is my aggressiveness and willingness to go on offense when there is a high probability setup.  My weakness is my aggressiveness and overconfidence.  I try to go on offense even when the odds are only slightly in my favor or even just a coin flip.  So from the heavy tuituion I paid through my losses, I know that I should be less active in these relentless uptrends.   I don't want to give back my hard fought gains during good trading markets in these slow, low energy markets.

I am not bold enough to buy into an uptrend that I know is likely to go on short-term, but eventually give back its gains in the medium term.  I want to limit most of my trades to ones where both the short term and medium term outlook are favorable for my trade.  For example, if I make a short term short in the S&P 500 at 2165, and it goes up 10 points to 2175 in the next trading day, I have greater conviction to hold the position and profit later when my medium-term S&P outlook is also bearish.  

It is one thing to lose money based on your analysis being wrong.  That happens, because no one is right 100%.  But if your analysis was only for a short term trade, and your medium term outlook was the opposite, then you probably shouldn't have even put on the trade in the first place.

Right now, my analysis points to slightly higher prices over the next week, but then choppy trading action for August, and eventually a pullback down to 2040-2060 area in October.  So I will be looking to put on a short sometime soon, but want to wait till next week, probably after the Fed gives full confirmation that they are on the sidelines, looking to pump the market higher, and rooting for Hillary.  S&P 2085-2090 looks like a good spot for a top from a price perspective, from a time perspective, July 27-29 looks toppy.