Month End Summary | Avoiding Wipeout

Trading Wipeout.jpg

Trading success revolves around avoiding the wipeout.

Trade Anatomy Portfolio

-.32% MTD |  -.32% YTD

Position Summary

0 long | 0 buys | 0 sells

Watchlist Summary

8 candidates

 

Commentary

The portfolio ended January in cash maintaining the same defensive position since the last update.  In times like this, I find myself providing less frequent updates about the market because there is very little to discuss in way of trades or potential new ideas based on my trading style.  I'm realizing that it might be more beneficial to everyone right now to discuss trading more frequently.  So, if you have any topics that you would like me to discuss in upcoming posts, please email me at info@tradeanatomy.com.  

For new traders and some seasoned traders the past 12 months have been challenging.  Many have struggled to stay on the right side either due to their methodology or lack of one.  During these periods many traders will wipeout and never come back to the table.  So, how do you keep your probabilities of portfolio loss to a minimum when the overall environment is not conducive to your trading approach?  The key for me is having a definable process from start to finish and then having the patience to execute it when the time is right.  

  •  Define and prioritize your trade setups.  As mentioned in previous posts, part of my preferred setup is a large weekly base setup over multiple years.   In the present environment, very few stocks are meeting this criteria which naturally keeps me on the sidelines.   
  • Know how you will handle the trade setups that  meet your criteria.  I always know when to sell if I'm wrong or when to sell if the trade works in my favor.    I try to keep it simple.  If a new trade opportunity arrives, I use my entry indicator as my initial stop loss.  Once the stock begins a positive trend,  I use my trailing stop in combination with my alerts indicator to manage the position going forward.
  • Master one trading style.  The rules I set forth aren't random but clearly defined based on what my expectations are for my trading.  The rules do bend but the overall makeup of the strategy doesn't change based on which way the wind is blowing.  Portfolio wipeout occurs to those who struggle to find and develop consistency in their process.  
  • Take the time to review past trades.  Right now is an excellent time to go back and review your trades and look at your notes to see where improvements can be made.  

Watchlist Summary

For 15 years now, the screening criteria has been set in stone and over the course of this time frame, the number of stocks making it through has always changed with the market conditions. In January, the list shrank to a record low 24 names before rebounding to 70 names.  So, as the market sits with a minor correction under its belt, it does make me wonder if something much larger is in store. If the lists begin showing improvement over the coming weeks, then naturally these thoughts will fade and trading will commence as usual.  But, if the overall market continues bouncing back and forth for an extended period of time without underlying stock improvement, then it sure seems that a much deeper and extended correction awaits.     


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