New Blog Trading Layout

As I start typing this I am not sure what all I want/need to get into. But in the spirit of New Year's resolutions and all, I have decided to make some changes with the organization and layout of the blog that I considered doing in some fashion before, but never did. These are things that I believe will help to improve the blog overall and take advantage of more opportunities.

Blog trades have typically been short-term in nature (about 5 days hold), however, the market dynamics began changing significantly this spring as volatility continually pushed lower and the market began to trend more so than mean revert. Markets are designed to go up, and in downtrends price movement is typically volatile and not trendy. However, in major uptrends price trends more, is less volatile, and it makes more sense to hold for longer periods in the direction of the trend. But as the market pushes higher (and has been for several months) it is my perspective that the downside risk is becoming very substantial relative to upside potential. This has made me shift my trading time frame a bit in really only looking to "top pick" a major reversal.

Tops are hard to pick. They are lazy and round. Bottoms are much different, with climactic spikes and sharp "V" rebounds. So this spring as the market began to maintain upward momentum despite sentiment conditions that would have marked tops in the prior downtrend, I began to feel that focusing only on one time frame (short-term) was not ideal, but I never made a major change in blog organization to really clearly communicate this and better take advantage of it. So for the last 4 months I really have been in the situation of trying to top pick and not post trades taking advantage of the still prevailing uptrend. In retrospect, I have managed to get us in inverse trades right near every short-term top, they have all eventually given way to new highs and resulted in several stop outs.

So to cut to the chase, I am going to change the format to include both an intermediate term time frame trading section on stock indexes in addition to the short term trades that this blog was really built around. Also, I will include a section aimed at trading other asset classes. I can think of several times this year that I saw a very good opportunity in something like gold, oil, US dollar, or treasury bonds, but did not post a trade on it because it was not part of the modus operandi. In this new format I believe it will be possible to post a trade based off of an intermediate term outlook (say the market is topping) and maintain that trade, but continue to buy dips in the uptrend as long as conditions look OK, all with everybody understanding what is going on and not feel like all their eggs are in one basket, particularly if they disagree with my perspective.

With this new layout, I will not be posting stops nearly as often, but getting back to exiting purely off of indicators and controlling risk via % allocation to the trade and the leverage of the fund/ETF used in the trade.

I will go into specifics in the next post on the new layout. As a general rule though, you never want to risk more than about 2% of your account value of a given trade. Risk even less if your account is substantial like $20,000 or more, and aim to keep risk at about 0.5% if your account is upwards of $100,000. If your account is smaller then you could risk a little more per trade but not too much. Also, in that case, I would focus on the intermediate term trades until your account is larger (especially if you pay more than a couple dollars in commission per trade).

Also there is a new trade listed on the blog site right now, but I haven't had the time to post the details. So until, I get more time to post, you may want to check the blog website.