The Weekly Wonder

Its April 2020, the markets are tough so take the pressure off step back and focus on the things that are important. High on the list is piece of mind and the fact that we want to enjoy our lives and our money. If you not high on cash, you are probably a bit stressed right now and not exactly prepared for the opportunity the market is now preparing us for. We’ve taken our medicine which is the smart thing to do for us. A move down of this force and power is a hard one to deal with but these forces are not to be argued with as we don’t ever know what the extent of the damage might be on the stocks we hold. So, we neutralise and prepare ourselves for the road ahead whatever it may bring.

What do we know? We know markets and stocks and markets move in repetitive cycles thrust between fear and greed resulting in certain price action. We play those cycles and odds of behaviour in an educated and informed way. The portfolio results show that over time including all the big falls of which we’ve had two over the last 17 years of our recorded trading history. They are a fact of life. Still we are ahead, portfolios grow strongly overall and the odds say that having had two market wipe outs over the last 17 years, we are probably back in ‘opportunity phase’. Within that background we then take the further steps to analyses specific stocks and find those market bottoms as I talked about in the opening of this Newsletter. (Radar Newsletter #500 April 2020).

As a part of that process I choose to analyse the market from a weekly perspective. That means I base my research and analysis on weekly data. The open, high, low and most importantly the close of the week. This also means I sit through the week in a state of relative calm and clarity which promotes perspective. The calm also comes from the fact I have faith in my process and the results to base that confidence on. In market talk it is called proof of process. Doubt can often be driven by our reaction to market moves and the closer we are to the market the worse that is. That ‘noise’ drives us farther from the truth. Now is not a good time especially if some have ‘held’ all the way down and retaining the heavy weight of those losses. That is psychologically damaging and a heavy load to carry.

The moment of truth challenges us now. Do we retain that poise and ability to act in the same way we should through all market stages, be it bull, bear or the frustration of sideways markets? All generate their own emotions and if we are to trade them, we need to understand them and know how to deal with them – in the same way. Focus, evaluate carefully, have perspective, and act.

The weekly perspective gives me an advantage and the ‘distance’ to assist me in formulating and implementing a trade plan effectively. The next few months may well tell an interesting story. This is the what I have learnt over the years and it resonates with me and helps me tune into the market. In a former life (younger more impetuous days) I have traded futures and options on a very short intraday basis for brokers and banks but as I get older and get more experience, I see the benefit of being more mentally relaxed and more at one with the market. I enjoy the cut and thrust of it and the weekly can still do that you don’t have to trade short-term it is a tough thing to do and very mentally taxing.

The karma it brings to my trading is very much a beneficial thing and helps me to effectively manage a trade plan and generate profits – despite the odd tough year! It also allows me to exude that level of calm and energy to members.

Other benefits that unfold from this approach are that is enables us to be smart about how we trade enabling us to feel good about developing the ability to ignore the irrelevant and distractive information overload generated by what I call the market parasites. Those that feed off us without actually helping us. And there are many, some necessary, and some definitely not. I’m sure you have all experienced that effect at some stage of your trading careers.

My stops are never on the market and at the mercy of distractive intra week volatility and the mental tussle of trying to finesse an exit of entry.  Although we naturally worry about intra week moves for the most part it doesn’t matter or have any material effect on my results. That’s another unnecessary loser exercise that invariably bears little fruit apart from the stress. A weekly trader takes his signal from the weekly close – when the market is closed – and executes on the open on Monday when the market reopens. How stress free is that. Stops are thus never on the market and you are implementing your trading plan actions in the relative calm of when the market is closed.

My key takeaway from trading over the years is maintaining clarity of view as to what your objective is and the road you choose to get that objective. As a long only Trend Follower there really isn’t a lot on offer for me right now but I am able to withstand the FOMO phobia with ease. Our time will come, and I know my focus as you must too.

Over recent weeks I have had discussions with many prospective members many of whom have made those same old mistakes knowing full well that they are making them – again! One of the biggest disconnects in the world of trading is not just the ‘knowing’ but the ‘knowing’ and the ‘doing’. The winners are the doers.

Interest in the stock market is always high after such a fall because we all know it’s an opportunity the hard part is taking the bit between the teeth and taking advantage of it. Come over to the bright side and live a little. Fortune, favour, disaster and calamity are all included and guaranteed. They are all events we have to withstand and manage and sadly the current world-wide calamity is exactly one of those disasters. Some are handling it well and others not so well. It’s all about clarity, perspective and doing what’s right not necessarily what people want right now. The longer term is our focus if we are to survive (as traders).