Position Size – When Markets Have No Clue

The fundamentals “kindly departed” several months ago,  ( if not a full year ago ) so….from that perspective alone – purely fundamental traders ( if such an animal exists ) have been shit out of luck for some time now.

Technical traders will have “long ago” been shredded to bits with attempt to “ride the short-term trends” in that the “short-term trends” have generally been “ranges and spikes” effectively blowing to pieces any single “technical strategy”.

And those of us that employ a combination of “both” ( admittedly struggling with the usual “extraction of profits” ) sit relatively idle, looking for opportunity – should “opportunity” present itself…..ummmm – ok so………when?

So who’s currently making money with their trading these days?

  • Is it the “Fed chasers” of day’s gone by? ( now that the Fed is in full-blown taper mode – does that make any sense? )
  • Is it those who caught the turn in the precious metals market / gold / silver / mining companies? ( looking at my mining investments as of this morning, one would think not. )
  • Or could it be the savvy “corporate investor”? Weeding through balance sheets daily, seeking out those specific / individual companies currently poised for growth.

Simple answer.

None of the above, as this is all by design.

You are “supposed” to lose all your money. You know that right?

During times like these, we run into the casinos with our pockets full of pennies convinced whole heartedly we’re gonna hit the jackpot. The T.V tells you, your neighbor tells you, your son tells you , your banker and broker tell you ( man……I’ve recently even had a 78-year-old retired school teacher tell me! ) – Everything is up. Buy, buy , buy. Nothing to worry about here – all is well.

Metals “pole axed”. Stocks “crammed”. Dollar higher.

Nervous at all?

This is all about position size, your ability to manage risk, and the balance of greed and fear.

The rest of it “isn’t supposed” to make any sense.

4 Responses

  1. Rob March 24, 2014 / 1:47 pm

    Hey Kong,

    First of all welcome back and congratulations on the wedding sir. Two things I wanted to mention. There is a couple books out on trading that I have read that I found helpful. I’d say the most important to me was Market Wizards by Jack Schwager. He interviews a shit ton of traders, all of whom pluck profits from the market using various strategies. Some are fundamentalists, some technicals, some combine both, but what they all have in common is, they feel they have a particular edge using the method they employ. Schwager goes on to say towards the end of the book, there is no right or wrong method, rather trading is about defining an edge how you see fit, and executing it. So I found that helpful for me, and I hope other noobs who read this will take solace in the fact that trading should be done executing strategies you create, and are confident in (technical, fundamental, or both).

    Secondly, I wanted to thank you again for pointing out the shit conditions that have plagued the market as of late. Choppy and bull galore. Because I don’t have any friends that trade or who I can bump ideas off of, I like how you mention the times are tough for all of us. I have been sitting tight, putting on positions here and there but it’s mostly been bland with little profit or some loss. Nothing great, nothing terrible, just part of the journey I must learn to become a successful trader. To summarize then, if professionals like Kong have been advocating the sidelines as of late, it comforts me in knowing I am not “missing out” on moves. Often times, beginners feel a bit anxious to get in the market, but obviously, part of becoming good requires patience and knowing when to strike. My strategy is fairly fluid and basic, and it has kept me sidelined for some time now.

    So here I wait, no longer as anxious, and more confident in my abilities knowing the right play in times like these is to trade small (not even position size, but also sparingly).

    Thanks Kong and enjoy your day


    • Forex Kong March 24, 2014 / 3:38 pm

      Great post Rob, and I want to get back to you in more detail but still have family and friends in town so….

      Please everyone! Just another day max and I’ll be back to my usual grumpy / cynical self!

      Ugly Nikkei action if you ask this gorilla….

      Ill try to get back to you all tonight…but in the morning at the latest!

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