Death Spiral Beginnings

For a few weeks now, I’ve meant to get around to writing about the extreme importance of having balance in my life in order to be successful. This is still not that post, but such thoughts will be forthcoming.

I’m pretty embarrassed at my conduct today, market-wise, and I blame the stupidity of my actions on the recent self-inflicted imbalance my routine has taken. I’ll work my way backwards, here and now discussing and addressing the stupidly made errors.

I say stupidly made, because a few of them are repeats. An error is acceptable, providing that I learn something from it. A second time, means I didn’t take the time to view that error as a lesson carrying the seeds of success, rather than an affliction, driving me toward failure.

Briefly, here’s the time-line of events:

1. I cashed out of my stock positions yesterday with the rationale that I had made some good trades, but did not have conviction to hold them beyond a “lucky” day. The stock market was showing mixed signals–breakouts in small stocks, on one hand, but possible reversal signals in the broader market. I figured that I didn’t really have a grip on what was going to happen, and instead of attempting to decipher the code, to get out with some coin. This was a good, soberly made, rational decision.



2. I stayed up late last night, digging through charts, reading blogs and news, a little “high” from the profits clenched yesterday. I noticed a few charts looking primed for break-outs. I made some notes of break-out points, and went to sleep late. This is still alright, though I did my stock “homework” at the cost of other tasks left undone. Hence, an unbalanced mindset start coming out of the woodwork.



3. I wake up exhausted and get to work a little late. My boss reminds me to show up on time. He’s right! I was late because I had stopped to get a box of donuts for the office, but that’s no excuse. Why do I include this? I usually show up early, or at the latest, on time. Something was off, and I should have stopped to consider the implications such a “red flag” would have for later in the day.



4. After logging on to check the market, I see breakouts! Cool. However, a small detail toward which I turned a blind eye: I had $0 in “settled funds” in my trading account, after going “crazy” banking coin yesterday. I was 100% cash, but w/out any “settled” funds. You can buy with unsettled funds, but you can’t sell securities purchased with unsettled funds until they settle, which takes 2-3 days. This was one of my “NEVER GET YOURSELF INTO THIS SITUATION AGAIN” lessons I learned in the past. I did not heed this lesson, and proceeded to buy securities with unsettled funds. I am now not allowed to sell them for a few days. This is potentially disastrous.



5. Having backed myself into a corner, I saw the S&P start to make a new intra-day downtrend at around 850. Could I sell ? Nope. My recent gains receded into losses. I couldn’t really hedge against each stock, so I “hedged” by getting short via an inverse, leveraged ETF. This was probably a smart move for my shitty situation, but definitely not ideal. Why? Well, what if the market rallies? That position can’t be sold either, so I lose. I could buy a leveraged long ETF to cancelthat out, but then I’d be stock with my long equities and no further possibility of hedging!

That’s where I lie now. It’ll take a few days to un-fuck my account, and I’ll definitely get a hair-cut on the bottom line, regardless of what happens. Here are some warning signals I should have seen, aside from the “red flag” of showing up 5 minutes late to work. This is starting to get into the issue of maintaining balance in life:

1. Starting yesterday, I stopped posting trade plans and explanation for each trade. Documenting my trades on my personal blog is a method for future review, but is also a safe-guard against compulsive, thoughtless trading. It forces me to vocalize why a stock is good enough to buy. I usually do some chart-work, giving a visual picture too. Most of the stuff I bought today, I had previously charted, but the fact that I didn’t take the time to follow my habit shows I was lacking patience and discipline. Instead of trading with confidence and caution, I traded with recklessness and compulsion.  



2. A crazy sleep schedule lends to exhaustion and fuzzy thinking. When I’m running on low sleep, it’s easy to lose perspective and forethought.

The unsettled funds trading shows a complete departure from a sober approach to trading. I am not beating myself up for it; the market will take care of that. The stock market is merciless toward the slightest mistakes made. An “efficient” market also means that people who act stupidly will lose their money.

I’m glad I “awoke” from this daze. Sometimes, losing in the stock market helps me to remember to invest in the OTHER parts of my life. I figure that I’ve lost some money, but I can grow richer in other ways: by reading and learning more about the world, by getting in a good workout, by studying my profession of warfighting.

Hopefully this kind of review will prevent future mistakes from being made in the future. Pointing out the mistakes made and the signals missed will make them more noticeable next time. Tomorrow is another day!

Trading Review: March 16-24

Trading Review: March 16-24

 

Where I was coming from:

            Starting on Monday, I was heavily short the market. This was after a huge run-up already. I had been following the teachings of Danny and iBankCoin.com. He continued to present levels of resistance and statistics pointing to the market going down. I continued to see the reasoning and logic behind his presentation, and continued to double and triple down on the market. I ended up gaining a very large position in inverse leveraged ETFs, with about $6000 in SDS and $2500 FAZ.

 

            The idea behind the shorting was:

1.     The market was in a serious downtrend.

2.     No fundamental issues had changed.

3.     We were just “bouncing” from 666 as we had previously.

 

Here’s a picture of the market over the last month, including Monday the 16^th:

 

In hindsight, I can see very clearly what I should have done. 

1. Expect the trend to continue until it doesn't. This would have meant shorting at the top of the S&P channel on March 10th. 


2. Sell once your assumptions are shown to be wrong. Shorting at the top of the trend would have been under an assumption that resistance would be in play as it had in the past, and the market would bounce down. This is expecting the trend and betting with it. After the market busted through resistance at about 696, I was shown that my assumptions were false. 


3. Wait for a new trend to confirm itself. This means that, although it broke through some resistance, it doesn't mean we're in a rally and I ought to start betting with the longs. I should see the market follow-through, to show it's serious. This could be an IBD follow through, or breaking through another level of resistance. 


4. Go to step #1. This system might turn into the framework for a new trading system for me. 

The next level of resistance was about 721, the previous high within the bear channel. Following the system above, I would have gotten my follow-through above 721, and then started getting long. A new trend, a confirmed rally, was established. Instead, I got short again at 721. Once it crashed up through there like a submarine in the Arctic ocean, I started eye-balling the next resistance level. My thinking was locked in bear-mode, and I vent frustration in this post.

As Gio said, a wise bear respects a bear market rally. I did not. Instead, I spit in it's face and bought FAZ in the high 30s. Here is an image from a previous post regarding my thoughts on FAZ, given to me by Upsidetrader. It seemed to make sense. I set my stop position a little bit below the previous support levels and luckily got out of FAZ around 34. 

Another over-all lesson learned?

If you're going to bed against the trend, have a very solid reason why, and keep your position/exposure small. Keep a very close eye on the price. Put your stop to a price that shows you're wrong. 

I can see my errors clearly now. I see it in this post, too. And here, even after I had started to see the error of my ways. 

Though I am encouraged I started to get long and change my perspective. There's nothing able to change my mind bear to bull as buying a stock & getting long. 

It was also encouraging to see me start stating reasons, expectations, and contingency plans for trading in my "trading journal", like for HES here. 

Another indicator that the trend has changed: You're betting one consistent way, and you're losing money. My Shorts kept getting killed, and any longs I had were easy money. Locked in a bear mindset, I was blind to the coin being gained by my longs. 

My HES trade here was well-executed. It was planned, small, and conservative. I used charts in my blog to support my reasoning. The result? It made some money, and got out before a possible break down. Instead of betting against the trend, I just stopped betting for it when it broke a trendline.

Habit Review

Praying in the face of Stress/ Anxiety

Did you pray this week? Yes. A little bit. I wasn't practicing the presence of God by any means, but did appeal to the Lord in prayer. Especially during quiet times and walks, and time spent praying during my morning/evening ritual. 

How to stay in the fight this week:  "scheduled" prayer is done in morning/evening rituals and by doing my quiet times (ie, prayer read/walks). This habit isn't merely a blending together of those two habits. The intent behind this prayer is to turn to God during times of anxiety or stress which would otherwise cause me to seek shelter in cigarettes, alcohol, lust, etc. Turning to God during this kind of challenge is hard to prepare for, other than trying to turn to God for just about everything else until you get there. I think that'd be a decent thing to eventually be able to do. For now, I'll make this short term goal : Tomorrow (3/23), I'll pray before completing each task on my "To-Do" list, and thank God after I finish it. This week, I'll consider the top 3 anxiety-causing things on my mind each day, and ask God for peace in them. 

No Swearing

Did you avoid swears this week? No. Swearing just pops out while driving, most of the time. I guess that's why it's a BAD HABIT. I would estimate that having a verse reminding me to pray for patience, and a reminder to breathe deeply were helpful. I also was SUCCESSFUL in listening only to delightful classical music or spoken word audio all week, including for the 10.5 HR car ride back from Texas. Awesome! I'm definitely going to keep this up. 

What will you do to improve next week? Continue to pray about it. Keep breathing deeply, and continue listening to classical or audiobook. I could probably also leave earlier so that i'm not in a rush. That would be some angry driving there. SHORT TERM GOALS: This week I will leave 15 minutes earlier than I'd need to in order to get to any given appointment. I will use the spare time to drive slowly, breathing deeply and enjoying the breeze. 

Hygiene

Have you been flossing? Yes. I flossed almost every night this week (didn't one night when I was too drunk). 

How will you keep fighting for this? I'm back in Florida and need to establish my morning/evening routine here even more firmly than in Texas. This morning and lst night were good starts, except without reading from Og or from the bible. Those are two things I definitely want to incorporate into my evening and morning rituals. But the hygiene thing is on it's way to becoming a habit. Just keep doing the ritual. I need to get back into planning my meals for the week. This is on my to-do list. 

Drinking with a Plan

Did you drink with a plan this week? The night I went to Saxon Pub, I definitely drank too much. Downside was that I was hitting on a 40 year old, and spent about $30 on alcohol. yikes! was all in the mindset. Going out alone, I need to be especially careful about drinking well, since I don't have much interaction by which to gauge my intoxication level.

How will you stay in the fight this week: I'm going to take a week off from drinking on my own. In the event that I go out with someone, I'll make my plan and limit before taking a sip. I will also alternate soft and alcoholic drinks. goal: no alone drinking this week. 

Reading Well

Did you read with a purpose this week? I didnt get much reading done this week at all. I did follow through on the short-term goal of starting word documents for stuff I'm reading. I took notes on a few sermons I listened to, and on "The Case Against the Fed", which i listened to 1/4 of on the car trip. Short term goal: Create word doc for "The Case..." and also "Three Cups of Tea". Read 30 pages on average of anything, each day. 

Dedicating Internet Time

Are you dedicating Internet Time? This is the hardest thing to do, besides getting up early. I just don't feel like it's time effective to spend time writing up what i'm going to do on the net. The point of this is to spend time on the Net for a purpose, not purposeless hours of endless browsing. Luckily I haven't been spending tons of time on the net, so the lack of this habit hasn't hurt. But more and more, i'm realizing that the formation of a habit is about the formation of an outlook or mindset about something. What mindset is this habit supposed to bring about ? It's meant to keep me from losing focus of my time and goals. To do everything with a purpose, even if my written purpose is to "unwind & surf". This will be easier with a dedicated notebook now instead of a text log. I will renew my efforts to plan time spent, aside from investing and blogging. Those aren't considered "surfing" to me. 

Sleeping in too late

Have you been getting up early? This is my hardest habit. I think i got up early 2 or 3 times the whole week. Good start, but definitely still a fight. I haven't had a regular sleep schedule, so that hurts. Now that I'm back to boring old pensacola, I think I'll be able to get to bed at a regular time each night (generally). This will help me get up at 7:00 each morning for How Hour

How will you fight this week? Unless something is absolutely essential, I'm going to cut off all work and "To-Dos" at 22:00, and go to bed. This gives me 9 hours time for sleep, of which I'll probably use 8. Giving myself extra time to get ready for bed will possibly help me stay more disciplined. 

Bible Reading / Walking Daily

Have you been reading and walking daily? Not daily. I did this twice out of five days last week. It's easiest and natural to do after a work-out. I've just cleared my mind and am ready for prayer. Any time I work out, I generally do it. So this habit is linked to another one, which may be helpful. 

How will you keep fighting this week? I'm going to do my workouts each day, as they're scheduled and do my prayer and walks after those. If i don't work out for some reason, or something unusual goes on that prevents my walk after a work-out, I'll be doing my walk NLT 2130 on the nights of days I haven't done one yet. This will be the last thing I do before getting ready for bed. 

Workout Daily 

Did you workout daily? I just about did. I think I skipped yesterday (car trip) and maybe one other day this last week. I didn't do P90X each day, but did a run or so. I'm going to keep logging my workouts here. 

How will you stay in the fight? By getting fully back into P90X - Diet, weight recording, pictures, journalling, everything. The more i embrace it as a system, the more momentum is has. 

Daily Planning

Did you plan daily? Just about , but need to tighten things down. I don't always follow the plan exactly, but it's helpful to plan getting up, meals, and key appointments. This keeps my diet, budget, and goals in check. 

How will you keep planning? This will be part of my week-end ritual, and nightly ritual. Weekend : plan as much  as possible for the week. Nightly: Revise, review, and request. 

Investing

This will be covered in it's own post. 

Review: Smoking

Did you smoke? I haven't smoked at all this week, because I haven't really felt the urge to. My life is pretty darn stress-free. I'm not facing any pressing challenges, I'm not anxious. It's really a nice breezy state of mind for me. 

Are you still "trying" to break this habit? Yes. Just because I had a good week doesn't mean I can take my mind away from being "on the lookout" in anticipating temptation. Tomorrow I'm going for a long drive, which is traditionally some of my favorite smoking time. I might be tempted to buy some cigs or dip just out of boredom. Right now, I make a decision NOT TO BUY ANY TOBACCO PRODUCTS DURING THE CAR TRIP TOMORROW. I'm not a smoker. 

I haven't been making quitting smoking a nightly prayer. This is because I don't have these goals written down to look at often. I think that's something I'll do right now. 

Disclaimer: In my original post here i mentioned that I'm not a "dirty person" and therefor don't smoke. I think that is a pretty lousy attitude toward smoking which I inherited from a girl I used to date. People who smoke aren't dirty people. Smoking, is smelly and gross. But I definitely should have distinguished between a repulsive act and the smoker's dignity. I do stuff people may find repulsive.. often. I hope that doesn't mean i'm a "dirty" person.