Trading Journal – 28th April 2019

I think taking time out is a really important part of recovering emotionally as a trader and that is definitely something which applies to me at the moment. After being wrong on the US equity markets and general risk off sentiment I needed some time to recover and get back in control of my decision making rather than trying to chase a recovery win. Also doing something outside of trading which has a positive outcome and has a building aspect to it was another good idea, in my particular case it was looking to climb some mountains overseas which will require some planning and also some goal setting as well as an amount of satisfaction from completing the task. All things for me to look forward to. Even did some things on a more basic level like cleaning around the house polishing up the car after I made a stupid mistake and ask for help on how to fix it from my dad. That has added momentum to do positive things again so that’s great.

Currently I’m long the US dollar by being long Euro US dollar put options so if I was picking something which was not aligned to that trade I would want something which is long a commodity / short the US dollar. Looking through the list of possible trades we also need to consider that the long US dollar position is also a risk off trade so I need to look for something which is a risk on or neutral trade. Oil is a bit of a confusing one because the trend is strong and it is in the right direction but a higher oil price is generally negative for growth unless it’s a demand-driven price rise, which in this case I would say it is not. Lean Hogs is probably a perfect example of what I would want to add to my portfolio but that horse has already bolted so to speak.

Sugar is an interesting example because in the bigger picture I have a bullish perspective on the price moving higher, as it fits quite a few of my criteria for my most successful trade:
– coming down from a major high in the last 12-18 months
– after coming down from a 30% or more fall, then the price has stabilized sideways for at least 9 months
– the moving averages have converged from the 15 day all the way up to the 200 day
– the price has attempted to move through the 200 day average at least once and failed.

One thing which is not occurred with this opportunity so far is the price moving back to within 1.5% of the old price extreme. This is the most obvious entry point from a good risk/reward perspective. Based on the May contract I’m not sure that the price will actually get there though so it’s a question of whether I take some risk now and if so it through what product – options or outright? I think the outright is at a good level in the short term but not close to the long term low.

What interesting thing which I have noticed after riding in my trading journal is that I have tried taking a long-term view and then taking long term positions as well as taking a short-term of you and then taking short term positions but accommodation witch support if I took the time to do the complete analysis is that I could use a long-term Outlook to take short-term positions and that might be quite profitable given in the money trades I’ve had previously. Ones that come to mind off the top of my head include the recent move in t bonds, the move in where the value of my options spiked, the move in the Dax, the move in the VIX index, so I suppose aside from that major trade setup what I’m generally good at picking from a profitable perspective is identifying the big picture setup and then trading the shorter term action. The issue has then become that I hold on to the position because I’ve got a long term view but then I get taken out in the chop or the longer term view turns out to be wrong once the short term move has evaporated. So I should really move to a rule where I take profit if my account is up by 30% unless I have a proven big win at trade setup which I’ve already identified as being either the one described above, or the 19% retracement rule.

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