Thread: JTH's Account Talk

Originally Posted by JTH

I do think a short-term bounce will happen, but I'm also prepared to absorb some pain and get out if it doesn't happen, thereby taking a loss on the trade. When I first started here I thought the S&P 500 was a stock car race, trading with emotion was the norm and if you were lucky, it went your way, but back then we had unlimited IFTs so there were multiple opportunities to make money within any given timeframe. At some point in time the majority of us will get caught up with an emotional trade, some of this stems from how we were raised to handle money. Growing up I did not have a money management foundation to build from, so I had to learn my lessons the hard way. The best way to counteract emotion is with education, experience and discipline.

Education through reading, reading, reading, experience though the application of your education and discipline to apply a set of constraints for your education & experience to work within. These three fundamentals have a synergistic effect on the outcome of what makes up the investor. We are only as strong as the weakest of these three components. One of the most important things I do before I make a trade is ask myself "Why am I making the trade, and what will I do if the trade doesn't go my way?" Another saying I like is "Be wrong and move on" hope is a 4-letter word and if you're hoping the trade is going to work out, it's probably already past the time you should have made the exit, or accepted that you will be stuck in that trade for a long time.

Amoeba, I made my trade based off of a variety of principles...

There were long candlestick tails throughout the major indexes, hinting that the bulls were controlling prices.
The Transports (often an Index that leads the markets) were in the green at the time of the IFT (they did close down -.18% but that's not bad.)
I had a 1.73% edge over the S-Fund (I took an entry into the markets when SPX had already pulled back 3.19%)
On many indexes we've spent an abnormal amount of time outside of the bottom (20, 2) bollinger band.
One of my systems had triggered a partial buy on the 27th & 29th.
Another one of my systems had triggered a buy on the 27th.
We are at the bottom of a 14 month parallel price channel (see chart below.)
Historically, following a weak week 3, weeks 4 & 5 are strong (we are already behind on the curve.)
Lastly, it's the end of the month and I still had 1 IFT, if Monday is strong, then I can pull out, take the gain and still jump back in later in the month. If the markets are weak, I can either get out or stick it out until the 1770 key level breaks, at which point I may jump back in at 1740, riding the markets back up to 1780-1810.

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JT, From experience you know you are not going to time the market perfectly every trade. We only have 1 transaction a month to enter the market unless you enter the first part of the month invested, which will allow you to get out and then back in. Since we have such restriction with TSP my strategy is like yours. I like to be invested going into the month. Your charts and knowledge of the market are great and if you stick to your strategy, you will come out on top. I'm hoping for a VERA/VSIP offer this year. If I am offered one I will roll my money out of TSP where I will have unlimited IFT's. Using your stategy can make you big money when we have volitility in the market. I even did great with TSP when we had unlimited trades. I feel that we will have a short term bounce unless there is more problems in the EM. I am ready to exit if that occurs. Another negative to the TSP is you get the end of trading day entry and exit prices. Best of luck to those that are in equities.