It’s Not What You Traded, It’s the Way You Traded It!

My feelings are really, really hurt. Friday’s session was no picnic for me and I experienced a classic dose of the It’s Not What You Traded, It’s the Way You Traded It. My portfolio was down -4.84%. After adding to my Finlay bond holdings, I was down 6.3%. It was déjà vu all over again. Last October? Not a time I want to relive. Talk about Halloween…

My portfolio now would put all divakind to shame. I allowed BAC, NYX, and HWD to fall back into negative territory. These were my full-time super heroes! The strange thing about this sell-off is that I see no movement into some of the safe haven type stocks, such as utilities. It was a true broad-based sell-off. No one was spared. A sense of foreboding?

I spent a good part of the weekend worrying about what to do. Rather than condemning myself excessively, though, this time, I was quick to switch gears. I’ve been through a sell-off before. I can survive another storm.

I had already started reducing my market exposure a few weeks ago by selling my KO position. I wanted to use the proceeds towards my premeditated debt obliteration objective and have successfully accomplished this.

What do I want to do with the rest of my portfolio now?

I’m going to prioritise my positions and figure out which positions I want to nurse and which positions I want to get rid of if absolutely necessary. Capital preservation is my main aim now.

BAC and HWD are still partially profitable. If I sell part of my positions now, I stand a good chance of taking a partial profit and still being able to buy back at a lower price later on.

However, the question is, just how much of a panic will investors be in? CIT has just recently filed for Chapter 11. Would there be other potentially worse news to come? Do I care? I’m not going to let last October happen again!

On the forex trading front, I got into a long GBP/USD position during my Lunchtime Fun with the Guys of London session. I was up about 11 pips on the position, but the position started quickly retracing. When it was down about 8 pips, I stopped and reversed. It would have been a good directional move, but since I had to get back to work, I had to close out the position entirely for a net 2 pip gain. The whole point of my Stop & Reverse was to reverse my loss. However, I think I might be onto something from a money management standpoint. I’d have to keep experimenting with this strategy to gauge if there’s some real long term benefit to doing the Stop & Reverse.

It did make me realise that the velocity of a move has a lot to do with probability. Something to explore!