Saturday, December 09, 2006

Risk Aversion

Seems I've become very risk averse. That's why I set such a tight stop yesterday morning. But that resulted in me losing money on a day when I had predicted the market direction correctly and should have been making money. I thought about getting short around lunchtime. But was scared the market would run up again. It didn't. The market fell more in the afternoon. I'm still out of the market this morning and am watching the big employment reported. My guess was the market would move up in reaction. So far it has, but I didn't place a trade. Maybe there are times when you should just take a break from trading, like from all things. I'll think about getting into the market again next week (of course I am always 100% invested in a mix of stocks, bonds, funds etc., I am talking about short-term trading. Today is the last class of this semester. I've set my schedule for next semester to make it easier for me to trade. Teaching 4 days a week from 12-2. Plan on heavy market data days to get to campus fairly early and watch the pre-market, market, prepare class etc. Major action in terms of setting a direction in the market tends to be over by 11am I find... setting a stop after that is a lot safer than before 10am which is when my first class is at the moment.

The model trend should remain down over the weekend even if today is something of a rebound day. It is too early to tell if the initial uptrend will hold. Bonds are down and the dollar and stocks are up at this point. As often is the case, it is hard to see what in the report generated the spike in interest rates.


Now stocks are down, the dollar is down, and bonds are off a little. Glad I didn't put a long trade on.


Got back from class and NDX is up 20+ points! Now the long trade is looking very good.... glad I'm just not trading :) Bonds are off quite a bit and the US Dollar is rallying strongly.

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