The Market and Us

Do you know this first line of the song of Queen? Every section in this article remind me of this quote, so find out: Is this the real life or is this just fantasy?

Market Ideas

Market moved in the way of my expectation (c) of last week: A bounce on the box to the top of the channel and now it looks like we’re on our way to the bottom of the monthly channel at around 2800.

Although the moving averages are in the middle, my expectation for the next week is simple:
Down to 2800.

What do you think? Is it unreal that the markets made this strong bullish run from the lows over the last 3 months. Is this the real life or is it just the fantasy of the FED and ECB …?

Because it’s been a while since I showed you this monthly channel I am speaking about in almost every article and because it’s the same period of time I used in the Portfolio Talk for my changed position, take a look at the daily chart of ES from 2017 until now:

On the one hand you can clearly see this monthly channel and on the other hand it’s not difficult to recognize that markets are ranging for a long time but we have the opposite of compression.
And after expansion there will follow compression. So, with this idea we will see more boring days the next months.

Or the waves will be bigger and it’s more like an expanding wedge, so we’ll not leave the range soon but with nice big trending periods.

Both situations will reduce the returns for long term positions. Therefore I can tell you that I am happy that most of you and me are trading long term, swings and intraday.

Portfolio Talk

My old friend – an experiment

This week I decided to sell about 50% of my last running partial of a stock I bought years ago – in 2017: EDIT.

I bought this healthcare stock in 2017 as a risky position to let it run until the first research results will be produced. My plan was to risk an amount of money to either get really high profits or lose my investment.

Editas Medicine, Inc. was only at the beginning of research when I bought it. It was news driven.

After my orders were filled I set my target orders in 3 steps. As you can see above they were all 3 reached. The last partial I decided to let run.

But after the many news of 2017 broke down to just a few ones, price moved sideways, slowly reaching the area of the all time low.

After the last break above failed and led to a strong move to the downside and this level around the upper trend line was reached again last week but the markets seem to more and more start the next leg to the downside, I decided to take again some profits of my last partial. And it’s still no small rest! 🙂

Overall EDIT produced really good profits (= real life) although the thousands of dollars (= fantasy) I expected first are not reached yet. But let’s see where I will exit the last part of my last partial. 😉

Additional note: What I do learn from experiences like that is: Even when you take a risky trade, as long as you have a good plan, you’ll succeed most of the time!

Futures Experiences

I will start with a question of one of my readers from Australia:

“You mentioned as +15$ in profit when trading. Why so low? I once traded 1 contract and got 90$.”

You are right. That’s far too low. And I am not really understanding the reason for 100% yet. As you know as a follower of my blog that the first weeks of 2020 I made hundreds of dollars with the same product and the same number of contracts.
I’ll try to explain:

I am on my way to consistent daily profits to pay my expenses. I had around 10 or more stages where I said to myself: “Now I know how it works. Let’s go!” – and it always was much too early. Maybe many of you know this from their own trading.

At the moment I only trade the best setups I find and work on my confidence for my own trade ideas. Because the last problem was that I shifted the stop too early to take the risk out early. This led to profits around 1-2 points most of the time. But when the price was in the losing area I didn’t change my plan, so that most losers were at my initial stop loss level. And small profits with big losses are: Losing days and weeks. To solve this I recognized that I do need more confidence to let my plan run without any mind tricks.

I always thought that you will reach profitable trading by focusing on the profits. But you will not! You have to focus on the quality of your setups and not the profits.

And as soon as I reach the high quality setups I can collect the data from those trades to create my perfect fitting money management with stops and targets.

But at the moment the small profits and the losses do not come from bad trades but from bad money management or money management that does not fit to the current style. And although it’s sometimes hard to go through, deep inside I know that it’s much better for my journey to have losses with really good setups than to have big returns with bad setups. Because the last kind of trading is based mostly on luck and not on a straight plan where you know that you’ll succeed on the long run.

I hope that you understand what I mean. And I hope for myself that I can make the next steps soon to show you big numbers:

Last Week:
• Paper account: -$49.43 (2 green days, 1 break even, 2 red days)
This Month (June):
• Paper account: -$210.30
[all amounts after commissions and fees, live account still pausing]

Of course, I was also curious in finding out if my thoughts and plans are right. So, I used another paper account and traded without my strict rules, took some more risk and just traded free and for fun.
Do you want to know how much I made with this experience?

I made +$12,922 in the last week with this approach. It was the ES, so with the MES – used with the other paper account – I would have made “just” +$1,292.

Maybe I can also learn anything from this experiment? Is this the real life or is it just fantasy?

In this article I wrote a lot about my thoughts, plans and mindset. I really would like to get some feedback of you. You can write a comment or just send me a message. Please, support me and my writings here by your critical view on what I send to you!

Thanks and a wonderful week and journey!