Sunday, April 5, 2009

Market has caught up with us

In the last 4 weeks the market had an unprecedented climb. I bet the market has beat everyone who was not 100+% long or who was short. My own performance vis-a-vis market since the bottom is negative 10% although my portfolio since 2/27 is +10% when compared to sp500 all of which can be attributed to the good fortune of shorting the market before this run and using 2x leverage on the long side which made the loss also 2x when I did go short. Ever since I started to write this blog I have not practiced patience. I felt pressure to always be either long or short. Patience is very difficult to have when you are trading a market, especially when you have just beaten the market handily. That is why people tend to lose to the market almost all the time. Current status: The market is currently in a non-directional phase with a slight bias to the upside and a 50day simple moving average support. The upside is limited by an overhanging resistance not far from the current position and a lack luster volume on the up days. So, if I tried to chase the market on the long side, there would be considerable risk for a limited return. The risk/reward factor is not in my favor as far as I see. Although fear of missing on the run is always at the back of my mind if not front and center and the urge to chase the rising prices is strong, I will try to be patient and stay on the sidelines for now. Trading is a lot like farming: when you look at fruits on a tree it is tempting to pluck them for a quick profit, but you have to be patient if you want the fruit to ripen, and everyday you wait, continuing to wait gets that much tougher.

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