3/25 Daily Commentary

I did not go short crude again.  I cancelled the order because at that time the stock market was closing in on critical support:

1.2% below this M/A at 10,835 is 10,705.  Give it 10 points cushion to 10,695.  If the stock market breaks this level it will cancel the restriction to short due to the I1 uptrend.  I do not expect this to happen.  Since short crude was a way for me to put on a synthetic short stocks position, shorting crude at stock market support seemed like a stupid thing to do.  DTO closed near where my fill would have been anyway.  Made 50 ticks on DTO earlier.

Sitting on my hands waiting for I1 to peak seems unproductive to the untrained eye.  Not much action.  Not much research into individual stocks, flipping them throughout the day.

Trading is a learned behavior.  The tenets of trading success (in my mind) are:

1)  Have a way to look at markets that takes you far from the normal perspective.  The more unique your perspective the more likely your long-term success.  Independence in research and in strategy are key. The primary reason for this is that your opinion will not be a conscious or subconscious acceptance of the majority of analysts (technical, fundamental, talking heads, whatever, we pick up opinion from the media).

2)  Discipline.  Iron discipline in entry will allow a trader not only to wait for the opportunity but will allow him to stay with a trade.  Staying with a trade requires discipline but truly separates success from failure. When I1 is not on a signal the number of markets I enter is far less.  Don't look for action!

3)  Learn to enjoy selling weakness and buying strength.  This took decades for me to learn because to me it seemed counter-intuitive.  Earlier in my trading career I would look for top tick, which itself was a gambling mentality.  Now I use breaks of moving averages as entry and exit points.  I never get in near the top or bottom.  The only exception is when I1 is top or bottom signal day.  Then I can go in near the close either choosing a logical point or market on close.

4)  Prudent money management is a must, limiting exposure of any trade or markets with high correlation.  I am sure if you look at the Trading History you will think I can never make any real money.  2.5% capital, 1.5% capital, etc.  I do when I catch a trend and add to the position.

5)  Have something else to do when your system tells you to sit on your hands.  This can include market research, hobbies, working on the ranch, whatever gets you away from looking at your trading platform.  The tendency to jump into trades is a bad habit that must be broken.

Silver closed up a bit, the stop stays at 16.89 on hourly close basis May futures.  The following is a 90-minute chart May futures.  My stop is based on hourly but the green line approximates the hourly with a 5c leeway on a closing basis. 

So, if 16.89 is exceeded on hourly close then I will wait for 17.07, the blue line, to re-enter the short.

Crude oil top day was today, but I will wait for a stock market rally to re-enter a crude short tomorrow.