The general markets and crude have been trading in tandem lately. With that in mind, crude has had a strong run and is attempting to stay on the right side of resistance while the SPX (shown below) was rejected at resistance earlier in the week. It’s now stuck between support and resistance. I know that after today’s big rally it’s easy to say that I was wrong to be short going into today, and that I was probably wrong to add to my shorts near the close today. But it’s certainly not out of the question for these markets to reverse here. I have my system and while today wasn’t exactly a walk in the park sitting through a big rally, my signals remain bearish and I’ll trade accordingly.
I did sell some puts against one of my short positions today to take in some premium in the event that I’m wrong. If the market tanks tomorrow and I get taken out of my position, I still have other shorts to capitalize off of (by the way I added EWC SPY short). Once you take a position it’s important to keep your emotions in check during days like today.
If you are in a position that you feel 100% certain you know it’s going to make you money you should sell right now. Trading isn’t about being comfortable. It’s about managing risk and playing the odds you’ve determined give you the best shot of a profitable trade. If I’m wrong I’ll move on and look for the next set up.
“Winning traders make money by consistently exploiting irrational behavior patters of other traders.” ~Michael Covel