Saturday, November 15, 2008

The Weekend Trader (Saturday Edition)

A snowball at the top of a mountain turns into an avalanche that destroys a city.

An out-of-control speeding driver skids on black ice and can't stop as he slams into the car stopped in front of him.

Through 63% of the 2001 regular season, the New England Patriots were an average team with a 5-5 record before going on to win their last nine games to win the 2001 Super Bowl.

The Dow crashes 778 points in one day which sets off a wave of worldwide panic that takes months to repair.

Momentum. It's powerful and often unpredictable. Mirriam-Webster defines it as the "strength or force gained by motion or through the development of events", and it can propel one to new heights or new depths.

And while it's still not yet time to reflect on the past 10 1/2 months, it's hard not to speak to the tsunami in which I'm currently caught. You see, I really hadn't planned on doing much in November & December as the holidays began to approach and market volatility returned to more "normal" levels ... however that's defined these days.

But then the market that keeps on giving gave again on Tuesday. And again on Thursday. Emotions continue to run rampant which continues to provide the market with highly fertile soil in which this year's Chinese Bamboo is rooted.

Perhaps Thursday was the market's final blast. One enormous clap of thunder before the storm moves on. Or maybe it was just the eye in a larger storm which is only half over.

Who knows. All I know is our job is simply to react to what is happening now and continue take the other side of emotion. When others are panicking, we're there with catchers mitts. When others "have" to cover to stop the pain (been there), we're on the other side. When others are too caught in the emotion of a short-term timeframe and as a result panic out on pullbacks in larger uptrends or downtrends (been there too), we're again there to take their trade.

And emotion is all that successful traders see when they look at charts. Forgot the algorithms, spinning doji whichamacallits, and Holy Grail labels ... the charts show the actions of people and their state of mind ... and nothing more. When I'm on my game I see it ... when I'm not, I don't. Pure and simple.

Unfortunately, the only way many traders finally "get it", is having been on the painful side time after time. And yes, I lived in that neighborhood years ago and still visit it from time to time.

Yet if you can make that first turnaround, you may find momentum as powerful on your side as it seemed when it was against you.

Personally, I would love to see a forest of Bamboos being planted and cultivated in some small part through the seeds of this blog, with many trees higher than mine.

For when I look back, that would be the greatest reward of this entire journey.

I'll post a video later today ... after I get a new cam as it seems my new PC didn't like the old one.

2 comments:

Chuck said...

Don,
I doubt my bamboo tree will ever grow as tall as yours (you have a huge headstart) but after 2 years of YM trading I have to believe the muck is being pushed aside and some sunlight is appearing.

Don Miller said...

Hi Chuck.

Good to hear. Never underestimate human potential though ... you never know.

Don