One thing I like to do and new traders should do this too. Is go over your losing trades, it will really help you see why you were wrong and how to avoid it next time.
Let's be honest, being long has been the money trade so far and going short has given you lots of pain. Why wasn't I seeing it, is what I am asking myself.
I will admit I had my bear goggles on and because of this I failed to ride this rally when market was giving bullish signals the entire time.
Each day I saw a candle stick that was "bearish", each day I saw a reason to short. Yet the next day the market proves me wrong and I keep trading against the trend.
So let's look at what signals the market was giving us to go long.
First looking at the daily chart, the market makes an Inverted Hammer after a downtrend. This should have been the first indicator to either exit your shorts or go long. The next day we gap up and break the trendline down(I apologize for that sloppy trendline). This is a bullish move for the market. The next day we have a doji, I start saying "it a dumpster baby" and the market could reverse. Yet the next day, the market gives us our third indicator, the market breaks through the 20MA. The rally could also been see on the 60 Day 60 Min chart.
The market fails to make a lower low, indicator one. The next day we gap up, indicator two. Then we have two bull flags that make up this rally, four and five.
The signals were there, I was blinded by bearish view. In the book "The Art of the Trade", Jankovsky talks about finding the "fish" in the market, looking to see what the loser is doing and doing the opposite. The past couple of days, the Loser is shorting the market.
So on a TA analysis, that is why the market was sending us bullish signals.
Fundamentally, we almost had a bank nationalized what else could scare the market this time. Most of the bad news on financial stocks seems to be baked in. Not that there isn't more to come.
But to keep an even keel, and not put on my bull goggles. This rally has been on light volume and is very overbought. Also, we could be making a bear flag on the daily, but I give this pattern a chance of 5%, due to that fact it would take the SPY to around 50. I don't see that happen.
So for new traders out there, look at the trades you were making and why they were wrong. The return you will get by doing this will negate any loses you took on the trade.
