More hobby news
Isn’t it great that I haven’t said anything about the stock market in 16 weeks? Well, dear reader, you sort of knew that wouldn’t last, right?
On Jan 03, when last we spoke, I had just realized a 4.2% gain in my imaginary hobby game. Then I said, “we’ll take a long or a short position, whatever the market offers.” So I started short-selling on Jan 06. That did not go well. On Jan 12 we hit the green line, which is just an arbitrary line-in-the-sand but still. Then prices briefly fell, then returned to the green line again so in disgust I stopped trading at 180% short, hoping the market would calm itself down - but it didn’t. On Jan 26 we reached new highs during what I had imagined to be a downtrend. My rules say that’s when I should close the position at a loss. But I didn’t.
February was unpleasant. The market was against me and all I could do was wait, while sitting on a large short position. As of Feb 02, I was looking at a 15% unrealized loss. But at least the newsfeed was bearish, so maybe this will turn around. Meanwhile, my 5-year-old “the Mob stole my inheritance” nightmare continues, with some deposition practice sessions during February. Any day I have to talk to a lawyer is a bad day. And that deposition still hasn’t happened. And my hobby just wasn’t helping that month.
On Feb 21 we returned to the price-area of Jan 26 yet still I didn’t exit. In fact, I started to feel cheeky. The news of imminent bank failures was getting louder. Maybe I should short some more? So I went to 220% short on Mar 03. Then the stock market fell for six days straight. It was glorious! I was gaining 2.2% for every 1% the market fell. Mar 09, 10, and 13 were my most enjoyable days of the year so far. What a fun game this is! If only my inheritance were so easy.
While the blue rail-to-rail move during Mar 03-07 wasn’t *quite* strident enough to trigger my ski-slope rule, the banking news was very bearish at that time so I decided to activate ski-slope mode anyway, where I don’t give a LIMIT order at the lower blue line but instead wait 4 days and then start using the dotted blue EMA(10) line as a daily STOP price. This often works quite well during these sudden downdrafts and would have been expected to get me out on Mar 27 with a +12.9% gain, except there was sharp updraft on Mar 21 so the STOP order triggered early and I ended up with only +9.5% gain for this 9-week swing. Oh well.
So what happened here? I didn’t follow my own rules, yet somehow got a profit anyway. How did I do that? Experience. I’ve been trying to trade IWM since 2010. Imagine a stupid rabbit pressing buttons at random on his trading computer. After 13 years, his button-presses start producing profits even though he still has no idea what he is doing. My trade went bad, but I managed to get out with a profit anyway. That didn’t used to happen 10 years ago. I have no idea how to teach that to others. This whole trade seemed like a continuous fumble.
Had I followed my own rules, I would have sold on Jan 26 for a extra -4.7% loss, then for Feb 09‥Mar 03 I would have had another swing for an extra +2.4% gain, then I would have needed to realize on Mar 08 that the market was cracking and I needed to go 100% short immediately, which (if I did it) would have netted me only +5.1% on Mar 21. So really I was better off doing it my fumbly way, which was the only way I could have found myself 200% short at the start of that downswing.
The final swing in this period began Mar 30. Four days of shorting, then I decided not to close at the lower rail in case this was another ski-slope, but it wasn’t. Then we just didn’t hit the lower rail for the next two days, then it’s back up for more short-selling. Apr 19-24 were boring no-trade days, then the position closed Apr 25 with yet another +4.3% gain. This week I expect that we’ll be continuing downward and I’ll be buying long positions on the way down, which I expect to sell at a profit during the next upturn. Stock-trading is so easy, except when it isn’t!