Thursday, June 2, 2011

Perchance to sleep

5:31 am (Hawaii) I must realize this: trading the market on no sleep is a bad situation for me. In the past two weeks, my worst trades have come on no sleep, staying up into premarket at 2 am and the opening bell at 3:30 am. The winning trades have come on a few hours of sleep going into the market, or simply sleeping through part (or most) of the session. This am, I thought FAZ would be an advantageous play. It was, except when I got in at 46.40, it was fairly close to its high of the day and proceeded to drop to 45.55 or so. I sold, naturally, at 45.60, and instantly FAZ ran back to 45.45. It's all about timing, isn't it? That small trade cost me way more than I expected, $160 loss. My thesis was right; there's no way this market can support the financials. And yet, I panicked and ran for the exit at just about the worst time.

In the meantime, an even smaller trade in OWW went downward to 2.75 or so. It's currently at 2.82 and I had to remind myself of something I'd forgotten with the FAZ trade: on a decline, sell early or don't sell at all. My target on OWW is 4, and beyond that 6-7. I told myself I wouldn't sell on the downside unless it returned to yesterday's pre-close level (2.21).

My Metals list has reversed course and looks like yesterday again at 79% red and 21% green. ZSL, which I passed on early this morning, is running hard, up 4.6% to 18.56. FAZ is hovering at 46.45 and clearly has room to rise, but I'm done chasing that one. Logic is one thing, but I have to respect my own psychology, flaws and all.

DGP and the PM sector are being pummelled. DGP is at 48.01, down more than a buck. Again, the summer is when gold wavers up and down, but this position is small enough that I won't mind holding it through. On the flip side, if and when the Euro zone's fiscal crisis deepens, DGP and gold will get "bonus" moves up during a season when they normally peter out.

All in all, with the indices down fractionally and light volume, I would've been better off sleeping.

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