From the journal (Hawaii time zone):1:41 pm Normal thinking does not apply to VXX, which moves differently from all other stocks, including FAZ. Hard to believe, considering how quickly FAZ can move. I made two positive trades on FAZ early in the week, then another yesterday/today. VXX, though was a losing trade four out of five times; paper profits turned to losers three of those trades. Overall, I broke even on the VXXen, including today's profitable, yet disappointing trade.
VXX will wander in a range of 30 cents to a dollar, driven very much by something that has alien and mechanical features. There's no way a human gets in the way at all, it seems. That's why, on a normal momentum move, it will reach back and grab any bid or ask within that big range. The exception is when something happens drastically and/or dramatically in the market and it really moves in just one direction. That's when it becomes almost pure momentum in one direction. That's when it's first come, first served.
Best to be highly selective when using VXX. Grab while hot and one-directional or while it is very cold and in a "limited" range. Also, best to take any profit at all times when momentum slows a little. It's like Doctor Octopus with long, chrome arms, reach forward, sideways and backwards to snare anything in site out of pure predatory instincts. But it is a machine. A deadly machine.
When I watched it in that final hour before the bell, VXX hovered below 33 and I would not reach in. Only when it got to 34.20 or so did I want in, and it was too hard. Kept inching up and never stopped until 34.88. My entry limit was 34.80. I almost cancelled; that intuitive thought was best, but I didn't cancel.
Once my buy order was met, VXX went off a cliff straight to 34.60 within seconds. It was like a reverse shake-out of weak hands. They took out all the breakout buyers and buried us; I used a rare stop-loss sell and got stopped out at 33.41. Went down to 33.01, then back up slowly to 33.80, then tanked immediately to the 33.60s before closing at 33.31.
But that wasn't the worst mistake of the day. Even selling VXX and FAZ early in the day (four minutes too late) wasn't the worst. The worst was not buying AAPL (or anything long) at the opening bell. I had the cash. I was just distracted and not focused on the long side at all. That's when AAPL was 131-133, and I blew it.
AAPL struggled going into the close, but bears crapped out and the squeeze pushed the market up. AAPL closed at 242.32.
FAS is the other one I missed. Finished up 10.18%. I KNEW THE MARKET WOULD BOUNCE, but when? I didn't prepare and strategize for it whatsoever. Maybe it's just tough to be bearish and bullish simultaneously. Maybe if I had gameplanned like I normally do, I'd be sitting long AAPL again and feel better going into the weekend. Psychology. It matters.
Post-mortem: For most of the week, FAZ & VXX were premiere athletes. Strangely enough, even the simplest move: buy Monday, sell Friday (morning) was highly profitable.
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