Trading Discomfort

This post sheds light on this very important subject. It does not seem to offer a feasible solution, but it at least brings up this issue. Discomfort is often a source of cognitive biases or lets these biases prevail.

Why perception is the key in trading (and in any) performance

This is a great post on New Trader U: Transform Your Market Performance With This Simple Shift.

The key points: 
- Life is a mirror that casts back to us our own reflection!
- An openness to challenge what we think we already know about the world.

So we continuously have to challenge the way we perceive say the same price action in different market circumstances. Perhaps the best way to start is developing competitive scenarios based on the same setup. The challenge is to treat those scenarios independently. In other words you have to have at least three independent mindset and you have to treat them or let the exist without influencing each other. You have to be able to thing bullish, bearish and believing that market is in a sideways mode.

Week Ahead 38

US Equities
SP500 made new high whereas NQ could not. SP500 on 4h has two pinbars that suggests an ongoing bull pressure.

The next target could be the measured move at 2560. Although the follow through of the breakout at 2490 is not particularly strong. On the other hand we are at 2500 that is technically not, but psychologically is a very important level. Should the 2500 fall, we could have a strong move up.  The 2500 level could create a bull trap ass well. Also, at the same time NQ could break the 6000. 

Sectors

XLU: retest of the breakout or a bull trap?

Bonds

Yields bounce back.

Commodities

DBC has a strong daily rejection bar of the follow through new high, though the bullish trend is still intact.

USO is at the top of a nested range.

DBA breaks the previous low.

My favorite LIT goes parabolic.

Gold

It seems it wants to retest the 1300 level.

FX 

USD Index is still at the L/T support, but more selling than buying pressure.

Week Ahead 37

SPY and QQQ: wait and see, but none of them seems to be keen to make significantly higher highs:

US 10y yields make new low:

Utilities/Discretionary rotation previous trend could resume:

Defensive real estate smoothly breaks out:

Commodities are still strong:

Agriculture commodities do not  make much out of the hurricanes:

Metals and Mining breakout rejection:

Health care regulatory worries seem to fade away:

USD shows some sign of life

As DX is around a major support level USD exhibits strong intraday reversal. Gold drops 1.10 from the high:

EUR/USD looks as if can't break the 1.2100 and is about to make a bearish engulfing on the 4h chart:

Both AUD and NZD retrace:

JPY broke the 108.00 level but might just finish the week with a daily pinbar:

The UUP doesn't really support the false breakout assumption, it looks more like a retest of the previous support.

Anyway, the false breakout trade offers a good probability vs. potential gain relationship. 

USD is at a critical level

I wrote here about potential bottoming of the USD. Now it looks that the DX might give up major resistance level. On the other hand we've seen the Trump rally making a false breakout early this year. 

The EUR is trying to break the 1.20xx level that is the 2012 July low. Aussie is making new high. CAD broke the 1.2500. JPY looks to break the 108.00. The yuan went total parabolic:

Lithium Sector Revisited

I wrote here about the LIT ETF that has made more that 50% gain since then:

There is a good article on Bloomberg about the Lithium demand. It suggests that the fundamentals are still very solid for LIT.

How Learning To Deal With a Loss

There is no doubt that my biggest psychological enemy in trading is the fear from losses. Handling losses properly could be the first step overcome this fear. 

There is a great post about the issue on www.newtraderu.com. Some key points:

"Recognizing your reactions is the easy part. The hard part is recognizing the part between the triggering event and your reaction."

"To become successful as a trader, you must put yourself into situations that will bring pain, suffering, and loss."

"So how do you stop this invisible force that seeks to protect you at the expense of financial disaster? You can’t."

"So if can’t we defeat ourselves or those defense mechanisms, what do we do? You learn to be aware. Sometimes, just being aware of what we are thinking and the feeling is enough to stop our reactions from hurting our trading. This is difficult for people to do, to be aware."