NYB - loss

The markets are in a state of consolidation right now, which can lead to some confusion.

Here's a chart of SPY showing the current market:

You can see that after making a new relative high, there was a pullback, then sideways movement. Right now, there's no reason for me to enter any new trades - because there's no edge. I don't know which way the market is going to go, but until I do, then I'm not placing any new trades.

Referring again to the chart above, I put on green lines above and below the consolidation zone. I'll look for a closing price for 2 CONSECUTIVE DAYS outside of the consolidation zone before entering a new trade. If the price goes above the zone, then I'll get into new bullish trades, if price goes below the zone, then I'll get into new bearish trades.

It's obvious why I'd take bullish trades - we're in an uptrend. However, not so obvious as to why a bearish trade. I would go bearish because we would have put in a lower high and a lower low. Always think in terms of highs and lows in order to understand market direction.

During this consolidation period, my NYB trade went against me and closed for 2 consecutive days into my stop zone.

Here's the chart:

I originally bought this option for $1.15 and sold it today for $0.35 for an $0.85 loss resulting in a ROI of (69%).

Nothing bad here, simply a loss. It's all part of the system. And how do we treat a loss? Same as we treat a win, we log it, learn anything from it that we can, and look for the next trade.

Now we wait until the market decides which way it would like to go - until then

HAPPY FAT TUESDAY!