Mental Capital and Market Psychology

Strategy

Mental Capital – Trading TICK by TICK

After binge-watching a Netflix series, last night, I saw a tweet by HCPG regarding “trade war” fears AGAIN. When I looked I was disappointed to see we were off again, more than (-30) handles. I contemplated watching and perhaps trading with S&P500 futures moving lower.

Then reality hit me. I’ve already exhausted myself these past few weeks, so I decided against trading futures to preserve my mental capital. I went to sleep instead. This morning I see many “experienced traders” writing the same message.

Futility and Tick by Tick Trading

I view deep pullbacks on news after hours as an opportunity, not something to fear. Remember “limit down” futures the night of the recent election? Super Tuesday, November 2016, we had SPY puts. They evaporated right before our eyes by the opening bell. While I didn’t watch every minute of the overnight session, I do remember something @shadowtrader once said, paraphrasing  “pajama traders almost never get the big picture right. If they are net short or net long, look for their position/bias to reverse by the opening bell.” Watching those puts evaporate was a disappointment, but new trades always come.

One thing was and is certain in my mind at this juncture.

If the Wednesday bullish engulfing candle is to be believed we will recover Globex weakness. We are at cycle lows and should continue higher in this new up cycle. Blocks are massive at 263.60 and VBP support is where we stopped yesterday.

SPY Mental Capital

Institutions will see this as “value.” If they don’t we have a problem. It’s that simple.

Being we haven’t had a trade war since Roosevelt, it’s hard to trade from experience. Lot’s of speculation and noise to deal with today. That said, I’m thinking this dissipates sooner rather than later.

Another thing, watching futures tick by tick the night of the election in fear of the future would only have created unnecessary stress in my life. In hindsight, it’s easy to remind ourselves, 18 months later, that we are at historic highs, despite the recent “expected” correction.

Hang in there and Happy Fryday,

Vinny

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Why Cycles are Critical to Stock Trading Success

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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.