I messed up. I have been so bearish for such a long time that when the market for the first time showed weakness I let my biases that it was over overtake my risk management. In my mind at the October lows there was no way we were going to breach the SPX 2000 bulltrap, let alone tag new All Time Highs. I correctly predicted a bounce and held off at the lows, even made a little bit of money going long for a few days. We got the bounce and I prematurely hopped back on the short side. I had made more money in a week on that drop than I had ever made before in my life. I got cocky. So when we got the bounce I bought back into that devilish instrument UVXY, this instrument had made me a fortune on the drop, this time around I was going to make even more. So of course I bought more than last time, the market kept rallying and UVXY collapsing so I kept buying more and more as it dropped. Averaging down and adding to a loser, rather than cutting it immediatly as the worlds greatest traders know is paramount. So QE is finally confirmed over. This is absolutely it I thought, the market is done for Finally! What happens?... We rally even more the next day. Ok painting the tape to make people think QE was a non factor in the rally I thought. Then out of the blue midnight rolls around and BAM Bank of Japan announces surprise QE out of the blue, strengthening the USD and sending futures flying to ATH. I was fucked. Here I am with my largest position, stupidly large in one of the notoriously worst instruments in the world to be holding long for any period of time, sitting at a substantial loss... I ended up selling half and eating a $5k loss. So all that money I made in that selloff a couple weeks ago has since evaporated. I could have bought a new car with my profits I made in a week, now it looks like I'll be driving my beat up old Taurus for a while..
The lesson here is to Never Fall in love with your thesis. Never outscale risk in hopes of making more, Never 'double down' these are habits of gamblers. Cut losses immediately. If the price action does not act as you hypothesised your thesis was Wrong so GTFO Immediately!
Do I think that now is the time to load up longs? Absolutely not, but I do not know what the market is going to do. I do not know how high it will continue to go. I do not know when it will crash. I must not fool myself into thinking I do. It's good to be aware of what is going on, but central banks are blatantly manipulating the market right now and fighting them is a fruitless battle.
I remain with a bearish bias and still maintain when this QE bubble pops it will be violent and devastating to the market but the keyword is When and I simply do not know when that will be..
All you can do is manage Risk/Reward, sometimes the best thing to do is stay out of the market altogether and remain in cash if there are no favorable Risk/Reward setups.
Just remember to never fall in love with your thesis because one week you will be brilliant and the next a fool in this business. Markets are not rational and thus relying on what you deem to be 'logic' can be dangerous.
Manage Risk/Reward and if you are wrong, cut your losses quickly before they become large losses.
I made a ton of money, almost tripled my account and in two weeks lost nearly 50%. I'll make it all back and more but now I must make 100% just to reach the previous heights I had attained 2 weeks ago which is not exactly a walk in the park..
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