02/25/2021 — Singles and Doubles
Wow. It appears that the gentle posturing that started late last week has evolved into a semi-serious market correction. Just an hour ago the S&P index threatened to dip below 3800. That would have been no small feat considering that around the same time yesterday evening the futures traded over 3930 momentarily. Regardless, in 24 hours the index dropped over 3% and brought with it the return of volatility.
The move came with mixed emotions. Of course I always welcome a bit of volatility into my trading day. Without it, trading constitutes a stream of endless days spent periodically staring at screens and restraining oneself from forcing poor trades that move your risk runs in the wrong direction while doing little for your account.
On the other hand, after spending nearly two weeks watching the VIX waffle between 19 and 20, I decided that a move up to 23 this past Monday afternoon was a good enough time to dip my toes back into the soup. And I did this again on Wednesday when the market slunk lower and the VIX crowded 25. In retrospect, both of those decisions were poor. So, it stings a little to exercise so much patience and then falter during the home stretch. Ah well. Such is trading.
I did however, get to participate in the market-meltdown revelry, and I ascribe that to “dipping” my toes in and not “diving” in when the trading was mediocre. That allowed me room to participate when vol levels jumped and I watch my earlier trades turn sour. Yeah, I could have done better, but I could have done a whole lot worse by trying to force a slow market into big profits by taking foolish risks.
Maybe next time I’ll be perfectly situated to knock it out of the park, but that’s unlikely too. As I said to a fellow trader today, “I guess I should have held on a little longer and done nothing, but then again, if I never do anything, then that’s not trading at all.” Without a crystal ball, it’s tough to get it just right.
Moderation might not be sexy, but hitting singles and doubles pays, and can pay handsomely. It beats striking out chasing a shitty pitch while trying to knock it out of the park.
