More hobby news

Isn’t it great that I haven’t said anything about the stock market in 16 weeks?  Well, dear reader, you sort of knew that wouldn’t last, right?

On Jan 03, when last we spoke of this, I had just realized a 4.2% gain in my imaginary hobby game.  Then I said, “we’ll take a long or a short position, whatever the market offers.”  So I started short-selling on Jan 06.  That did not go well.  On Jan 12 we hit the green line, which is just an arbitrary line-in-the-sand but still.  Then prices briefly fell, then returned to the green line again so in disgust I stopped trading at 180% short, hoping the market would calm itself down — but it didn’t.  On Jan 26 we reached new highs during what I had imagined to be a downtrend.   My rules say that’s when I should close the position at a loss.  But I didn’t.

February was unpleasant.  The market was against me and all I could do was wait, while sitting on a large short position.  As of Feb 02, I was looking at a 15% unrealized loss.  But at least the newsfeed was bearish, so maybe this will turn around.   Meanwhile, my 5-year-old “the Mob stole my inheritance” nightmare continues, with some deposition practice sessions during February.  Any day I have to talk to a lawyer is a bad day.  And that deposition still hasn’t happened.  And my hobby just wasn’t helping that month.

On Feb 21 we returned to the price-area of Jan 26 yet still I didn’t exit.  In fact, I started to feel cheeky.  The news of imminent bank failures was getting louder.  Maybe I should short some more?  So I went to 220% short on Mar 03.  Then the stock market fell for six days straight.  It was glorious!  I was gaining 2.2% for every 1% the market fell.  Mar 09, 10, and 13 were my most enjoyable days of the year so far.  What a fun game this is!  If only my inheritance were so easy.

While the blue rail-to-rail move during Mar 03–07 wasn’t *quite* strident enough to trigger my ski-slope rule, the banking news was very bearish at that time so I decided to activate ski-slope mode anyway, where I don’t give a LIMIT order at the lower blue line but instead wait 4 days and then start using the dotted blue EMA(10) line as a daily STOP price.  This often works quite well during these sudden downdrafts and would have been expected to get me out on Mar 27 with a +12.9% gain, except there was sharp updraft on Mar 21 so the STOP order triggered early and I ended up with only +9.5% gain for this 9-week swing.  Oh well.

So what happened here?  I didn’t follow my own rules, yet somehow got a profit anyway.  How did I do that?  Experience.  I’ve been trying to trade IWM since 2010.  Imagine a stupid rabbit pressing buttons at random on his trading computer.  After 13 years, his button-presses start producing profits even though he still has no idea what he is doing.  My trade went bad, but I managed to get out with a profit anyway.  That didn’t used to happen 10 years ago.  I have no idea how to teach that to others.  This whole trade seemed like a continuous fumble.

Had I followed my own rules, I would have sold on Jan 26 for a extra –4.7% loss, then for Feb 09‥Mar 03 I would have had another swing for an extra +2.4% gain, then I would have needed to realize on Mar 08 that the market was cracking and I needed to go 100% short immediately, which (if I did it) would have netted me only +5.1% on Mar 21.  So really I was better off doing it my fumbly way, which was the only way I could have found myself 200% short at the start of that downswing.

The final swing in this period began Mar 30.  Four days of shorting, then I decided not to close at the lower rail in case this was another ski-slope, but it wasn’t.  Then we just didn’t hit the lower rail for the next two days, then it’s back up for more short-selling.  Apr 19–24 were boring no-trade days, then the position closed Apr 25 with yet another +4.3% gain.  This week I expect that we’ll be continuing downward and I’ll be buying long positions on the way down, which I expect to sell at a profit during the next upturn.  Stock-trading is so easy, except when it isn’t!