Sometimes Losing Less is the Smartest Move

Options Traders frequently find themselves in heavily drawn down trades near their maximum losses.

Often it’s a good idea to restructure the trade at that point, to create a realistic opportunity for a significant reduction in a loss as opposed to an improbable win.

In this video, we review an example of such a situation and the proper way to think through a realistic loss reduction goal.


SMB Training Blog

Airline losing a bag grows or shrinks the GDP?

On a recent trip to Beaver Creek, Colorado, I unwisely chose to fly to EGE, connecting in Denver, instead of flying to Denver, spending the night at 5,000′, and driving a rental car west to Beaver Creek (actually Arrowhead, at 7,400′).

United Airlines was kind enough to stamp my bag with “VIP” but then they proceeded to leave it in Denver during my two-hour layover. I waited for about 30 minutes after the flight had landed before waiting 15 minutes to talk to the baggage claim lady. The bag made it onto the next flight from DEN to EGE and was then driven to my friend’s apartment. I was reunited with my bag approximately 8 hours after the flight landed. I gave the driver a $ 20 trip (“this should cover half of your next Starbucks”).

The question for readers is did this grow, shrink, or leave the GDP unchanged compared to if United had delivered the bag on the carousel?

Arguments for growth: United paid the courier to deliver the bag. He also got $ 20 to spend at Starbucks or elsewhere. The courier company will purchase a new van slightly sooner because they had to drive a little bit extra. The courier company bought more gasoline than they would have. The courier delivered the bag at 8:08 pm, a time at which he might have been relaxing at home rather than working at any job.

Arguments for shrinkage: I had my laptop with me and worked that afternoon while adjusting (poorly) to the altitude. So I did 30 minutes less work while waiting around at the baggage claim. Maybe the courier could have taken a more productive job during the same hours if airlines weren’t constantly losing bags.

Readers: What’s the right answer? GDP grew as a result of this lost bag? It stayed the same? It shrunk?

[Note that the Denver airport was originally supposed to run with an automated baggage handling system. This became one of the world’s most notorious software and systems failures and probably wasted close to $ 1 billion. See this MIT study. Also this New York Times article.]

Philip Greenspun’s Weblog

Americans terrified of losing government regulations that have yet to take effect

A few weeks ago I wrote about Americans who are terrified that they can’t live without relatively new government handouts: End-of-Obamacare fears a good illustration of why government has to grow?

Here in Beaver Creek, Colorado, a subset of the millionaires can fairly be characterized as Millionaires for Obama. Recent conversations have included them expressing their horror, after reading the New York Times, that coal companies will now be able to dump unprecedented amounts of filth into America’s rivers. An example article seems to be “Republicans Move to Block Rule on Coal Mining Near Streams”. If you read the article carefully and also follow a link to the Federal Register you can learn that this rule was promulgated in December 2016 and never took effect. You would also learn that it was Congress rather than the Trumpenfuhrer who killed it. However, the Democrats here in Beaver Creek had the idea that a regulation that had been in place for decades had been revoked by King Donald I. They were preparing to find a whole new world of pollution any time that they visited the Midwest (i.e., never).

Regarding something that Trump actually did, the visiting and local Democrats had read “Trump Rescinds Rules on Bathrooms for Transgender Students” and concluded that we were in a whole new and unfamiliar world of hatred. The Times story was in the news section, not the editorial one, but the journalists give a misleading impression that the feds telling local school districts how to run their bathrooms was the policy throughout the Obama Administration (8 years) when in fact it was closer to 8 months. For most of the Obama Administration, and indeed at any time from 1635 through 2015, a public school could do whatever they thought best.

For both the coal mining/river and bathroom policy issues the country would simply be living under the regulations that prevailed during 2010 when Obama was in the White House and Democrats controlled Congress. Yet the idea of returning to a slightly less regulated time filled at least some wealthy and degreed Americans with terror.

Philip Greenspun’s Weblog

Five things profitable traders do that losing traders don’t

Ever wonder what is going on the minds of professional consistently profitable traders?

An extremely important part of our firm’s success is modeling what top traders have in common.

These common characteristics and practices are things that you can learn from and apply to your trading.

This Thursday at 4:15 pm (NYC), Mike Bellafiore will be teaching a free online class: “Five things profitable traders do that losing traders don’t”

In this free online class, you will learn:

The growth mindset essential for reaching your trading potential
The importance of stock selection for winning traders
Examples of successful Read more […]
SMB Capital – Trading Education

NASDAQ Losing Support

Since Apple decided it would be a great idea to try to dodge U.S. taxes, they’re now getting pummeled by European tax authorities many years later. In other words, the money that might have flowed to our own country is instead going to Europe. Well done, Apple. You can take that smug, stupid “Designed in California” […]
Slope of Hope

Weekly losing streak continues…

Stocks fell for a 3rd consecutive week over concerns in the retail sector, commodity price volatility, and a stronger dollar weighing down large cap international stocks. The news in retail seems to be providing further evidence of the change to on-line buying patterns of US consumers as the Commerce Department reported an increase of 1.3% in overall retail sales while department stores reported dismal first quarter sales figures and lower forward guidance. Macy’s (M), Kohl’s (KSS) and Nordstrom (JWN) all disappointed investors, with Macy’s dropping 17%!

Macy's Ord

Source: OptionsHouse

This week kicks off with Money Managers filing their required 13F forms showing the world their positions as of the end of the 1st quarter. The headliner was Warren Buffett disclosing that he was upping his investments in Apple (AAPL) and IBM (IBM). Apple has responded right out of the gate Monday morning, bouncing off a low close ($ 90.52) not seen since May of 2014! While the Oracle of Omaha seems to have the investing masses attention today, many other prominent money managers slashed their positions in the tech giant. Here is a short recap of a few of the publicly announced portfolio moves:

  • David Tepper’s Appaloosa Management sold its entire stake AAPL and slashed its investment in GM by about 80%. Its largest new holdings include FB, BAC, and energy-pipeline operators ETP and WPZ.
  • Ray Dalio’s Bridgewater sold all holdings in AMZN, KO, and GPS. It also cut its holdings in AAPL by more than 60%, in PEP by about 80%, and in FB by nearly 50%. At the same time, it tripled its stake in INTC while reporting new investments in GOOGL, MCD, UPS, DAL, and DHI.
  • Dan Loeb’s Third Point initiated a new position in GOOGL by buying more than half a million shares, as well as investing in VMW, FOXA, and LOW. It sold all positions in EBAY, MS, and ACE while slashing more than half of its stakes in AGN and AMGN.
  • Nelson Peltz’s Trian, in addition to selling its stake in PEP as noted here Friday, is cutting its holdings in GE. The firm also increased investments in BK, PNR, DD, and SYY.

Other notable items this week that traders will focus on include:

Tuesday: Labor Department releases the consumer price index for April. Expectation is for a 0.4% rise up from 0.1% in March.
Wednesday: Minutes from the last FOMC meeting released showing additional detail from the governors’ discussions
Cisco Systems (CSCO) releases earnings
Thursday: Philly Fed shows manufacturing activity
Walmart (WMT) and Gap Stores (GPS) release earnings – expectations are pretty low after last week’s retail debacle

With earnings season pretty much behind us, traders will be focused on other factors to determine direction. Dollar strength or weakness will drive commodity prices which could drive the markets as well. So far, the sell in May old adage has been working, the SPX just closed below the 50 day moving average – it will be interesting to see if that trend continues.

S&P 500 Index

Source: OptionsHouse


OptionsHouse Blog – OptionsHouse

Losing Money On A Trade Is Not The Same As Failing

In our SMBU Daily Video, Seth Freudberg discusses why losses are inevitable in this kind of market.

Options traders struggle in volatile markets like we are experiencing.
It’s important to keep a proper perspective in these circumstances–losing on trades is expected–as long as you stayed disciplined through the trading process then you didn’t fail–you simply lost money on a trade.

We hope this video helps you improve your trading skills.

no relevant positions

 

 

  Read more […]
SMB Capital – Trading Education

Losing Smaller

In our SMBU Daily Video, learn why losing smaller is just as important as winning big on a trade.

In this video from Seth Freudberg, you will learn:

How reducing a loss can help improve your yearly returns
It’s important to control an existing loss
How losing less is exactly the same as winning more

We hope this video helps you improve your trading skills.

* no relevant positions

 

Read more […]
SMB Capital – Trading Education

Live Tonight 9 PM EST – My Top 10 Winning and Losing Trades of 2014

UPDATE- Broadcast has ended, view the video here!Tonight at 9 PM EST on my Ticker.tv channel, StockJunkie, I will be going through all my biggest winners and losers of 2014.
Original post: Live Tonight 9 PM EST – My Top 10 Winning and Losing Trades of 2014

Read the full article at StockTradingToGo.com

Read the full article at StockTradingToGo.com


Stock Trading To Go

Technical Picture – Commodities Get Crushed Extending S&P Losing Streak

The CRB commoities index DBC chart above, fell 17 pts. (the most in 2 years) almost 7% on huge volume today. No commodity escaped the selling. Gold lost $ 40 (3%) while silver lost another 10%. Crude oil fell $ 12 (10%). Copper lost 4%. Part of the reason for the heavy commodity selling was a sharp rebound in the U.S. Dollar. Look at a chart of UUP and you’ll see a huge move up on massive volume. Most of the dollar strength came from a falling Euro which tumbled 2% on the ECB suggestion the next rate hike was being postponed. The breakdown in commodities (and copper in particular) is especially troubling since it suggests that the global economy is slowing. That may also explain why bonds are rallying and stocks are correcting around the globe.

Furthermore, sector rotation over the past weeks suggests a move into biotech/healthcare, consumer discretionary, and utilities, all defensive sectors, which could indicate a near-term market peak.

The S&P is still on a path of lower highs and lower lows as depicted on the 60 min. chart below. The first support level held in early trade, and a nice rally ensued. We moved to the upper channel line, consolidated and then plunged, carving out another lower low. If the S&P doesn’t turn around tomorrow, we’ll have a failed pattern IMO. Inverse H&S pattern broke out, came back for a retest and failed.

Job data tomorrow in pre-market.

The NASDAQ is holding up well so far. The SMH is still basing out, but the biggest holding in the SMH is INTC which has been vertical since reporting earnings two weeks ago. Not sure the other components of the SMH are really strong enough to propel this sector higher.


We’ve been talking about an oversold technical bounce in the $ USD for a while now, so today’s move is no surprise.

Oil prices back under $ 100.00. Smart money trade of the day was short USO because oil futures (CL_F) were bear flagging in pre-market.


Just when many thought, it couldn’t go much lower, it gaps down and rips lower on higher volume. SLV has given back three months gains in one week. Next supports are $ 33.00 and $ 30.00.

I’d like to see SLV gap well below it’s lower trend channel line and then bounce. Today’s gap down was well within the channel, so no trade. I tried some long when it capitulated into the lower channel line on a huge volume spike, but it didn’t end well. A lot of aggravation for a scratch trade.

If you’re hurting yourself trying to pick a bottom in SLV, it’s not worth it. Margin requirements are being increased frequently and every increase is another leg down. When you see a bonafide short covering rally, you’ll know it and you can jump in.

Wall St. Warrior