CASH IS A POSITION
Here is the US Dollar Index, which has made a break out of a tight congestion area overnight. I know some very good traders that were long this who must have been stopped out by this move. To me when I look at this I see negative divergence in the momentum oscillator and a declining ADX. As a result this was not a trade on the long side I was looking at. Had we risen today, there is actually a pattern that would be bullish, but I felt the better trade was to wait for a short entry. That judgement call obviously saved me some money. I have always maintained in trading that CASH is actually a position. At times if the opportunities are not optimum, I prefer to stay flat and wait for what I judge to be the best trades. I really like to be in cash after taking a loss or two, which is the opposite of what most people do. The majority of people want to "get that money back." For some reason fortunately, I have never even as a beginning had that mentality.
I have a fear of the markets, and probably alot of others after the last few years now share that fear. That fear is more borne out of respect than the traditional sense of fear. I make my living from the markets, but I also know that there are not always great opportunities to do so. During periods like this I have quite a bit of money that is just sitting in cash, and that is fine with me. In the old days we would always have it in 90 day T-bills, but the rates are so low now they don't even cover the commissions, so it is not worth doing it anymore. I had the chart of the Dollar above also kind of as a play on the topic of the day.
We are having breakouts in the currencies today, most notably the EURO and the Aussie. Of course since it is the same trade, the ES is also trading up sharply today. I mentioned yesterday that I was looking at the long side but I thought we would trade sideways for a couple of days. It looks like I was half right and half wrong. However, one thing I am constantly reminded of is the following. When I trade my opinions and not my patterns, I do not do well overall. I may have runs where I hit some but in the end I ultimately get myself into trouble. This market has launched as I thought it was going to but the pattern was just not what I look for so I missed it.
SO BE IT
I am never going to catch every move and do not even try to. I just try and focus on being correct at the times when I do trade. I have missed a big move here and also in Bonds where I was waiting one more day to go back in, and POOF the market left town without me. I will sit tight and wait for something that meets my rules and work on my train wreck of a golf swing in the meantime.