Thursday, February 24, 2011

Shit Happens...

There's nowhere in the official "Trader's Rule Book" that says that even if you follow the rules you won't get smoked every now and again. Anyone who doesn't believe that can come and take a look at my trading book today.

I somehow found a way to lose almost 3% of my portfolio today - the single worst trading day I've had in over 6 months - on a day where the markets were basically flat. This brings my P&L back to flat for the month so far. My streak of 9 consecutive positive months is also now at risk.

Scrolling down my P&L speadsheet all I see is red. With one exception, none of my positions represent more than 5% of my total portfolio. I have some long positions, some short positions, some gold, some natgas, some tech, some energy, some currency and some cash. Some of these are trading positions, and some are longer-term holds. But just about every one of them found a way to lose 2-5% today. The way the day went, I wouldn't have been surprised to see my cash losing 3% as well.

I haven't done much in the way of trading this week. A couple small trades here and there. And for the first 2 trading days of the week the portfolio worked well enough to post small gains each day. Today, for some reason, everything fell apart.

Sometimes you just have to throw your hands up in the air and say, "Shit Happens".

I reacted the only way I could. I covered some positions, and scaled back on others. I have been long gold and short EUR/USD for a while now (effectively net long gold in euros). The gains in my gold position have been pretty much offset by losses in EUR/USD. Today I covered the EUR/USD short but stayed long gold. I also initiated a short bond position via long $TBT @ 20.29. So if gold continues to fall tomorrow and bonds rally expect to be reading "Shit Happens, Part 2" tomorrow.

Time for another drink...

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