We are removing our stop-loss order management from our trading. Our Member’s page will be reorganized to reflect these changes. Simply put, we cannot afford to get stopped out of some well-planned trades in this highly nervous and volatile market.
We have been using stop-loss prices for almost a decade. However these days we are faced with far greater volatility than ever.
The biggest contributing factor to this volatility is extreme fear and panic stemming from memories of the dark days of the 2008 crash, especially in the latter part of 2008 and early 2009. During August and September of this year, we witnessed pure fear-selling by the average investor trying to avoid an additional 30% loss over and above what they had already lost. This is creating major price swings in normally less volatile ETFs and stocks. In addition, there can be flash crashes created by stock exchange glitches or high-frequency traders.
All this volatility creates opportunity. When we take advantage of such attractive prices in our focused ETFs, we and our subscribers cannot afford to get cashed out prematurely. We prefer to be in the driver’s seat as to when would be the right time to sell. The absolute pricing is not the only driving force in our decisions to sell.
In today’s markets there are a lot of amateur traders, hedge fund managers as well as many chartists and momentum players all trying to beat the market. They all use their technical software and charts. Many of them buy and sell by using 10 day, 50 day, and 200 day moving averages. In our experience whenever a great number of participants in the market use the same strategy, such as computer software and black box systems, the market responds in a punishing manner.
As a result we have gradually made some enhancements in our trading decision model to reflect the changes in the new trading environment. To sum this up, we will tolerate bigger swings in prices with the goal of allowing for far bigger profits with longer hold periods. More and more, our approach is to take advantage of panics and fear by flock traders, media followers, amateurs, and hedge fund guys.
The rules of engagement in the market have not changed. It is still driven by fear and greed. We intend to exploit this to the maximum.