They say in trading you shouldn’t be emotional — and they’re right. However, there’s something about when you get a good zinger that makes it hard to forget. There’s such a balance between: ‘don’t be emotional’ and ‘learn from your mistakes.’
Why am I talking about this today?
Well, next week is FAANG earnings. Last year, during FAANG earnings in July, it was actually my worst week of the year. Not last quarter, and not the one before that… it was last July. But, for some reason, it still stings a bit. More than that, it makes me a little cautious ahead of FAANG earnings every single quarter — and that’s something that I want to impart to my readers.
So, why was it my worst week? Well, there are a few reasons…
First off, volatility: generally, due to the fact that Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOGL & GOOG) are the market leaders, and because they’re heavily weighted within the indexes, they move the market. In a big way. Each earnings season is different, due to expectations and reality, however, for the most part, they move the market.
Traders often ask — ‘Well, if I’m trading Adobe (ADBE) then why does it matter?’ Usually about 85% of stocks will move with the market. If, for whatever reason, AAPL earnings aren’t great, the Nasdaq is GOING to move. Then this hits your other Nasdaq positions.
Now, of course this can work in your favor. But, since this is a news-related announcement (what we call a binary event) we never know. It’s the technical analysts worst nightmare
Yes, we can go back and look at the technical pattern, and prior reports, and what the company ‘typically’ does — and make our educated opinion — which, we do. But sometimes it’s just not going to work.
The example of the last time for me, that it just did NOT work, was July 2018 on FAANG earnings week.
Normally, I’m very consistent. As traders, we will have losses. It’s part of the game. But the wins have to outweigh the losses. That week, I think everything I placed went bad. It doesn’t happen often, but when it does, it hurts.
So what did I do? Well, for one I went to Tame my Trade Monster.
What does that mean?
I went through my process that I do when I have a bad week. I outlined this in my class that I taught with John not too long ago. During this class, I went over my worst days and weeks of trading, and what I did to get past them. Taming your Trade Monster is CRITICAL to your trading success.
And while that week still stings a bit, my most important piece here is that I like to go almost flat before it now.
The market moves in a sporadic way, that can give any trader a run for their money. So, I’m going (almost) flat. I have a small position on in ETSY along with XLU… but beyond that, I’m waiting for explosive earnings moves to trade them, after the fact. I may place a few (very low risk) earnings trades next week, but beyond that, I’m waiting for a more reliable market. I’m also, Taming My Trade Monster.
What about you?
I want to know what your worst trade, or your worst week was. I also want to know how you Tamed your Trade Monster. Drop me a comment below!
Have a great three day weekend! I know I will. I’ll see ya’ll on Monday.