As I start this trading journal I should caution that I'm not yet sure what direction it might take. I don't currently have any intention of posting live trades or trading results as I am still in the midst of testing and refining a newly developed strategy that's showing some encouraging early results, but still remains very much in its infancy.
Instead, I'll just begin by sharing some of the observations I've made and the lessons I've learned over the years that I've been involved in the financial markets. And even if I'm the only one who ever reads these words, I'm confident that it will be a rewarding process. I often find it helpful to reflect, gather my thoughts, and put them into words. And if others here would like to share some of their own ideas, I'd gladly welcome them.
Entry #1 - Markets abhor complacency
Financial markets abhor complacency. They will find it, root it out, and knock it down every time. One can never know precisely when the market will choose to exact its revenge, only that it will. As a trader I consider it my professional duty and privilege to help the market perform its natural function.
A contrarian to my core, I view any discernible herd or mob behavior with both skepticism and disdain. When a new fashion trend emerges, I go out of my way to dress differently. When a popular restaurant becomes the cool new place to be, I stop going there. When the COT data shows record spec long positions in a commodity, the DSI index is showing 90% bulls, and all the knuckleheads on CNBC are saying "it can't go down," I instinctively want to be short.
This general contrarian style formed the basis of a swing trading strategy I developed many years ago. It worked pretty well for quite some time. Perhaps one of these days I'll go back to it...