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Why I Sold My Dow Position Earlier Today


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    It's time for some gin, lemonade and calculus !! I have only slept for 1.5 hours,  ( if that ) in the last 24 hours. 

         Nah , I didn't have a party last night!  It's more of a function of tinkering with my analytical tools , plus we got a-lot going on at the office atm.   New systems installed   today. Therefore,  a-lot of skills need relearning. Result ? Chaos. Didn't get to eat the Chinese I saved from the prior nights meal for lunch !  It wasn't all bad. Big-Bossman came down  to the pharmacy and we had a good laugh. I like this man. He tells you what he requires off you and provides the support and tools to get it done...... Sexy. Effing. ****.    

       Anyway we are here to talk about the #DOW. What a drop eh ? When I refreshed it this morning ( now yesterday)  whist listening to fire flame  . 

I noticed a change in the minute by minute cadence, of it's returns with respect to where they settled , when compared within plus or minus one standard deviation....... And...... me no likey.  See for yourself. ( time stamp highlighted) 

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   The bottom= price chart green and red bars are +-1 standard deviations, the black line on the top chart is the .....umm.... lets call it the " volatility error calculation " Forgive me I haven't got the foggiest idea of what to call this thing seeing as  it didn't exist until i made it up in my head after a few months of consuming copious quantities of caffeinated products and many sleepless nights,  trying to teach myself a different way to think about complex systems of which no one really has a clue about . Bar "economists". .....Of-course.

 It's just a visualisation tool I use as a way to time and refine my trade idea executions. The idea behind this tool is based on the relationship between price and vol.  Price up , vol down. As the error expands / rises higher prices tend to come down and vice versa. In normal circumstances a "range bound volatility error"  is common. However, I noticed the error kept getting larger and larger and larger.  And for anyone who has studied or not studied volatility regime shifts, vol has different regimes ( short term / episodic  vs  longer term/persistent/ trending)  these shifts happen in short time frames and are responsible for significant market moves. vThey are also  ones you do not want to be on the wrong side of ( remember my portfolio was on the receiving end of a Mike Tyson-level punch in Q1  2021 when I thought this endeavour was a cake walk😆  oh to be young and silly....

 Any way, from my observations, rising vol ( rapidly falling error spreads or increasingly negative spreads  presage  drawback in prices.. FACT....... No no no no no I didn't make this up. The data is freely available and  you can do this analysis yourself.  When I run the calculations and chart the output thats what I have consistently observed. I saw  this occurring  in multiple time frames in sort of a " fractal cascade" . So I got out. Thankfully it was the right decision to make.  Not bad for a self taught  non finance educated pharmacist ehhh ???  

Thats it folks. Tired. Off to bed. 

 

 

Edited by Rintel
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Turns out that was the right call....... No need to be distracted by headlines.... its all blah blah blah.... a good trading process helps prevent tears.... PS my trading account is SUB £1K . This is how you take on the market.... by not losing money when everyone else is. 

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