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There was only one direction in which to trade S&P 500 in 2019.


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Long - buy and hold - for the entire year.  Dips clearly predicted by MA crossovers.  Upon the low of each dip the correct thing to do was to add longs.  Advanced warnings of the bottoms provided by the 5MA and turning slopes of 20 and 50.  Anyone shorting the S&P 500 in 2019 is a 'goddamned fool' trading against the trend.

Buy and hold (and adding additional longs) vs. being a muppet using one minute charts.  Which would you choose?

2019-08-29_01-22-50.thumb.jpg.f9d0aa8c9e12922997f2cb1cfd421215.jpg

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1 hour ago, dmedin said:

Long - buy and hold - for the entire year.  Dips clearly predicted by MA crossovers.  Upon the low of each dip the correct thing to do was to add longs.  Advanced warnings of the bottoms provided by the 5MA and turning slopes of 20 and 50.  Anyone shorting the S&P 500 in 2019 is a 'goddamned fool' trading against the trend.

Buy and hold (and adding additional longs) vs. being a muppet using one minute charts.  Which would you choose?

2019-08-29_01-22-50.thumb.jpg.f9d0aa8c9e12922997f2cb1cfd421215.jpg

I think you will regret.

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Hindsight is 20/20 as you said before @dmedin  So the question is, if you were going to trade the SP500 now, do you buy and hold?

Buy and hold sounds like an investment strategy to me rather than a trading strategy, albeit that as a longer term trader I do hold positions for some time if we are in a strong run.  As a swing trader, which is mostly what I am, the play was to buy after Christmas (which I did, after cashing my shorts on reversal signals) and cash out in early May (I actually cashed earlier than that, which was a mistake).  Then buy again in June and cash out and go short in July, I did the latter not the former.  If you bought the dip in June and held you would have been stopped out on the July reversal.  I have posted recently elsewhere that I went Long on the strong pull back after the reversal rally in early August and have swung successfully a few times so far and am now Long again but this is all tactical for me as I believe the odds favour an end to the Bull sooner rather than later.  Unless there is a confirmed breakout rally buy and hold will not work.  Typically traders do not buy and hold anyway.

So net, trading is not as simple as it seems in retrospect and other than when we get into long strong wave 3s or Cs (trend following territory), swing trading is a better strategy than buy and hold.  It is also worth noting that the markets tend to spend more time in consolidation phases than strong trends, hence swing trading is more often than not the right approach.  A trading strategy will have an exit as well as an entry part to it, even if this is something as simplistic as a trailing stop, which I never use myself.  In order to make a profit you have to cash out.  Buy and hold is not a trading strategy and for my money, at this part of the cycle, it is not even a credible investment strategy either.

Various market greats, such as Buffett for example, all say 2 things (they say many things but they all agree on these 2 at least):

  1. Buy low/sell high (reverse for Shorts naturally) - you have to sell to make money (outwith dividends of course)
  2. Don't lose money - this is about money management and risk management

Crack these 2 simple concepts and get control of your emotions and you can make it work.  Fall into the trap of retrospective recriminations and false lessons learned and you will not succeed. 

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2 hours ago, dendyver said:

Hi dmedin

I assume you are using simple moving averages?

Assuming you are acting on the 5 and 20 crosssovers, what is the role of the 50dma?

Did you not think to short the May correction?

 

I did think to ... but I didn't.  My approach should have been to use the daily and set the stop above the ATH, instead of fannying about with hourly and minute charts with tight stops that inevitably get taken out.

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