I Tried To Call A Top

A few weeks ago I tried to short the entire market. It was my first time trying to call a top and it won’t be the last. I thought I had a grasp on the Fed, the price of oil, and the crash of retail. I thought is a very key word here. The market is a monster and does not care. But at least I tried and I am convinced you should not be in markets if you’re not willing to play a little hero ball here and there.

Anyways, the market trampled all over my position and here are a few things I learned from the experience:

  1. You really don’t know the stock market until you’ve tried to go against it
  2. You will never look at the stock market the same once you try to fight its natural trend
  3. It’s painful when you’re long and the market drops or corrects, but it’s even more painful when you’re short and the market continues to rip higher
  4. You are not smarter than the market
  5. Writing your ideas out first and testing them in the public domain is a great way to get feedback
  6. You need to have a grasp on earnings trends
  7. You should know the the prevailing market narratives
  8. You need to have a network of traders, investors or mentors who you can rely on for advice at any moment
  9. Always define your risk before going short
  10. Use options to go short
  11. The market does not care about your position
  12. Never short the hole in a BTFD market
  13. Don’t sell rips in uptrends
  14. Avoid confirmation bias at all costs
  15. Don’t short without knowing, at least to some degree, what your counter party is thinking and why they are taking the other side of the trade
  16. Sometimes the contrarian trade is the popular trade
  17. Not sure how many times I have to learn this, but the market has plans of its own and does not care about politics
  18. Not sure how many times I have to learn this, but the market has plans of its own and does not care about economic indicators
  19. Try to be as honest with yourself and your position as you can
  20. If you have trouble knowing when you’re wrong, you should not be in markets
  21. Review your circle of competence before putting on a trade
  22. You need to preserve your mental capital, don’t let any one trade take you down or stress you out
  23. The best way to preserve your mental capital is to define your risk before going into a trade
  24. Having fun is everything and if you’re managing your position properly, you can still have fun with the market even when it’s going against you

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Scheplick

Scheplick

1.7K Followers

I write about investing and manage my own account. I look for misunderstood companies that can be big long-term winners.