BE PREPARED and BE DISCIPLINED
Two unusual events took place in the last couple of weeks. One was the highly unusual formation of a hurricane in the Atlantic Ocean 6 months before the start of hurricane season. It was not since 1938 that meteorologists have witnessed such an event, before Hiroshima, the Vietnam War, before computers and space walks. The other event that took place was another type of storm. In the first 10 days of the year, US stocks saw the worse start to a calendar year ever.
Surviving one is pretty much the same as surviving the other.
First, educate yourself. Always, always, always be prepared. Education doesn't stop at the last book you read or last weeks charts. Come into the day prepared with your forecast of what you believe to be the most likely scenario. But, like a hurricane, have several plans in case your forecast in wrong. You don't want to be the person left on the rooftop or sleeping in the Superdome. Don't assume anything. What the market looks like at 6AM, 8AM or 9:30AM, isn't going to tell you what it will look like at 4PM.
And now that you have come into the day prepared, prepare to be disciplined. If the storm isn't unfolding as you had planned, get out. Get out of New Orleans or get out of your trade whether it be long or short. Watch your levels, your pivots and the technicals that you have already charted. Never get into a trade without having a plan. Know why are you getting in and have your exit plan before you enter the trade.
Never assume another storm isn't going to hit the market tomorrow. Some storms are going to be category 5 and others will dissipate without ever touching land.
I pause to remember my youngest brother, Patrick, who would have turned 49 today. #heavenssweetestangel
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