I hate starting the new year on a losing trade.

But that’s exactly what I got today. Wasn’t necessarily a bad trade – I managed the risk like I should, noticed fairly quickly into the trade that the market wasn’t going to hold up and got out of the trade with less than half the losses than if I would have stayed in longer and ultimately let that stop-loss get hit.

I got into UPRO at 90.71, took the L at 88.88 instead of waiting until it hit my stop-loss at 86.95. Big loss? No, not even a 0.5% loss against the portfolio, but still I hate I got sucked in early on and let that market dump on me anyways. I’m still looking for a bounce, I think there’s signs of it every where and the market is hitting oversold levels that will be very difficult to sustain or even go lower from here, without a bounce first.

Despite the initial setback, it’s crucial to recognize that this kind of disciplined exit strategy is exactly what separates consistent traders from those who let emotions drive their decisions. The ego in me was telling me to “let it ride”, but the experience told me that this trade was cooked and I needed to go back to cash.

Blow to the trading ego

Always a blow to the ego too, when you get into a long position and the stock immediately reverses. That can sully up the mood at the trading desk for sure. The market has a way of humbling us, especially at the start of a new year when I’m eager to begin with a win. But trading isn’t about individual wins and losses – it comes down to the body of work achieved throughout the course of the year.

Looking at the technical setup that led to my UPRO entry: the logic behind the trade, the plan, and the reasoning wasn’t wrong. I was expecting a bounce, the market started bouncing, but the momentum simply fell apart. The oversold conditions are real right now, however, timing these bounces can be particularly tricky, especially during the first few trading sessions of the year when institutional money flows can create unexpected volatility. As a result, it can often times take a few tries to get it right.

Right now, the technical setup is still there for a bounce – this is the one I was following this morning,

In summary, while today’s trade stunk, it’s certainly not the end of the world, or even year-defining. It’s a blip on the radar. I think the market will provide another chance at this bounce here, I just have to wait for it to show itself and confirm the move on the charts. Here’s to many better trading days in the the new year!