Throwing in the Towel….As a Winner!

• Posted by Greg Harmon
• on October 23rd, 2013

I was a winner today. I threw in the towel. Gave up. Cried No Mas! Yes I was a winner. You grew up being told that quitters never get anywhere in life. Just keep trying. In many aspects of life that is the story drilled into your head. Persistence pays off. And that is why so many people suck at trading. Oh, don’t get me wrong, persistence does pay off in trading. But you have to be specific about what parts of trading you keep plugging away at. Studying entries and exits and charts to understand how your stocks are moving will pay off. Keep at that part. Creating and recreating a repeatable process will get you far. Writing a plan every week or day will get you to the point of being ingrained in the fabric of your mind. So what do I mean when I say that teaching you to continue to try to persevere is wrong? When is throwing in the towel the right thing to do? When your trade hits your stop. That is what happened to me today. I have been short US Treasury Bond

exposure via a short in the ETF $TLT. This stock has been in a downtrend with interest rates in an uptrend since the Federal Reserve suggested that the might cut back on the stimulus they are providing at some point in the future. After the move lower from 124 the stock just froze. Trading between 102 and 108 for 3 months. This was limbo for me as a technical trader. The stock had just completed a bullish Butterfly Harmonic (in green) at 103.55 but there was also a bullish Shark Harmonic (orange) at 92 lower. Which would prevail? It was also at a 61.8% retracement of the move higher from February 2011. That could be causing some problem before letting it proceed to the Shark lower. My stop was chosen to be confident that the Butterfly was beating me. A stop at 108, above the 200 week Simple Moving Average (SMA) and the 20 week SMA (approximately the 100 day SMA). This would also make a second new higher high off of the bottom. A pretty solid story that I am wrong. It hit that stop today and what did I do? I bought the stock to cover the short. I threw in the towel. I won. I lost on the stock but I won because I stuck to my plan. I may still win on the trade as it was hedged with January call options. But most importantly I live to fight another day.

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