There are several reasons that I chose not to run an open blog or trading forum on Right Side of the Chart, at least in the initial stages of building the site. However, I do enjoy discussing the markets and trading ideas, both those posted here as well as those shared by others. I welcome comments, trade ideas, articles, questions, etc.. via the Contact section of the site located under the Resources tab on the top menu of the site. Although I can’t always immediately reply to every message, I typically reply (via email) within a day or two. Many of the improvements that have been made to the site have come from feedback from the users and just wanted to thank those who have passed along suggestions.
With that being said, I often use some of the questions regarding a specific trade or my thoughts on the market for the basis for a new post or update to an existing trade idea. Today I’ve received multiple questions regarding my thoughts on some of the existing short trades and whether or not this might be a good time to add to a position. Although I often point out that adding to a short position on a bounce to resistance (or a long trade on a pullback to support) is an objective area to add, as of right now, my preference is to sit tight and wait for some type of confirmation that my current market scenario might play out. An example might be for prices to reverse soon, preferably on increased volume and impulsive selling. Some type of bearish technical signal, such as a bearish engulfing candlestick on the daily, would also help add to the bearish case and increase my confidence in my current preferred scenario. However, until such evidence and in light of the recent strong upside momentum, I’d rather wait for some half-decent confirmation of a possible near-term trend reversal before aggressively adding to my existing short positions, even if that means adding at less favorable prices than today.
Although I don’t strictly abide by this rule, many experienced traders will only add to a winning position (at less favorable prices than their original entry) and never average down on a losing trade. Again, I don’t use that as a hard rule but I will only add to a position that is down if I believe that the R/R is very favorable at the time. Right now, although I still believe that the next 10% move in the market is lower before higher, I can not state that with enough confident to aggressively add to any short positions. As things can and often do change very quickly in the world of trading and investing, I am continually evaluating both the markets and my positions and will be prepared to make any adjustments as needed.