August was a relatively quiet month, marked by just a couple of days of significant volatility. As the month comes to a close, most markets are nearly at the same levels they were at the beginning. However, there have been some notable shifts.
In line with my previous reports, I executed a few trades this month but remained relatively inactive. August is typically not the best month for trading, especially with the looming uncertainty of an upcoming American Presidential election.
I experienced a small loss on a EUR/USD short, but I managed to acquire some very cheap Bitcoin during a brief market dip. Additionally, I have a few commodity positions from two weeks ago that are showing a decent profit, especially the non-ferrous metals, which I might look to bank.
My outlook was initially bullish on the dollar, expecting it to strengthen with Trump’s potential re-election. I held my short position at 1.0940 for several months, anticipating a favourable move. However, when Biden stepped down and Kamala Harris emerged as the nominee, the landscape changed. Whether Trump wins or not, I’m not one to hold onto a position when the fundamental or technical outlook shifts. I had a stop-loss in place at a level I was comfortable with, and so I let the position run until it was triggered.
In the days leading up to the stop being hit, there were opportunities to exit the trade at nearly break-even. However, experience has taught me that knee-jerk reactions can be costly, as markets often reverse just after a panic-driven exit.
Losses are a part of trading that few people discuss openly, preferring to present themselves as infallible. However, every loss is an opportunity to refine strategies. No two traders employ the same methods, and I regularly adjust my approach depending on the market conditions and time horizon.
For short-term trades, spanning a few days to a week, I’m comfortable entering and exiting the market frequently. For longer-term investments, lasting weeks or months, I often scale into and out of positions. (For those unfamiliar, this means buying more as prices decrease and selling more as prices increase.) However, I avoid holding onto assets indefinitely unless they are physical and serve as a hedge against political or economic turmoil, like my physical gold position, which I’ve held for three years.
While I have been fortunate to pick up some Bitcoin during its recent sharp decline, I don’t consider it a true hedge or long-term insurance. This might not sit well with crypto enthusiasts and HODLers, but as someone from the old school, I believe gold’s value lies in its historic use for trade and for bartering. BTC simply doesn’t have the same history. Moreover, I remain cautious about crypto, especially now that major institutions and governments have become more involved. I’ll sell my crypto if it generates a significant profit or offload it if it falls too far below my purchase price.
Ultimately, my goal isn’t to be right on every trade; it’s to be profitable each year. If that means cutting losses on trades that aren’t performing as expected, I’m prepared to do so without hesitation. Every trade I enter has a predefined stop-loss level, and I never move it further from my entry point, regardless of market news.
If you trade without a stop, you’re not trading with a strategy—you’re trading with your ego. Moreover, if someone claims they’ve never lost on a trade, they’re either new to the game and lucky, or they’re not being truthful. Unfortunately, this kind of bravado is all too common in the world of social media.
For those serious about their trading future, managing losses is essential. I always tell new investors that the best time to manage your loss is when you place your stop-loss order as you enter the trade, and if it gets hit, don’t take it personal, it’s just part of a very long, hopefully successful, journey.
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