If there's one 'secret' to trading success, it's the ability to manage fear. There are two components to managing fear: (a) refusing to act on it (the fear of missing out on gains, the fear of losses), and (b) managing risk to avoid placing yourself in a position of fear (managing trading risk, size, and frequency). Successfully managing fear then allows you the composure to buy when others exhibit maximum fear (ie, panic).
(a) Following Wednesday's rout in global markets, additional fear played out overnight in market futures. DJIA futes were down as much as -200 points, and have now recovered to -87.
(b) INTC (Intel) has slid further to 29.50. Note that scaling in yesterday with a quarter position now allows me to consider adding on further weakness.
(c) EEM (Emerging Markets) off -0.3%. SPY (S&P500) off -0.5%. Anyone who bought last Wednesday's post-FOMC breakout (fear of missing out) is likely at the point of stopping out around here (fear of losses). In contrast, by reopening partial positions on yesterday's weakness, I'm free to either add or give the positions more time.
Ramping up position size (which increases position risk) can easily introduce fear. I plan to simply exit positions on further weakness (for a minor loss), or close positions on strength (for a minor gain). No point in 'doubling down' in this environment. Neither do I believe we bounce back quickly, so no point in hoping for more than minor gains.