Tensile Trading by Gatis N. Roze

Author:Gatis N. Roze
Language: eng
Format: epub
ISBN: 9781119224358
Publisher: Wiley
Published: 2016-03-15T00:00:00+00:00

FIGURE 5.1 The Sisters Strategy PerfChart

Source: Chart courtesy of StockCharts.com

This sisters strategy works not only for individual stocks but also for mutual funds and ETFs. For mutual funds, sites such as Morningstar.com offer lists of similar funds that make it relatively easy to find sister candidates. The same concept applies to ETFs. I use other comparable ETFs as sisters, and I also track the performance of the top five individual equities that constitute the ETF I own. These are essentially part of the family, and they offer unique insights into the “mother” ETF.

Experience has taught me that a stock, mutual fund, or ETF levitating by itself, independent of its sector, industry, and sister stocks, is particularly rare. This sort of low-probability occurrence does not deserve my consideration as an investor. As such, the sisters strategy as I implement it is a primary part of my routine for every trade I make—while stalking, buying, monitoring, and selling. Routines such as these make it more likely that you can execute your analysis quickly, efficiently, and—for the most part—free from any dangerous love affairs or emotional attachments to the individual equities you decide to trade. As a result, you are more likely to invest based on the balance of evidence and reality you see displayed before you, viewing the market through a wide lens that captures more of the true market landscape and not simply a snapshot of one equity.

At this point, the trading day is approximately half over. I have a firm sense of the day's market pulse and am settled into my routines. My trading journal is open and available to me to note observations I make, key relationships I notice, and money flows I witness. My objective at this point is to remain mentally flexible and open to what the markets are telling me while keeping my emotions in check and executing my methodology. At this juncture I often find myself experiencing what I call the midday pause, a point at which I stop to reflect on my motivations and objectives and ask myself why I am trading the market. This becomes another opportunity to be brutally honest with myself and stay true to my methodology as I have written it in my trading plan.

As an investor, this sort of momentary uncertainty or self‐questioning is inevitable in your trading. Anticipate it, embrace it, and cope with it. Your response to it is everything, and by calmly revisiting your own list of personal motivations, you can prevent it from becoming a disruptive force in your investing. I often take the opportunity to bring my trading journal to Starbucks, grab a cup of coffee, and take a brief step back from my immersion in the market.

For the remainder of the day, I become a juggler, keeping track of the multiple investment balls I have tossed in the air. I organize equities of interest—those that catch my eye—into one of the three categories in my stalking ChartLists, each of which is monitored according to its level of perceived urgency.

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