On the morning show, you may have heard me say the from “I’m liquid and I’m lovin’ it.”
It’s something that I take to heart.
And it means that at the end of every trading day, I sell all of my held shares, and I end the day completely in cash.
Why do I do this?
Well there’s a couple reasons…
For the broader markets, we’ve had an insane year.
We’re almost 30% off all-time highs of December last year, and the road downward has been completely unpredictable.
One week we’re up 10%, the next we’re down 20%. There is no rhyme or reason to trying to go long on any position in this market.
And that means both in bullish and bearish stock picks.
If this was a bear market, I would be thrilled because we could short stocks and make ourselves easy money on the way down.
Likewise, if this was a bull market like we had in 2020 – 2021, you couldn’t lose with your bullish picks.
Everything was going up.
Neither is the case this year. The market on the long term barely knows what it wants to do.
And when you get to trading individual stocks, it can get even worse.
Just look at what happened to our darling stock VERU last week…
Last Monday, the stock shot up past $15.00 and nothing could stop it.
But if you were going long on the stock and held it through Wednesday, you were awoken with a horrible surprise…
The stock went as low as $5.00 pre-market and currently sits at just above $6.25.
Think about what would have happened if you played this trade like anything else.
If you had bought for instance 1000 shares of VERU, you would have lost nearly $10,000 overnight.
And if you had bought options on the stock going long, your calls would be completely worthless the next day — a 100% loss on the trade.
VWAP can’t help you when the market is closed.
In this market especially, you need to stick with what works.
And what works right now, staying liquid and trading around daily movement is your best bet.
November 15 2022