UNG-What we learned

Really, not much new that we haven't realized a while ago. Just before 12:30 today I posted I was closing the UNG call position even though UNG is one of my favorite long term longs in the market, but when the 5/15 min charts look like this and market volatility and character look like this you simply CAN'T FORCE TRADES ON THE MARKET.

If you have been around WOWS for a while, you know I would much rather a trending trade and the UNG long position in the equities model portfolio is doing well,

 This is a position I barely look at and I think it is and will be a decent trending trade, but the chart looks like this...

That's a 4 hour (very long) chart with a major change of character. The point is, I think I chose the right tool (an equity long) for the job.

As for the Call/options position that is 3 days old, this isn't a bad gain...

However, I know how the market has been trading and I know that I/We have to adapt to the market and use the right tool for the job.

The above position was closed out at almost the exact high of the day, but knowing how the market acts and knowing the strengths and weaknesses of options, these were the correct charts/tools for this trade.

 When this 5 min chart didn't confirm that big move up I pretty much knew that the move was being sold in to, Wall Street ALMOST ALWAYS sells in to strength and demand and buys in to weakness.

Even though the longer term prospects on this UNG 15 min chart look good, the fact the divergence showed up here too told me it was more serious than just some intraday jiggle and it was time to close the trade at a decent profit.

This is one of the tougher markets if not the toughest market I've seen. People who bought, "Come Into My Trading Room" and use 1 method of trading are getting annihilated, just look at the financial blogs, the Stocktwits/twitter stream.

You have to use the right tool for the job, take what the market gives, be willing to change your opinion if the data supports it and fast and you HAVE TO let the trade come to you. We bought UNG calls on a pullback with a 3C positive divergence telling us it was a healthy pullback, our gain would have been almost nothing if we had chased UNG instead. Luckily we have a tool that gives us an idea of what to expect BEFORE it happens, it's not 100%, but if it was you would have never heard of it or me, however it's been reliable enough for us to make some great trades while everyone else is getting knocked out of the game. The key is what I have always said is our biggest advantage over Wall Street, "PATIENCE". We don't have to be in the market all of the time, we can pick and chose our battles and we can wait for the trade to come to us.

I hope the UNG trade made you some good money, but I hope this post give you some things to think about to further your success.