Mistakes
- Do not hold a position against general macro events like (Trade) Wars
**Lesson learned:** impact of loss aversion and reversion to mean is muted when trade war is occurring
- Don't double down on your mistakes
**Lesson learned**: it is cheaper to admit mistake and cut losess
- Committing too much to a position leaving not much liquidity for later. This forces freeing up liquidity at a loss when new buying signals surface.
**Lesson learned**: it is cheaper to under allocate portfolio to a position upfront.
- Entering too late into a buy signal by more than 48 hours.
**Lesson learned**: it is cheaper to forget about it when you are late
- Entering too early into a buy signal.
**Lesson learned**: it is cheaper to figure out the support level before entering into position.
- Don't enter into position when there are no buy signals.
**Lesson learned**: it is cheaper to wait for a wave than to get carried away by the anxiety that there will never be a buy signal again in this lifetime.
- Not verifying assumptions
**Lesson learned**: Seek evidences to challenge your own assumptions. Lessons could be learned when you dig deeper into pass records to for deeper insights.
Additional insights
- Sudden news about macro economic events (Donald Trump tweeting) does follow a lose aversion and reversion to mean pattern.
- Gradual news about macro economic events (US passing tariffs on China and banning Huawei) will have a long term negative impact.
- Price of REITs are:
relatively insensitive to trade wars
- hyper sensitive to Federal Reserve (expected) interest rate changes
- Only execute loss aversion and reversion to mean trades on positions that exhibit bullish trends both at the individual stock level as well as at the SnP level.
Related references
- [Trading strategy capitalizing on loss aversion and reversion to mean](https://garyteh.com/2018/04/trading-strategy-capitalizing-on-loss-aversion/)
- [Timing entry into loss aversion and reversion](https://garyteh.com/2019/03/hypothesis-on-timing-entry-position-into-loss-aversion/)
- [10th May 2019 - Effects of just trade war](https://garyteh.com/2019/05/15th-may-post-effects-of-13th-may-2019-us-china-trade-war-on-us-markets/)
- [12th Dec 2018 - ](https://garyteh.com/2019/05/15th-may-post-effects-of-13th-may-2019-us-china-trade-war-on-us-markets/)[Effects of trade war compounded with Federal Reserve interest rate hike](https://garyteh.com/2019/04/spy-snp-index-during-dec-2018-market-pull-back/)
- [Personal trading logs](https://docs.google.com/spreadsheets/d/1_96bn2RYJdDVlbWKTVoL0Ru6vmeulft5rMUL_dxA0b8/edit?usp=sharing)
- [Sentiment analysis engine](https://getdataio.slack.com/messages)