Don't Panic! My Plan For This Market Crash
In a Nutshell
Markets recovered after the Fed rate hike, making shorts risky as markets show strong support at 700. Ricky maintains his Micron short position (175 shares, $170K exposure) because the stock is consolidating without making new highs, with plans to reduce size if it returns to support. Position sizing discipline is critical to preserve gains—avoid forcing trades, cut losses quickly, and keep exposure light enough to recover from mistakes.
These notes were generated by AI and may contain inaccuracies.
Markets erased all losses and then some just one day after the Federal Reserve raised interest rates. Markets have strong support at 700, making shorting risky. Markets are irrational and always more bullish than bearish. Probability for more rate hikes in the next meeting remains greater than a potential pause.
Ricky has been on a hot streak, making over $15K two days prior. The concern is that a hot streak can create feelings of invincibility, leading to aggressive trading and potential large losses from a single bad trade. The key is avoiding terrible position size management and terrible risk management.
Today's live trading session was approached with the mindset of preserving gains. The strategy is to avoid forcing trades that aren't playing out as expected, and to accept losses when trades go against. The NASDAQ is viewed as overbought with significant pullback potential.
Micron was selected as the short position because memory chip stocks gapped up significantly. Intel was also strong. SanDisk was avoided due to excessive volatility. The position consists of 175 shares representing $170,000 in exposure, which is within the trader's risk tolerance. The position is priced in well with trades closed daily.
The stock has been consolidating without making new highs, keeping the trader in the green. The profit potential for this short is viewed as greater than the risk potential. If the stock returns to previous support range, the short position will be reduced to $100,000.
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