When you take on a trading position and plan to hold it overnight, it is akin to playing your two hole cards and waiting for the flop in Texas Hold'em. In this environment, if you can't take the pot down pre-flop just get out!
The cards in a deck do not change but if you look at the market, you can expect jokers and weird cards being stuffed into the market structure 'deck'. The hand that you are playing against Mr. Market can change overnight - you might have pocket aces but with enough wild cards and volatility (bulls and bears slugging it out), you have to worry. Also, if you are bearish right now you have to worry about policy makers dealing from the bottom of the deck.
Mike Caro, a renowned poker analyst, has invented a concept called the
misery index. If you are holding positions overnight based on some probability breakout setup, it might be reduced to pocket tens, and the chance of you being miserable the next morning might be 60%.
I've been thinking about this for awhile now, but my motivation to post came from reading
I always enjoy chessNwine's analysis and especially his non-chart pictures (Bruce Lee, pretty girls, etc.)!
