Hi Nickola,

I would say that I am an intermediate level trader; I have been working on technical analysis for about 4 years. I have a full-time position and trade in between calls and infrequent meetings.

Last week I made about 40 trades in/around IWM and most of its juiced ETF's (I didn't trade TVIX). I was directionally correct all week, but despite relying on the robots, $TICK, etc. and being up big end of day Wed (I held overnight), the gap-up on Th morning was very hard to hold through and I had to dump 2/3rds of my positions near the open's second bounce, getting stopped out by $0.02.. then I took more profits shortly after the Fri morning gap down.. at this point I was holding about 1/3rd of my Wed night profits. The rest of Fri morning to mid-afternoon, I tried to jump on 4-5 intraday downtrends in IWM with TZA because I knew the market was looking weak, but I got stopped out each time. To my surprise, IWM closed below YS1 (64.40), so I shorted 100 shares of IWM at 3:59:40 PM ET Fri.

Anyway, I spent a ton of emotional energy last week and only retained about 10% of my Wed gains by Fri's close.

Over the weekend I read Peter Brandt's "Diary of a Professional Commodity Trader" and did some soul searching. Brandt's is a +40% discretionary, chart-based trader with over a +20 year career, and his emotional challenges are his biggest.

If there is going to be a significant bear move in the coming months (as I am biased to believe), market conditions are going to be *extremely* volatile and the snap-back rallies vicious and scary. It is going to be extremely difficult to time and emotionally difficult, if not impossible, for me to trade effectively (see my results from last week, as an example).

Brandt's book describes 4 components to trading: 1) trade identification and entry, 2) trade management and exiting trades, 3) risk management, what % of my capital do I put into this trade, and 4) emotions (fear, second-guessing, greed, self-doubt, etc). The Robots are back-tested, proven through fall 2008, and take care of 1 & 2 better and more reliably than I can. Risk management - I am using Kelly's criteria and for the IWM robot's win rate = 58% and 3:1 odds, this formula suggests that a trade should be 45% of one's capital account for optimized returns (I am worried that maybe the robots will not trade to these stats over time, so I am looking at going with conservative assumptions and trading 10% of my capital for now and perhaps pyramiding into positions each day the robot triggers). Last week exposed my biggest weakness, i.e. the need to work in the emotional area (fear, greed, etc.).

This is a long way of saying that if this market is going to go into a serious bear mode, I am sticking to the IWM Robot as best I can, and focusing mostly on controlling my emotions (which to me means mostly not letting the bad stuff in by staying away from the intraday charts, CNBC, etc.) and using stats to build confidence so I can increase my position size to Kelly levels.

Anyway, that's what I think about when I wonder about jumping the Robots on profit-taking.

Shawn

PS: My gains today are about twice what they were all of last week and the stress infinitely less.