In the last newsletter, I discussed how I’d make a lot more money in my educational business if I only talked about how profitable trading can be. Yes, done right, you can be quite profitable in the long run. Living through the ups and downs in between can be tough.

Open profit drawdowns are one of those “features” that’s “not in the brochure.”  It’s tough to watch a significant portion of your profits disappear. There’s a strong temptation to abort the plan. However, if you’re not willing to take some “heat” (down to the protective stop), then you’ll never make any real money trading. Big trends tend to have significant corrections. Though painful, corrections are a necessary “evil.” They shake out weak hands and attract eager shorts. Should the trend resume, these players must “put up or shut up,” which can help to propel the stocks even higher.

The two gold stocks in the portfolio, TFPM and KGC, had significant open profit drawdowns. Both stocks have since recovered nicely. At the time this is being written, TFPM is making all-time highs, and KGC isn’t too far behind (knock on wood). Of course, they don’t always come back. Eventually, what starts as a correction will turn into a bona fide top.  However, you have to follow the plan as if the trend will last forever. And, so far, so good on those two. We’ve been following the trend here since last May. Hopefully, (I know, a dangerous word in trading!), I’ll be talking about these next May!

Speaking of May, one of this week’s 26 Trading Resolutions for 2026 was to focus on the charts and only the charts. If you adhered to the adage “Sell in May and go away” (avoid trading during the summer months), you would have missed TFPM and KGC, two of the biggest winners in the portfolio, up 87% and 151%, respectively. Paying attention to the news and the political landscape could have kept you out of other big winners in 25/26. 

Some think that technical analysis no longer works because of the news cycle under the current administration. I disagree. In this week’s Dave Landry’s The Week In Charts, I showed how Landry Light and the Big Blue Arrow, of course, are alive and well despite a barrage of news. Yes, there can be some frustrating zigs and zags, but this is always the case. “Stuff” happens. 

 

Another “feature” of trading not in the brochure is the extreme amount of patience required. The market has essentially gone nowhere since last October. It’s been a while since I recommended anything new in my Trading Service (and even longer since a recommendation triggered). As mentioned in The Week In Charts, if I’m not willing to put my own hard-earned capital into harm’s way, neither should you. Of course, I’ll lose clients who crave action, but I can sleep at night. We’ve got a decent-looking portfolio (scroll down) at the minute (again, knock on wood!). I’m in no hurry to muck that up! This doesn’t mean that I’m not poring through thousands of stocks daily (and nightly!) looking for the next big winners. You have to do your homework, even and especially during less-than-ideal conditions (again, see The Week In Charts). 

The bottom line is knowing your methodology’s nuances and being willing to live with them, even if that means doing nothing or watching some open profits disappear.

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