“Mastering the Market: Strategies to Overcome FOMO in Day Trading”.

By Ilan Levy-Mayer, VP

The unpredictable fluctuations in stock index futures can prompt a discussion on a significant challenge that day traders often encounter: the Fear of Missing Out (FOMO). This phenomenon is particularly prevalent in day trading, where the rapid pace, high leverage and high stakes can lead to hasty decisions.

Imagine a scenario where a trader is monitoring the charts and notices a significant downward trend. The immediate thought might be a concern that the market is on the verge of plummeting to new lows. While this could indeed happen, the trader also has a guideline: avoid initiating short positions when the market is below the lowest Volume Weighted Average Price (VWAP) band. This rule is based on the reasonable expectation that the market may rebound before continuing its descent. However, the swift movements of the market, coupled with emotional impulses and the desire to recoup losses, can result in a trader disregarding their own rules in the heat of the moment.

So, how can one manage this internal conflict? Here are some strategies:

• Document your trading rules. Writing them down can reinforce their importance and make it easier to adhere to them.

• Implement a system of self-discipline. If you find yourself breaking your own rules, consider setting consequences for such actions.

• Accountability is key. Enlist a trusted individual to review your trades with you and hold you responsible for your trading decisions.

• Practice mindfulness. Before making a trade, take a moment to breathe deeply and count to five. This brief pause can help you maintain composure and avoid impulsive actions.

• Embrace patience. Often, the decision not to trade can be as crucial as the trades you make. By reducing the number of impulsive trades and focusing on deliberate, well-thought-out actions, you are likely to see progress and improvement in your trading performance.

Remember, overcoming the urge to act on FOMO is a challenging but essential part of becoming a successful day trader. It’s about finding a balance between being proactive and not letting emotions dictate your trading strategy.

Daily Levels for April 19th, 2024

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.

FOMC Rate Decision Tomorrow

The last few FOMC meetings I looked for trades until around 930 AM Central time and then somewhat “took a step back”.

I would then follow closely around 1 PM Central when the announcement comes out but try to not pull the trigger until 1:15/ 1:30 when the smoke clears.

CURRENTLY the market is expecting no change in rates. Language will be watched closely.

This is of course just my personal preferences and every trader is different.

Take notes after the trading session so you can look back and refer the next FOMC meeting….

Below are some additional tips/observations I have taken notes of for myself:

·    Reduce trading size

·    Be extra picky = no trade is better than a bad trade

·    Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 4425.00 with a stop at 4419.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 4419.75 and place a stop a few points below in this hypothetical example ( consider current volatility along with support and resistance levels).

·    Expect the higher volatility during and right after the announcement

·    Expect to see some “vacuum” ( low volume, big zigzags) right before the number.

·    Consider using automated stops and limits attached to your entry order as the market can move very fast at times.

·    Know what the market was expecting, learn what came out and observe market reaction for clues

·    The rate announcement comes out exactly at 1 PM central. As of this morning there is a 98% chance of no change in rates.

·    Traders will pay EXTRA attention to the language and the Q&A which starts at 1:30 PM Central

·    Be patient and be disciplined

·    If in doubt, stay out!!

Plan your trade and trade your plan

Daily Levels for March 20th, 2024

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.