Hello Traders,
For 2014 I would like to wish all of you discipline and patience in your trading!
Today’s action in stock indices was quite impressive! The volatility we are now seeing is so different than what we witnessed 2 months ago it’s almost like we are trading a completely different market!
We had almost a 50 point range on the SP today!! Much different than the 8-12 points range we saw couple months back….This calls for you as a trader to adjust, researched and be aware of the market conditions you are trading in.
The market is moving much faster. I was watching the DOM today off and on and the speed of the moves was extreme.
When volatility expands I have the following tips:
- 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 1925.00 with a stop at 1919.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 1919.75 and place a stop a few points below in this hypothetical example.
- Consider using automated stops and limits attached to your entry order as the market can move very fast at times.
- Be patient and be disciplined Read the rest of this entry »
