Volatility!
The last few weeks and especially the last few trading sessions we saw tremendous volatility across many markets.
What we witnessed last night and during today’s session reminded me of the markets when COVID first broke out and we saw limit moves across the board.
Temporarily: Due to volatility, most of our platforms now require 100% margins; even for day trading!
Here are some ideas to explore during times of volatility like these:
1. You don’t have a crystal ball. To think you can buy an ES contract in this volatility and use a 2 point stop in hopes of making 20 points profit is a very low probability event…you would need to buy it at the PEREFECT time for this to happen. Point is, with higher volatility you need to use WIDER stops to give yourself a chance. That may mean using SMALLER trade size.
2. If you are able to, share your read with another trader, it may provide you with a better perspective just by sharing.
3. If you think there is room for a big move or what we call a “runner” – be prepared to for the pullbacks. Use multiple time frames to gain a better perspective and hang in there for the big move, if this is what you think can happen.
4. If you have enough risk capital, try to use multiple contracts, example buying 2 rather than 1. Taking profit on the first part of the position will help you relax and look at what the market is really telling you rather than what you would like it to say. It helps reduce both the fear and the greed.
5. “Plan your trade, trade your plan”
Again, these are just some short pointers, written quickly after today’s session in hopes of helping you when you face a similar situation of extreme volatility. |
