Current Market Price Action Chops Up Accounts As Well As…

Over the last couple weeks, the market price action has been very challenging.  We have experienced several false entry signals, reversal patterns, and intra-day whipsaws.  I have been warning that this is the time for new and inexperienced traders to stand aside, watch and wait.  I know that can be harder said than done but it’s time’s like these when trading accounts get chopped to pieces.

Losing money is one thing however almost more damaging is what happens to traders confidence.  We never know how long an indecisive period like this will last   The trader invests a lot of time, energy and emotion into their efforts but receive loss after loss in return.  With confidence destroyed they are handed smaller accounts as a result.

It’s then when the trader begins to question everything, change everything and search for a perfect setup or perfect scan to end their woes.  Sadly no such thing exists, and a vicious cycle of searching and disappointment begins.  Trust me when I tell you this path has no end and years can be wasted traveling down it.  We traders are our worst enemy!  The market’s and we are traders so that means we must be trading, Right?

Wrong!  Often time’s we can make more by trading less.  Standing aside during choppy markets is not a sign of weakness it’s a sign of experience.  Watching does not mean you need to question your trading knowledge and change everything up; it shows patience.  Waiting isn’t a waste of time; it displays the discipline to stick to a plan.  Take control, be the boss and remember sometimes less is more!

On the Calendar

On the Economic Calendar today we have the JOLTS report at 10 AM Eastern, which is a report on available job openings.  It can at times move the market but unless it produces a big surprise that’s unlikely.  We also have one Fed speaker at 1:45 Eastern to be aware of as you plan your trading day.  On the Earnings Calendar, we only have 16 companies reporting none of which are newsie companies that move the market.

Acton Plan

As the market chops sideways it like a spring wound tighter and tighter.  Eventually, all that energy will likely release a big move one way or the other.  Personally, I don’t want to get caught overly long or overly short when that occurs.  If I trade, I will keep the positions small.  I will also plan to take profits faster than normal if I see resistance or the potential of a reversal brewing.  The majority of my time will be waiting in quiet preparation for the market to decide which direction.  Because three of the four indexes are displaying current downtrends, I have to assume the Bears still have the advantage for now.

Trade Wisely,

Doug