If the market goes dull and quiet after you enter a trade and makes no progress in the direction of your entry, do not wait until your stop is hit. Just get out! Seek a more active market or better trading opportunity. –Larry Connors and Linda Bradford Raschke, from Street Smarts (1995, M. Gordon
We view losses the same way we view cancer. A small cancer can be removed and the patient will most likely live. A small cancer allowed to grow into a large cancer will eventually kill the patient. A small loss removed early will most likely allow the trader to trade again. A small loss allowed to
While gaps can offer excellent trading opportunities, it’s often difficult to know (except in hindsight) if one is a runaway gap or an exhaustion gap, or some other kind of gap. One of the best filters for determining whether a gap will lead to a short-term runaway move is the ADX. If the AD
When a stock or commodity gaps higher on positive news and then reverses, it is an immediate short sale candidate near the previous days high. This is known as a “news reversal,” and it captures that century-old Wall Street strategy that if it doesnt go up on good news, it’s go
Most of us know Wayne Rogers as Trapper John McIntyre from M*A*S*H. What many people do not know is that Wayne is also a long-time money manager and a graduate of Princeton University. I first learned that Wayne was an investment advisor more than a decade ago when I was working at DLJ and would see
Many times, when markets experience extremely high volatility they then proceed to trade sideways as volatility reverts to its mean.
As you know, when short-term volatility is one half or less than its normalized longer-term volatility, it signifies a pending large market move.
Looking for low-volatility setups in high volatility stocks can be a good way to identify stocks that move 40% in a week.
One of the better ways to get an edge trading low-volatility situations is to combine them with the trend.
Today’s volatility column is brief and will help you identify the few times when low-volatility situations do not lead to large moves.