Adjusting To The Conditions
There’s a time and place for
everything. This
morning in our TM chat, I was stressing tightening up the reigns if
one was considering breakout trades in today’s session. With volatility levels
stretched to some degree and daily patterns against resistance setting up in
some of our ETF friends, my M.O. is ‘trading in the moment’ when trying to play
this particular category of trade.
Some ways to adjust to a choppy environment (when
it seems like the market is going from breakout central to the downtown express
in a single price bar) is through the use of smaller trade size and possibly the
use of tighter stops. With the chop, the use of tighter stops might be contested
by some traders if one is already cutting back on position size, but in my opinion,
today presented one such session where I personally felt both were in order.
Another method to trade the breakout ‘while in
the chop’ is by getting in ‘early’ out of mid-level consolidations, rather than
near the ‘targeted’ breakout that’s typically broadcasted by many media outlets,
after the fact. of course.
One stock that might fit this category of trade
before the ‘targeted’ breakout is Zebra Technologies
(
ZBRA |
Quote |
Chart |
News |
PowerRating). The
issue came within .18 of prior highs within a weekly consolidation pattern in
today’s trade before pulling back on broader market weakness. The stock is a
member of TMs Intermediate-Term
Report report for potential breakout plays.
Zebra can be an animal, but I really don’t
know if it will earn its stripes in today’s trade. But, what I do know is how I
like to adjust my breakout trades in order to keep the long-term edge when the
conditions are less-than-ideal for certain trade types.