How To Trade The Changing Market Rhythm

In light of recent market rhythms, I thought it might be helpful to comment a
bit on trade management and observations during recent weeks. Additionally, I
received a call last night from an individual that was asking me whether the
“favorite” trade entries included in the

video and
online course would still work in these days where it seems the vast
majority of traders are getting whipsawed left and right. (In fact, I’ve
heard more “grumbling” over the last few weeks from traders than I’ve heard in
the last several years, but I digress.)

In responding, let’s first ask ourselves whether the recent market is really
that much different than a normal market, however one might define “normal.” I
would say not at all. What I would say, however, is that the market has
alternated between rhythms of varying timeframes with a bit more frequency, and
that the emotion behind some of the moves, whether they be two-minute or hourly
surges, has been exacerbated at times. Yet the setups and triggers are working
just fine, thank you.

So why all the industry grumbling and almost comedic “keep it light” mantra,
which even I’ve preached at times? I think part of the reason is the extent
to which the rhythms have changed. The setups still work wonderfully, yet as
I’ve mentioned in recent columns, the market seems to be in one of its better
“survival of the fittest” modes that I’ve seen in a few years, a mode which
requires constant adaptation, or a keen awareness when to sit out.

For example, using our preferred timeframes, the 13-minute trend helped lead the
100-point S&P rally a few weeks ago. Yet for much of the past week, despite the
50-point retracement (much of which occurred during untradable overnight hours),
the rhythm has been highly conducive to one- or two-minute trades. Dramatically
different rhythms over a very short period of time.

Those that sat through my sequence of 100 trades in the weeklong seminar a few
weeks ago, know that I frequently trade a scalp account (Minis) and a 13-minute
account (SPYs). I do so because I recognize that the market will alternate
between 1-minute trends (aka “chop” on the larger timeframes) and longer trends.
In essence, it provides instant timing diversification, not to mention “skill
diversification” when I stink it up on one timeframe or the other. And yes,
despite a very strong daily win/loss ratio in March, there was one day where I
stunk it up on both timeframes.