How To Work Smart, Not Hard
Change Is Slow; But Inevitable
While trading for the most part takes place at a
rapid pace where split second decisions and nerves of steel are the norm, there
are other aspects of trading that change at a glacial pace. Yesterday I made an
announcement to the subscribers of my trading room that I was not only going to
be hosting it for the opening two hours, not the first and last two hours of the
day as I had done since its’ inception. Why such an announcement?
For as long as I can remember, my trading day was
always fragmented, two in the morning, two in the afternoon. Each session
seemed to be equally skewed in terms of opportunities. In hindsight, the
deflation of the bubble back in 2000 has left many changes in its wake. Lower
volatility being the one that is paramount in my mind. I really do not know
exactly why volatility and range are so narrow, and frankly, even if I did know
the answer it would not help anyways. As I have mentioned frequently in this
column, the opening still presents traders with the best opportunities for high
probability trades. You either make it happen on the opening, or wait patiently
until the next day.
In going through my trade sheets for the last
six months, one glaring conclusion came about. Roughly 90% of what I make
doing HVT was done in the first 90-minutes. It was obvious now that forcing
myself to stalk opportunities in the last two hours was not the best use of my
time. sure, every once in a while a few lay-ups will present themselves, but
not too often. This present a dilemma for most traders, especially newer ones.
For lack of a better term, the ‘Protestant Work Ethic’ has no business in the
world of trading. If there was ever a place where “work smart, not hard”
was applicable, it is in the world of trading.
Let’s look at it from the ‘sexy and exciting’
angle that most purveyors of trading systems hype – work for two hours then hit
the golf course. Well, I can say that the opening provides me more than enough
rewards for me to not have to get concerned about being short-changed. It is
imperative that you rid yourself of the mindset that plagues most traders:
“I will go and
find some hot stocks.”, or
“The market is open, there must be something moving.”
As you know, I have made a choice to use the
reminder of my day to focus on trading another market and a different time frame
altogether, FX. I see it as the ultimate compliment to HVT. You want price
action and a market that is pretty “true” from a technical analysis standpoint?
Look no further. While my experience has led me to the conclusion that FX is
not the ideal market for HVT type trading, its lends itself well to Swing and
Position Trading. For me, this has been a fantastic way to refine and hone
a whole new set of trading skills which HVT put in place. It is surprising how
many of the techniques do crossover on some level, yet at the same new tactics
and lessons are being learned. Purely from an intellectual standpoint, FX
satiates that craving.
So, ask yourself some questions? Is what you
have relied upon still producing the results you want? More importantly, are
the number of hours spent seeking trades dwarfed by whatever you may find? I
don’t know, I cannot speak for all styles of trading, I am merely letting you
know that I have set in motion a plan to adapt to what appears to be a new and
completely different marketplace.
Going into today’s session, it appears the the
Dollar Index (DXC) is once again the lead
sled dog. The 86.50 level held like a rock overnight after a sharp sell-off.
At this point, continuation longs in EUR,
CHF and GBP
seem likely if further DXC weakness
persists.
As always, I welcome your
comments and questions. If you would like to have your email address added to
my FX Mailing List for actual trade recommendations ahead of my FX
Service through TM in mid-February; simply send me your name and
email address to: aspendave@yahoo.com.
Dave