Keep Your Powder Dry
I trust it is clear by now to all short term traders
that the current market is not exactly what we want nor expected going into
September, a notoriously active period. Nonetheless, it is early in the fall
trading season, so do not get too discouraged. Every dog has his day, and right
now, the HVT/Scalpers are not the
beneficiaries of the price action.
So now what? Keep it light, trade selectively, and NEVER (you shouldn’t
anyway) buck the trend. For review, I mean the trend on the one-minute S&P
futures. If the trend (the slope of the 20-period moving average) is up, look to
buy pullbacks; if the trend is down (the slope of the moving average), look to
sell short the rallies. More importantly, if the market is moving sideways (the
moving average has no slope), do not trade.
Keeping these three simple concepts fresh in your mind will allow you to
avoid the low-probability setups that many new traders fall prey to. To give you
an example, look at a one-minute chart of the S&P futures from yesterday,
specifically between 9:30-10:15 AM EST, as you will see the slope of the moving
average is clearly down. From 10:45-11:00 AM EST, the slope is clearly up. And
lastly, from 2:30-3:45 PM EST there is no slope, therefore no trend. That is the
market that seduces most traders into trading and as a result, getting very
chopped up.
So while today’s column may not offer you much insight as to what or how to
trade today or tomorrow’s session, it offers you something far more valuable,
knowing when and when not to trade. Your capital is far too precious to be
risking it needlessly of marginal setups. As Mark Weinstein mentioned in an
interview once, (I am paraphrasing):
“Trading is like a cheetah on the plains of
Africa. He waits patiently for the antelope, and not just for any antelope,
preferable one that is weak, young or sick, it is at that point that the
cheetah’s chances for a successful kill with minimum effort are the highest.
That to me is the epitome of successful trading.”
Remember, unlike other professions, you do not need to be busy on the
keyboard all day to be a successful trader. In fact, it is the opposite. Knowing
when to sit tight will make you more money than you can imagine in the long run.
Intraday/Multiday Setups
Shorts: [IBM|IBM],
(
MWD |
Quote |
Chart |
News |
PowerRating),
(
CEFT |
Quote |
Chart |
News |
PowerRating),
(
GS |
Quote |
Chart |
News |
PowerRating),
(
LOW |
Quote |
Chart |
News |
PowerRating)
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 925 | 964 |
| 916 | 956 |
| 912 | *950* |
| *903-06* | *935* |
| 897 | 930 |
| 892 | 916 |
| 886 | *898-902* |
| 887 |
* indicates a level which has more significance
As always, feel free to send me your comments and
questions. See you in TradersWire.