Three Coping Mechanisms
The S&P and Nasdaq futures are
down five and nine respectively as we approach midday,
as traders are reintroduced to the theme that
nothing goes straight up or down forever. The early trade has been light and
range tight as the hourly continues to provide wind at the backs of longs, with
the upside currently marked only by intraday Bollinger Bands to the north and
trend resistance on the monthly chart, the latter of which of course isn’t much
help for intraday trading. Given the morning retracement and hourly tailwind,
keeping an eye on any oversold momentum indicators as we head into the afternoon
may prove worthwhile.
So how does the intraday trader cope with the recent lack of intraday
volatility? In my view, there are three options. As
David Floyd mentioned today, one option is to consider expanding your
timeframe. While I’m not encouraging mass style changes and I realize that
pinball-type traders may fear atrophy will set in if the fingers aren’t moving,
the 13-minute and hourly charts have continued to provide very solid clues in
terms of trade potential, in addition to providing support and resistance clues
when trading the three.
The second option, which may at first glance seem like the opposite of #1, is to
adjust your income expectations and position for a few
2-3 point moves and leave it at that. (Perspective check: Two points on two ES
contracts twice a day provides for a six-figure revenue stream before stops and
commissions.)
The third option is to simply take some time off, something that this trader
hasn’t done enough of over the past several years. We all need to remember that
income in this business is “lumpy” in nature, which is why I only care about
quarterly and annual income. So why not use this time to recharge the old
batteries? Admittedly, one of my own greatest weaknesses is that I tend not to
sit still very well. It’s inherent in my personality, and my family can tell you
I’m an ogre when I get sick.
On that last point, it’s actually somewhat ironic that I left the corporate
world years ago to pursue trading, largely because of the freedom it would
provide, and then found myself doing columns and magazine articles, developing
simulations, and teaching — all at the request of third parties — in addition
to trading. And while that’s my own dilemma, my point is take advantage of the
freedom this business provides, even if just starting out, and let the market
provide you clues as to when to relax.
ES (S&P)Â Â Â Â Â
Friday November 22, 2002 11:30 A.M. ET       NQ
(Nasdaq)
Moving Avg Legend:
5MA
15MA 60-Min 15MA
See
School and
Video for Setups and Methodologies
Charts ©
2002 Quote LLC
Hats off to TM’s timing
indicators
and Larry Connor’s
end-of-day sell strategy which provided end-of-day sellers with Friday
profits on the gap down before the coffee had a chance to heat up. While
overnight holds are not a part of my recommended intraday strategies and I
prefer trend breaks on lesser timeframes to trigger low-risk reversal entries,
it goes to remind all of us that there are many methods to extract profits from
the market, and I thoroughly enjoy when someone else’s method based on sound
probability concepts generates income for folks.
Good Trading and Have a
Great Weekend!
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