Two Ways To Avoid Being Head-Faked
Each day brings us one
day closer… to some good trading. I have a colleague if mine in San
Francisco who is always optimistic, (and not in such a manner where his blinders
are on), and often repeats this to me when we discuss how dull the tape is.
I will not go into details about future direction
(it provides us HVT’ers with no edge anyways), although it looks to be sideways.Â
But, if you are patient and selective, you will manage to uncover a few
opportunities each day. \ I digress.
There is little denying that the market remains
firm, albeit it is a trading as odd as I have ever seen it. Friday for
instance I did ONE (yep, one) HVT trade all day. In my humble opinion, I
chose wisely. So how can you avoid getting head faked and tossing away
valuable capital?
1. Make absolutely sure that the S&P
and Nasdaq futures are exhibiting enough range on the 1-minute chart to justify
trading.
2. Make sure you do not trade against the
trend of the 1-minute charts.
If you do these 2 very simple things, you will
manage to “survive” this market. For those who read Jennifer
Highfield‘s article Sticking
With What Works And Following It Over And Over… on TM, I
suggest you do. I am tired of preaching the same message, and perhaps
someone else’s description will assist those that still find themselves dabbling
rather than focusing.
Nonetheless, I cannot resist the temptation to
talk a bit about the state of the market. There is plenty of “bad
news” out there, although the market continue to take it in stride. While
that may be constructive, it does not negate the fact that the market is far
more vulnerable to the downside that to the upside. On the other hand, with many
a trader, individual investor and hedge fund aggressively shorting yet another
bear market rally, the real surprise may very well be a “melt up” not
melt down. This scenario was illustrated to me by a hedge fund manager I had
breakfast with a few weeks ago.
So, for me personally, I can make a case either
way, although I lean towards the bearish argument. So, in the meantime it is
high-yielding CDs for the money not in my trading account (IRAs, Joint Accounts,
etc). For the first time in many years, I am content to sit and wait, my only
trading is taking place on the shortest time frame possible, HVT, for me that
offer a very clear edge. If the trade is designed to last more than 15 minutes,
I just do not see the risk reward. Mark Boucher and other market professionals,
whose opinion I respect, seem to (although I cannot say for sure) indicate that
a sideways market for several months is what we need to prepare for.
So, at the risk of sounding like a used-car
salesman, take a free trial in my new Trading Room.
Why? Simple, if there is one thing that I can provide you in this market, it is
restraint. Selectivity and focus is always the goal, but now more than
ever. This is the constant comment I get from the current subscribers:
“You save
me from making marginal trades, thanks.”
In
Dave Floyd’s Trading Room, I offer live real-time audio commentary, analysis and alerts is
now available. I encourage you to check it out.
Click here for more information.
As always, feel free to send me your comments and
questions.
P.S. I also have a new trading module available which teaches how to trade my HVT
style through bar-by-bar chart simulations.
Click here for information about the module.