When are we going to get a nice one directional move? These choppy markets are tough to trade, and you must be prepared to be in and out quickly which is a massive detriment in our business because you want to make all the decisions before you enter the market and not once your trade is live.
Watching ticks and then trying to decide as money come into your account or leaves it is the hardest way of trading. This is when fight or flight takes over and you become tunnel visioned. Not a situation you want to be in while trading ideally. It’s best to have a set profit target and a fixed loss and then let the market do what it may, fully confident in the knowledge your edge works long term.
But this is the hand we have been dealt lately and we must make the best of it if we can.
Pre-market the econ data was not so hot. GDP came in slightly lower showing the US economy expanded at a slower rate at the end of last year. Reading this data and taking into account tomorrow morning’s important inflation data I was looking to go short the market. The moment my edge formed at 9.47 a.m. I went short the market. I let the market play out and eventually I exited the market right before close with a R1 in the black in the NQ.
Trading is about being calm while in a live trade. This you only learn after years of being an absolute basket case by watching every tick, or worse watching the PnL data on your software and letting all sorts of negative emotions dictate your decision making usually leading to massive frustrating losses. These are all the hallmarks of an amateur trader who has not learned the art of trading.
Price does crazy things, it goes one direction then makes a beeline the other way forming a massive candle before changing direction again. There is no way to actively trade such a market, it’s all about having a system and deploying that system safe in the knowledge that your stop loss will protect your account. R1 losses are annoying but if the market does go your way you will extract at least a R2 from the market and on some days much more. These are the days we live for as daytraders.
Do not be sucked in by the violent volatile tricky price action, only rely on your system which will make money long term because you are confident your edge works.
For those of you newish to this newsletter I would read these articles to get a better sense on how to create a system and the psychology of trading.
Big few days remaining this week.