Adapting to This Market as a Day Trader

What are you doing as a day trader to adapt and succeed in this tape? This market can be rough for novice day traders trying to figure out a way to find consistency. The bots are alive and well, the volatility remains high and headline risk abounds. Trades that worked only a few short months ago are now being piled up like garbage on the streets of NY with the sanitation department on strike. Yes, your P/L will stink just like that garbage on a hot summer day if you don’t adapt. The bots are hunting stops and swapping both sides of important levels before making the real move. The shake outs against the trend are not of the junior variety they are big boy shakes. The headlines or comments from Europe can turn a winner into a loser in seconds. Sounds impossible right? Wrong … manage your size better (smaller or around a core), expect the shakes (find entries or adds by using them), and use relative strength to mute some of the headline spikes (short the weakest only, long the strongest only). These days the nice draw a pencil line level with a nickel stop are fewer and further between. You have to be thinking ahead about the things being used to get you out of good positions and adapt to them. Try anticipating them and being prepared to take advantage of them.

Today VRTX was under pressure and heavy all day but not an easy trade if you got too big or added on weakness. You needed to give it room and wait for the misguided longs to get rolled over before it paid on the short side this afternoon. The SPY had the spike at 1:57pm and VRTX found sellers in the offer and held it in check (relative strength saves your position from the headline). That spot in the day made it clear a new low of the day was a decent probability and it found it shortly afterward. Next up, the buy the new low bot does its thing … you should have been expecting it. Now just wait for some stretch to the downside to get the bottom pickers to head for the exits. Day trading requires the ability to adapt if you plan on making it a career. Get used to it.