For those of you who don’t know, trading during the summer months can be tough on your patience and P&L. A sizable portion of market participants and those with the ability to move markets all go on vacation and enjoy themselves while the rest of us stare at a computer screen that looks like it is frozen in time. I am a big proponent of following the big guys and taking time off, but that does not mean there are not opportunities. The methodology that I use is just as effective in this environment as it is in a more eventful one. Why?
I am writing this because I want you to understand two things: 1. If your methodology is robust, it should work with little variation throughout most market environments. 2. If you are having problems, you need to question: Is it your lack of patience? Or do you need to re evaluate your methodology?
What is working for me?
The same thing that has been working and that is: anticipating relevant support or resistance levels, evaluating the potential opportunity in terms of risk and reward that they present, and being patient with the validation process. What this translates into is this: I spend a lot of time waiting. I evaluate my charts on large time frames like the four hour. I am waiting for the market to show signs of overreaction. I am evaluating the trend and momentum on multiple time frames. I may step into a trade and get stopped, only to have to reenter again an hour or two after. This process is no different in an active market, except that in an active market, trades have more potential and more opportunities emerge.
Since my methodology is so well defined and I know how to assign importance to potential price levels, I naturally have the patience to wait. If there is no setup and/or no validation, then there is absolutely no reason to trade. Forcing trades only gets you into trouble.
A great example of our methodology being used in this environment is my trainee Petr. He joined our program earlier this year and he is now sharing videos of his trades with me. He has been participating in some great trades that he is finding on his own. Make sure to watch for my trade review this Friday here because I am going to feature his work. By the way, he trades remotely from the Czech Republic. Before he came to us, he looked at the market from a traditional perspective and got mixed results. Since he has been in our program, he is able to spot, properly evaluate and validate emerging trading opportunities, even in this tough environment. What separates Petr from the majority of traders is he has the ability to recognize value and he wasn’t afraid to take a chance by joining our program. It just goes to show that “Fortune favors the bold.”
What is working for you?
If you are still consistent in this environment, I would love to hear how you perceive the market. Share your thoughts in the comment section. If you are having a tough time, then you need to start asking questions: are you reacting to market information? You should be anticipating. Are you worried about not being able to show a profit for the month? You are more likely to jump into anything that looks good. Are you forcing trades by jumping into any setup without justifying its potential? You are impatient, bored or pressured. Are you blaming the market for all your problems? You lack perspective. Only professionals have the ability to adjust. The market is not our friend and has no reason to act in ways favorable to us. It just is. If you are having a tough time, it is most likely the result of a trading structure that needs to be further refined.
Market activity is correlated to the volume or trading activity and it fluctuates just like anything else. If you are new and insist on sitting in front of your computer to gather some experience that is one thing. If you are somewhat experienced and find your self stressed out on a regular basis, just take a step back, the market will not go anywhere without you. Always remember to give yourself a break once in a while too. A well defined methodology will get you through any environment while emotions and an unclear thought framework will lead to a shrinking account.
What are you thoughts? What’s working? Please share with the community.
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Marc Principato, CMT,
*No Relevant Positions