A Traders’ Market

We spend a lot of time on our prop desk focusing on skill development.  Trading intraday requires a certain set of skills that take some time to acquire.  If you are given good training and work very hard you will develop a set of skills in 6 to 12 months that will allow you to make money in all market conditions.

But all markets were not created equal.  The market we have been in for the past six trading days is a traders’ market.  What do I mean by this?  A trader’s market is a market that is constantly offering opportunity.  I have traded in markets where if you didn’t make money in the first 20 minutes you weren’t going to make money that day.

What I have been telling the traders on our desk for the past few days is don’t worry about being up money in the first few minutes.  Take the good trades if they are there, but protect yourself on the downside for later in the day.  If a stock gets to a great price right on the Open then put on the trade.  Or if you see a great setup make the trade.  But also look to let things develop.  There will be opportunity throughout the trading day.

Let’s use MS as an example.  Yesterday, on the Open it dropped to the 21.80 level which provided a great opportunity for a quick trade.  But around 11:30 when it traded below 22 again there was an even better opportunity to make a large chop.  It wouldn’t drop below 21.95 and moved up to about 22.17.  On the pullback towards 22 the 22.03 bid held with a large amount of prints.  This was a catalyst for a move up to 22.35.  Five minutes later it traded to exactly 22.03 before having an even more powerful up move.

All of this price action took place between 11:30 and 12:45.  Normally, this is a time when volume dries up.  But the volume really picked up in MS at this time.  The bottom line is that there is a lot more interest in the Market right now.  Maybe it is some of the $4.6 trillion in money market funds.  I don’t really care.  As long as there is interest in the market then intraday traders are going to kill it.


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