Summer Trading

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The slow part of the summer is upon us. Seasonally this is the best time to take time off to get ready for another exciting year of trading. August is typically a very slow month in trading, especially the last two weeks of the month. If the volume and volatility is not there, it is not the time to sling heat but rather a time to play some defense.

Remember that as traders we have to adapt constantly. We have to recognize when the market changes from being extremely volatile, to just volatile in the morning, and to just flat out dead. Not being able to recognize those changes will impact your bottom line.

So how do you recognize that the volume is not there? Your PnL will indicate clearly that those plays that typically make you money are not working during these slow times. Some examples of these plays include but are not limited to: paying a new intraday high, hitting a new intraday low, range break out/down, held bid, held bid higher does not lead to an incredible up move, etc. The key is to take your losses quickly and take whatever the market gives you. Forcing trades will most certainly lead to many red days this month.

As for me personally, this is the time when I try to make most of my money early in the morning. My trading will then be cut down to the absolute minimum as I will be only looking for the very good risk vs. reward opportunities. The lack of volume and big players during this time minimizes my edge. This does not mean that there aren’t going to be good opportunities, it just means that I have to be more selective of the trades and the size I take.

If you find yourself struggling a bit this month do not take it personally. Go out in the city and do fun stuff. Enjoy the freedom that comes with this job. Go to the beach, go to the gym, work on your golf game, or simply put go on vacation.

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