As a desk we have transitioned into focusing on Trades2Hold due to different market conditions. Scalping has diminished. C trades deemphasized. We wait for our best set ups and execute. But then Obama entered the arena looking for a fight with the Banks. Things got ugly. And as traders we need to adjust again.<\/p>\n
Back in the Fall of 08 we banged in and out of the Banks whenever there was the slightest hint to do so. Perhaps SPY got weaker. Boom we hit the bids on a few bank stocks. A three point downmove then followed often in a GS for example. Perhaps IYF got weaker. Bamm we hit the bids on a few bank stocks. Stocks touched new intraday lows and whop we smacked a few bank stocks. It was sloppy, trade as much as you could, hit the bids for any reason trading. And that is how it should have been during these unique market conditions.<\/p>\n
The last two days, and the day after the Dubai mess, were similar days. Out the window went our new sophisticated approach of more research, important levels, and Trades2Hold. And back came hit the bids when the market showed any sort of weakness in the Bank stocks. Whack JPM, oops it didn’t go down so cover. It didn’t go up so now reshort and hold, with a stop much higher. Whack that GS. Now that is what I am talking about as GS crumbles to new lows. Let me try some of that MS. <\/p>\n
This type of trading can be tiring. It is often frustrating as your win rate will be low. It can seem as if you are trading like a bunch of monkeys. There is very little intellectual stimulation to it. There will be tons of tickets. Many losing trades. But guess what? There will also be the opportunity for outsized gains.<\/p>\n
For days like yesterday and today it is double the volume and triple the P&L. Because you never know when the banks or other market leaders like AAPL and AMZN will just drop like a falling knife. That is why you keep getting short, when the market shows newfound tremendous weakness. You may catch that next precipitous drop. And the risk of missing one of those moves is greater than a little extra in transaction costs.<\/p>\n
Let me be clear, banging in and out of stocks is not the system to be used on 98 percent of all trading days. As intraday traders we make trading decisions based upon intraday fundamentals, technical analysis, and reading the tape. But there are those days when the intraday fundamentals call for all day trading, never leave your desk, no lunch, leave it all on the trading desk trading. When the government announces it wants to regulate the banks this is one of those days.<\/p>\n
Best of luck with your trading!<\/p>\n","protected":false},"excerpt":{"rendered":"