Avoiding Strong Emotions To Minimize Risk

2021-01-07

Topsy-turvy news events mixed with a volatile first few trading days of 2021 have traders searching for a proper perspective on how to trade in the New Year.

Despite the volatility, the market is showing signs of being about as bullish as it can be.

Indexes continue to push toward or exceed lifetime highs and key stocks and sectors, like Big Tech, continue to ignore world events and push higher in price.

Simpler’s traders are approaching each new day with a degree of caution while avoiding getting in too far over their heads. They continue to focus on their trade targets while minimizing risk.

Even in the chaos of life and the market, there can be opportunity. Finding a path forward as a trader may not be easy in the middle of the volatility. Our goal, our jobs, as traders is to stay focused on key technical indicators and stick to the trading plan of staying with the best setups.

Internal signals appear to show the market remains on a bullish track. Simpler’s traders are watching for strong positions to execute a limited number of trades.

A key focus in this market is to avoid strong emotions, especially euphoria for those who catch a nice run up or any big win.

Euphoria and the overconfidence that comes with it can make traders think they “have it all.” That’s when the market can kick you to the curb.

No trader “always wins” and every trader will suffer some losses, even after a big run. It’s important to keep working the plan and not let strong emotions dictate your actions.

Expectations are that volatility will increase through Friday. Simpler’s traders are keeping their heads up and eyes on any strong pullbacks that lead to opportunities.

U.S. politics and other news will likely influence this market, so we’ll keep focusing on the technicals to find profitable potential.

We Saw: U.S. reeling from political turmoil — 

  • Markets shrugging off rough news cycle
  • Big Tech exercising big power in market
  • Stimulus checks start hitting bank accounts

We’re Watching: For pullback and strong rally —

  • Avoiding emotions, limiting risk
  • Overnight market moves
  • Setups in: AMZN, PLTR, PINS, MU