Battle ‘Water Cooler’ Buzz With Consistency

2021-02-01

Talk around the proverbial watercooler is all abuzz about big-scale short positions and how the retail traders are taking on the establishment.

But as fun as this talk is on a wild Monday to begin the month, should traders be in the middle of this fray?

Big losses, big wins, and never-ending churn are always happening in the market. The market constantly repeats itself. This cycle is a signal for how traders can learn to take advantage of the current market environment.

Traders who can develop their own repetition — repeating setups and trade execution — increase the probability of more consistent wins. Repetition in any effort or discipline — think martial arts or other sports — creates consistent results in personal strength and results.

Likewise in trading, applying a setup — such as a debit spread, butterfly, or iron condor — a few times and expecting any level of confident execution is futile. The setups, tools, and execution must be completed in all types of markets — high, low, fast, slow, up, down, choppy —  to achieve a level of consistent trading.

Anyone in the current fray surrounding short-interest tickers (such as GME or AMC) who hasn’t already developed consistent, effective trading abilities would be prudent to step away from the water cooler... or at least not wade too deep into the conversation or frenzy.

If you’re watching this market and your answer to what you should be doing is, “I don’t know,” don’t feel alone. There’s no “one size fits all” way to trade in this environment. No one knows where this market is headed.

Simpler’s traders are staying focused on a daily outlook for what trades are available according to market movement. February historically sets up as a better trading month than January. History also shows that in a few weeks all the buzz around the water cooler will likely have faded.

One certainty is that the market will have moved forward despite the conversation. The market is consistent that way.

We Saw: Another frenzied day of high-short interest — 

  • Politicians, celebrities, traders all talking up the frenzy
  • Seesaw battle continues over economic stimulus funds
  • Frenzy volatility ripples through market

We’re Watching: Charts, internals, and strong signals —

  • Not getting caught in the frenzy and fray
  • Sectors and tickers not on high-profile radar
  • Setups that signal another market gasp and plunge