Don’t Use A Hammer In A Wild Market

Another crazy day in the market where seeking wins sometimes feels like trying to cure a headache with a hammer.

September closed with a bizarre trading day and October set the stage for fall with a choppy first session that fell mostly flat until a late-hour kick to the upside.

This seems typical for a market that for months has been experiencing massive swings and often with many wild swings throughout the daily session.

What’s the play with the prospect of a wild, wild fourth quarter?

Whatever boosts calm and creates plenty of patience is the Simpler Trading play.

If you have to round up zebras to “gear down,” then saddle up. If deep breathing and easy listening music provide a good vibe, enjoy.

We don’t believe trading, trading, trading is a strong plan at this time.

What we expect to pay off going forward is mostly sitting on our hands in cash, being patient, and waiting on better setups. While we’re leaning long and grabbing trades – on a limited basis – and taking gains wherever possible, we’re staying cautious overall.

Straight-line swings, i.e. gaps straight down or rallies straight up, can place traders in a vicious cycle. Making a play to the upside and getting ripped when the market dives and then running the opposite way with the same bad ending is a frustrating formula for failure.

Those who are on the right side of these drastic moves might do well. Everyone else shakes their head at the smaller tally in their trading account. Erratic chop in the market like today doesn’t help.

Keep in mind, we’re not here to be right or prove to ourselves we know exactly where the market is going.

We’re here to make money. That requires a plan, discipline, and a healthy respect for not trying to cure a headache with a hammer.

We’ll keep a close eye on market levels and price action while being proactive with any current trades.

We Saw: Wild, choppy start to new month – 

• Session closing with slight uptick
• Markets nervous about news
• Market pressures keeping things uncertain

We’re Watching: For stronger setups, direction –

• Working to avoid sharp reversals
• Politics of stimulus back and forth
• Setups that won’t rip our heads off