Focus On Caution, Cash During Volatility

2020-04-09 | Simpler Trading Team

Long-term investors likely aren’t enjoying this volatile market, but it’s a prime environment for traders.

Simpler Trading online moderators are focusing on daily setups with precise entries that allow them to hit profit targets and exit the trade. This “take the money and run” strategy avoids risk of staying in trades too long and possibly getting wrecked with a sudden shift in the market.

Volatility is the recurring theme in the markets.

Average daily price swings over the last five weeks have been larger than since the Great Depression. While there is a bleak outlook throughout the economy, this “rip up and rip down” market pattern creates opportunity for traders.

Simpler’s traders are following a surgical methodology to trade day-by-day and step-by-step to identify setups and execute timely trades.

While the markets surged this short week, caution abounds among Simpler’s traders looking ahead.

Most are staying flat with limited or no trades over the three-day weekend. Maintaining cash is a priority.

Market conditions next week are anyone’s guess with earnings season starting and continued debate over the status of the coronavirus pandemic.

Expect earnings to be an ugly picture of the state of the economy which creates uncertainty in how the market will react. No one can predict if the pandemic will surely slow or spike again.

With the U.S. markets closed Friday, it’s a rare event for active traders that offers time to go flat and disconnect from the markets. Refresh, recharge, and assess what may come next.

Ignore the FOMO (Fear Of Missing Out) — traders can get back into any promising position once the markets open next week.

We Saw: another day of push to the upside — 

  • Rising prices, but limited setups
  • Another round of harsh unemployment numbers
  • Expectations of stimulus loans and checks arriving

We’re Watching: … our cash positions and account balances —

  • Effect of NYSE volume up 90% back-to-back Tuesday and Wednesday
  • Signals for a multi-day pullback next week
  • “Price before news” — always

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