Market Tide Signals Caution For Traders

2021-12-03

This market has collapsed and roared back to new highs more times than traders want to count.

Any bit of news — negative or positive — appears to send emotions running rampant and market sentiment reacts forcefully.

Traders have to keep asking, “Do I try to ride the market tide or sit on the shore and watch the waves roll in and out?”

You’ll find Simpler’s traders not venturing into these waters on any “3-hour tours.” They don’t want to get shipwrecked by the next knee-jerk market reaction caused by the latest hectic news of the day.

In rough waters like this market, our team turns to a known “safe harbor” — the indexes.

Simpler’s traders have decades of experience and understand how the indexes trade with relatively more predictability compared to specific tickers that can rise and fall like a tidal wave of news.

The market has been uncertain, even treacherous as it keeps trying to rally against the ever-manipulative outside influences (news, Fed, governments, panicky investors).

As people hope for calmer seas on the horizon of the new year, traders should consider their positions.

Simpler’s traders are following basics to navigate the market turmoil:

  • Assess the market on a day-to-day basis with plans to trade shorter time frames
  • Consider taking gains before profit targets are met
  • Avoid having too many trades open
  • Maintain a strong cash position
  • Know your personal risk vs. reward tolerance

Many questions remain unanswered, i.e. latest Covid-19 variant effects, oil prices, unemployment, government lockdowns, and it may take weeks or months for the market to settle into a clearer direction.

And, the worst pullback in recent history may yet be unseen.

Traders who stay prepared while waiting and watching as the market shifts may be better positioned to ride out (or ride high on) rough waves ahead.