Markets Challenge Patience Of Traders

2020-04-28 | Simpler Trading Team

A powerful trading position has emerged over the last seven weeks of pandemic volatility.

Patience.

Turnaround Tuesday saw the markets tease another positive day before losing ground and closing down across the board.

The daily back-and-forth in this volatile environment can test even veteran traders trying to wait for the best setups.

It’s a cautious time to avoid an itchy “click” finger on your trading platform.

A barrage of news and market updates can create strong FOMO — Fear Of Missing Out.

Keep in mind that “hot” news doesn’t correlate to stock and price moves. Institutional influences — market makers, large funds — drive market movement.

This is what trips up so many traders who buy into the news assessments after institutional influences have made their moves.

The news consensus is the markets are almost out of the woods. Based on market history, it’s likely a head fake.

Positive momentum may continue in the near term, but caution is warranted as the market shifts. Simpler Trading veterans have seen this cycle before and signs are building that it’s about time for markets to roll over and tank again.

This is a time where patience becomes a powerful position — waiting, watching with cash in hand.

Strong advice learned at Simpler Trading is that traders are not born with the patience gene.

This foundation message gets repeated over and over again at Simpler — unless you develop patience you will not succeed in trading.

We Saw: markets stumbling after previous gains — 

  • Banks facing multiple pressures
  • Unemployment numbers rising, yet housing stocks surge
  • Pressure mounting for more states to plan reopenings

We’re Watching: … signs of an historical downward shift —

  • Any stocks moving their own direction — RH, ADBE, WING, TSLA
  • Advertising losses affecting key tech stocks
  • Sage advice: “Patience is bitter, but its fruit is sweet.” — Aristotle

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