Adapt Now For Summer Lull In Stock Market Trading
In this article:
- Build a predetermined trading plan
- Mastering trading with mentors
- Strategies and tools equip traders
The “summertime doldrums” of stock market trading don’t only affect retail traders or individuals. Fund managers and large, institutional players also historically take time off from trading.
Market participants are ready for a break, especially after the last six months of chaotic market movement and constant, unpredictable shifts in the market.
This summertime lull in the market leads to less trading volume – 10% less or more per historical data – and a general slowdown of market interest.
By the time traders get back into the swing of things for fall around September, this market could be on a completely different trajectory higher, or sinking further as recession looms at the end of the year.
This summer slowdown can be a great time for retail traders to take a step back, review trading plans, and add new tools to their trading toolbox.
(Check out the free video, above, for insight into trading this changing market.)
Plan Now For Summer Lull In Trading
Make no mistake, market volatility will continue through the summer months. Just not at the volume of the first half of the year.
How do traders adjust trading plans to avoid pitfalls and seize opportunities in a market still as hot as the Texas temperatures?
Learn. Adjust. Adapt. Seek opportunities based on what the market gives.
Back to basics is a strong strategy when faced with a new market environment with fewer players and all the market dangers still in play.
Simpler’s traders are looking at which adjustments to trading plans, strategies, and tools will protect from getting burned in this market.
Reacting to a rising consumer price indication of 8.6% (inflation gauge) and a record low consumer sentiment survey, the market took a steep dive to close the week. The Dow dropped 880 points and all three major indexes – Dow, Nasdaq, S&P 500 – fell more than 2.5% on the day.
The Nasdaq was hit hardest, falling 3.25% at the close.
Learn from the historical data of past summer seasons, and dive into what Simpler Trading has to offer during this summertime of volatility, fear, and market lows.
Understand and plan for trading risks
“What are you willing to risk?” is a baseline question every trader must ask before making any trade.
Don’t let the summer doldrums cause complacency in your trading plan. Know the risks, and plan accordingly. A summer lull is a heads-up to cement the importance of traders maintaining a well-planned and objective trading plan that matches predetermined risk parameters.
Just because the summer is “dull” doesn’t mean traders can ignore how quickly market momentum can change and price action could rise or fall. These momentum moves can expose traders’ setups that aren’t well-planned.
Start the trading plan process taking one decision at a time.
Develop a predetermined plan that can work through what the market reveals this summer. No need to give up the current plan, just adjust for what historically lies ahead this summer – a slowdown.
A trader’s personal “wants” or “hopes” aren’t a consideration, because the market gives what the market gives.
Let the adjusted trading plan define this summertime journey with set goals:
- Avoid losses – Know the risks and don’t go beyond these levels.
- Losing trades – Put them in the past and learn from the mistakes.
- Winning trades – study these to understand how to repeat this success.
And, an extra, don’t allow undisciplined emotions to affect trading decisions. Emotional traders are known for losing.
A trading plan can keep emotions at bay whether it is a losing trade or a winning trade. Unbridled excitement after a win can be just as dangerous as frustration and fear after a loss.
Just like taking a family vacation for the summer, traders need a way to get where they are going and a map to guide the way.
A predetermined trading plan provides direction, discipline, and tools needed to stay focused on trading without getting sucked into the doldrums.
Build skills with a team of traders
Simpler Trading has created over the years a community of like-minded traders open to those wanting to learn more and trade at a higher skill level.
Our team always asks, “Why trade alone?”
Lone wolves may survive in the wild, but they tend to get swallowed up when challenging the stock market alone.
Simpler Trading developed specific mastery training programs designed around a variety of trading styles and personalities. These mentoring programs allow traders to connect with a professional trader who aligns with individual goals.
Here is a quick take of our mastery programs:
- Small Account Mastery – Interactive trading sessions with John Carter, Founder of Simpler Trading, focusing on a path to consistent profits from small accounts. Develop small account options strategies to level up results at a faster pace.
- Moxie Indicator™ Mastery – Market “pops and drops” demand actionable trade alerts to track momentum patterns. TG Watkins, Director of Stocks, delivers insight into precision entries and exits for trades that help find a path forward while avoiding false moves in the market.
- Sector Secrets Mastery – What trader doesn’t want to uncover the best-kept secret to consistent gains? Raghee Horner, Managing Director of Futures Trading, hasn’t had a losing year in over three decades of trading and works winning trades in a specific sector of the market.
- Profit Recycling Mastery – This “key to consistency” is a game-changer for a once struggling theater major who jumped into trading and never looked back. Allison Ostrander, Director of Risk Tolerance, manages risk while taking advantage of options opportunities designed to keep profits rolling.
- Strike Zone Mastery – In the complicated world of futures trading, Joe Rokop, Managing Director of Commodities and Equities, identifies simple entries for consistent gains no matter which way the market moves. He targets “no brainer” entry signals to catch big moves while managing risk.
- Voodoo Mastery – Precise trades, instant alerts, and monthly live-trading sessions combine for a mysterious, magical combination of science and technical analysis. Henry Gambell, Senior Managing Director of Options Trading, and David Starr, Vice President of Quantitative Analysis, are the “Voodoo Masters” with a stellar record of mapping out the market and identifying the next spread trades and directional market movement.
- Compounding Growth Mastery – Taylor Horton, Vice President of Directional Options Strategies, compounds gains across the market by taking aim at weekly account growth with the precision of a scalpel cutting out profits. He makes his money work for him, and not the other way around.
- B.I.A.S. – Bruce’s Income Accumulation System (B.I.A.S.) is a sought-after program focused on low-risk, consistent returns within the trading style of Bruce Marshall, Senior Director of Options and Income Trading. Roll up your sleeves for this workhorse program that takes long-standing basics of trading to another level.
- Fibonacci – This is the gateway to understanding market support and resistance levels from an age-old mathematical formula. Nature, science, stocks, options, indexes, and the market overall can be tracked with this conservative, in-depth technical analysis. Henry and David deliver the details for data-hungry traders.
These “train and trade” mastery programs are where Simpler’s traders will work through the summer doldrums and prepare for what is expected to be a flurry of volatile trading through the fall and into the end of the year.
For traders who want to dive into the data and details of market action, take a look at these premium reports:
- The MEM Edge Weekly Report – Tap into the 20-year track record of a veteran market analyst providing stock selections to institutional portfolio managers. Mary Ellen McGonagle, Senior Managing Director of Equities, delivers insights from a pro with direct experience about what really drives the market.
- This Week In The Markets – Traders wanting the big picture of market action backed by bold insight into market research turn to this fast-paced report from Sam Shames, Vice President of Options. Sam delivers an edgey, in-depth synopsis of what he sees happening and what is likely to happen – good or bad.
As the summer heats up, now is the time to take advantage of the seasonal lull and learn new skills while trading the market in real-time.
Target profits with stock chart indicators
Why do we emphasize tools – stock chart indicators – so much at Simpler Trading?
Traders who daily earn a living in the markets use specific tools and resources designed to provide an edge on which chart signals to watch, stock market earnings reports, and upcoming market-influencing events such as Federal Reserve (Fed) announcements, jobs reports, or economic data. These charting tools are what traders refer to as technical analysis.
Experienced traders carefully structure trading plans to take advantage of charting tools to target profit opportunities in any market environment.
Chart indicators find strength, weakness in potential trade setups despite market pressures such as slowing economic growth, inflation, interest rates, struggling supply chains, or recession fears. Seasoned traders understand that these pressures can lead to trade opportunities as the market rallies or drops.
Trying to manually track all these market influences can overwhelm traders.
Stock charting tools – indicators – help retail (individual) traders process all this market data. Within the online trading world and computer algorithms of institutional traders that operate in nanoseconds, these are priority tools for traders.
Indicators are designed to track technical and analytical information of stocks. The design helps traders understand how a stock price may perform – or move – in the future, based on past and current data related to the stock.
Indicators vary in purpose with some specializing in specific details while others are more general. Traders can select indicators based on the individual trader’s plans, strategies, and goals.
Indicators can track moving averages, trends, highs and lows, relative strength, volatility, and much more. These data trackers can also follow economic information or company earnings reports. And, indicators can be applied to various time frames, including minutes, hours, days, or months.
Indicators are used to identify trading opportunities by analyzing all the past and present data in an attempt to anticipate upcoming trends in chart patterns and stock price.
With any indicator, the key is to balance the input in an effort to validate entries and exits, and make more precise decisions.
Free or premium indicators – which are best?
All online trading platforms offer stock charting indicators.
There are two types of indicators:
- Free – Designed for use with trading platforms and can collect and process a variety of stock market data. Free trading indicators are a starting point before adding more, but many original indicators – such as the TTM Squeeze – are still available in trading software.
- Paid – Designed by experienced and professional traders, these indicators focus on gathering multiple sets of data into one tool. These tools can be more complicated (multiple tools working in the background) than basic indicators. These chart indicators are usually purchased from their creators or a trading platform.
Not all tools – free or premium – work on all trading platforms. Some basic tools were designed years ago and never updated, and some premium tools are designed for exclusive use on certain online trading platforms.
Stock charting tools are designed to gather real-time information for when to enter (buy) and exit (sell) in each trade.
This summer, as the market twists and shifts, indicators will be important to traders.
Here are some top indicators used by Simpler’s traders:
- New Multi-Squeeze Pro – The squeeze is the foundation among Simpler’s traders and this indicator identifies moves with explosive profit potential.
- Moxie Indicator™ – This proprietary indicator was created to specifically read the profit potential of a stock and pinpoint accurate “pops and drops” in price.
- QuantPivots – Nothing like a little revenge trading to exploit the Wall Street “blind spot” and find precise targets in trade setups.
- Voodoo Lines® – Automatically predicting future support and resistance levels gives traders an edge when other traders get stopped out too early.
- Phoenix Finder Turbo – This tool exposes strengths and weaknesses of market-moving stocks and can be used in trading futures, options, and stocks whether day trading or swing trading.
- Divergent Bar – Track trade potential of the next “higher high” or “lower low” within the next three bars on a stock chart.
- VWAP Max – This is a combination tools package designed to automate reading overbought and oversold tickers in up, down, or choppy market conditions.
- Ready. Aim. Fire!® Pro – Catch tops, bottoms, and retracements with the indicator that identifies turning points and reversals.
Another important tool for traders is a stock scanner.
Trying to manually sort through thousands of stock tickers is virtually impossible. Researching a full watch list of stocks is time-consuming, even with indicators, so traders need this added, valuable tool.
Indicators are essential to retail traders wanting to simplify price information, track trends, identify trade signals, and develop insight into upcoming changes in trend or price.
Traders should personalize how they select the best indicators for their trading plan. For those wanting more insight into selecting indicators, get this free e-book, Best Day Trading Indicators.
The goal of using stock chart indicators is to uncover an edge that other traders might miss.
Adopt a balanced trading mindset
How do traders maintain focus in a trading lull while the market stews and brews ahead of its next upheaval?
Focus on adopting a trading mindset that puts aside the previous bull run and embraces a bearish market that some expect to fall off the cliff in coming months.
“Hope” is not a friend of traders working on improving their trading mindset. Hope won’t change this market environment.
Adopting a new mindset starts with – wait for it – developing and maintaining a trading plan that matches market movement to the downside.
An unemotional mindset combined with a predetermined trading plan insulates traders from wandering off track into risky trades.
Adopt a summertime mindset with these insights:
- Avoid “noise” – Cut out the noise and news of market pressures and focus on trading with an objective plan.
- Live life vs. trading – Trading for a living, or a part-time endeavor, doesn’t require sacrificing the important areas of life. Don’t let trading be all-consuming… enjoy life..
- Basic mechanics – Learn the basic mechanics (or revisit them if you are an experienced trader). Understanding and skill in technical chart analysis, indicators, strategies, risk management help build a stronger mindset.
Can a shift in mindset really work?
Best-selling books about trading – like Mastering The Trade by John Carter – dedicate entire chapters to the topic, so take this for what it’s worth.
Switch to trading on shorter time frames
Commit to a schedule for trading and a trading time frame of either swing trading or day trading.
Long-term trades are difficult and often not even a setup to consider in this see-saw summertime market.
Swing traders who might normally expect to hold trades for days, weeks, or even months are having to shorten their time frames. They are now working on trades that may only last a few hours or days.
This shift to shortened time frames can push traders toward more day trading which, like all trading, has a high degree of risk.
Simpler’s traders see adjusting to shortened time frames as a must to trading this market.
Whether swing trading or day trading, look for these insights into a daily time frame:
- Has the asset price moved beyond historical volatility? Assets could include an index, stock, exchange traded fund (ETF), or futures. And then there are options on most assets that can provide possible trade setups across time frames.
- Is there more chop or sudden action on the daily time frame? This can signal difficulty in identifying a rally or gap down. Use indicators to help identify clear signals that support changes in direction.
Summertime trading doesn’t have to be a “downer” even though signals show a season of spitting and sputtering on the way to a bear market.
Learn to maximize opportunities during quick market shifts and understand the basic trading methods that identify ways to target trades on a shorter cycle.
Underlying volatility during summer lull
This summer trading season the hot topic will be market movement and which indexes, sectors, and stock prices have momentum.
Historical data indicates a summertime lull overall with an underlying tendency to increase volatility despite lower trading volume.
The team at Simpler Trading continues to identify momentum trading opportunities by relying on training programs, trading strategies, and stock chart indicators. Welcome to summer!
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