Exercise Patience To Avoid Q4 Mistakes


Simpler Trading Team

Nov 04th 2020  .  2 min read

U.S. presidential election uncertainty didn’t phase the stock market as all three major indexes continued a strong rally this week.

Anyone on the short side of this market was taking serious hits.

All three indexes pushed higher Wednesday with the Dow spiking above 700 points and Nasdaq jumping above 4% at one point.

The Dow rose to 27,847.66 points to gain 1.34% (rising 367.63 points on the day). The Nasdaq raced to 11,590.78 points for a 3.85% increase while the S&P 500 continued the midweek explosion up 2.2% to 3443.44 points.

Simpler’s traders weren’t looking to “load up the boat” during the rally as they searched for manageable trades in a market not presenting many likeable setups.

This market is presenting an environment similar to when daytraders “make their money in the morning and give it back in the afternoon.” Traders in this situation face decision fatigue later in the day and get impatient when taking trades.

Simpler’s traders have done well to this point in a crazy volatile year and aren’t looking to give back anything heading into the fourth quarter (or “afternoon”) of 2020. Sitting back and really reading what the market is presenting may be tough for active traders. There may be limited opportunities to press through the volatility with certain setups, but they will need to be possibilities.

The consensus is to protect capital and grind it out with patience while watching for clean setups that fit a relaxed trading plan.

We Saw: A market on a mission to rally – 

  • Big tech gaining strength, boosting the Nasdaq
  • Shorts taking hard hits with the fast rally
  • A presidential election in limbo

We’re Watching: How to grind it out through Q4 –

  • Managing for clean setups, opportunities
  • Protecting year-to-date gains with patience
  • Whether third straight positive session can hold