Find Windows Of Opportunity In Stock Market Trading
In this article:
- ‘Buy everything’ market has ended – adapt
- Time frames offer windows of opportunity
- A disciplined plan is a trading necessity
In case you missed the news, the technical parameters of a recession have been realized in the economy.
According to the Federal Reserve Bank of Atlanta’s GDPNow forecasting model on June 30, the latest estimate for second-quarter U.S. real gross domestic product (GDP) growth is -1.0%. Combine this result with the 1.6% GDP decline in the first quarter, and the back-to-back negative GDP numbers reveal a recession in play.
GDPNow is a continually updated forecasting indicator and not the final, official second-quarter number. Second quarter GDP results from the Federal Reserve (Fed) are expected to be released on July 28.
Following the worst first half of the year’s performance in the stock market in 50 years, the economy and stock market are facing an uphill battle through the second half of the year.
Traders looking for ways to navigate this march forward will need to adapt their trading plan.
(Check out the free video, above, for insight into trading this changing market.)
Find windows of opportunity and more ‘why(s)’
Traders wanting to adapt to this market and close out the year on a profitable note need to understand that the “buy everything” market of past years is gone.
Any sustained uptrend is in the future and trading today requires an approach to the market that acknowledges the uncertainty and chop fueled by factors such as inflation and interest rate hikes.
This market volatility can be a trader’s worst enemy, or a friend.
The market has various windows of opportunity – pre-market; open; midday; and into the close. Traders must decide when to trade and how to trade these windows.
The “when to trade” blends with personal style, i.e. part-time or full-time trader, swing trader, day trader. Part-time traders may be able to get started looking at the markets at 7 a.m. before heading off to the day job while full-time traders might be better suited working trade setups after the open and into the close.
Traders of any style should resist trading on their lunch hour – midday from 11:30 a.m. to 1:30 p.m. – as this tends to be the daily doldrums where the market is trying to figure out what it wants to do for the day.
For any window of opportunity, consider this question, “What are underlying market conditions that can reveal a valid trade?” These conditions include the hourly price movement range, support, and resistance.
A simple strategy in this contest is to watch for opportunities to buy at support (moving higher) and short at resistance (moving lower). Consider each possible trade setup based on the number of “why(s).”
Trade has to meet the standard of having at least one “why I should trade here” – timing, price, support, resistance – and preferably have multiple “why(s).” The more valid reasons that apply to a trade setup relates to the potential for a successful trade.
Applying these “why(s)” within the market windows of opportunity allow traders to use time and volatility as a trading advantage.
Trading futures in a downtrending market
Futures trading is a strategy to expand a trading portfolio as the market chops along in volatility.
Traders who are learning futures trading or are seasoned veterans can always use extra insight to apply strategies to navigate an uncertain market.
Gain access to live-trading sessions where you can trade with a professional, get real-time trade alerts, and study the learning center to build personalized strategies in the futures market.
There are futures trading learning opportunities at Simpler Trading.
Define a disciplined trading plan
If you haven’t done this already, we’ll say it again and hopefully it will sink in over the three-day holiday weekend (markets are closed Monday, July 4 for Independence Day).
Define a disciplined trading plan and keep it updated through the end of the year.
The markets are famous for having an alluring charisma that entices people to the trading lifestyle. Think back to the Robinhood rush during the pandemic where supposedly anyone with a smartphone and $100 could launch a profitable trading career.
While many want to fire their boss and escape the constraints of a J-O-B, actually realizing the longing for freedom to do as they please, when they please, and make money in the process takes a lot of work. This work includes risking hard-earned money with no guarantee of success.
The reality of the trading lifestyle often hits these anguished souls with such force that they slink back to the safety of contributing in the workforce.
Trading, like anything that has potential for great freedom and monetary success, is a lifestyle. This lifestyle involves a learning curve and definitive risk vs. reward considerations.
Fundamental to developing the trading lifestyle is formulating a plan.
A trading plan defines the trading future, and this plan requires discipline.
The irony of trading is that it attracts people who hate structure and long for freedom.
Consistent income from trading is not possible without determined discipline. With discipline comes freedom.
A disciplined trading plan helps:
- Avoid losing total account value;
- Keep from repeating the same mistakes from losing trades; and
- Know what trades have been working and how to continue the “rinse and repeat” mantra.
Without a defined plan it is easier for undisciplined emotions to flow into the trading lifestyle and lead to trading losses.
Day trade to open windows of opportunity?
All the chaos of this market has created a new level of stress for traders.
One strategy to consider is day trading. While day trading is considered a higher level of risk, the team at Simpler Trading understands what traders go through when the market maintains an extended level of uncertainty.
Simpler Day Trading allows members to follow experienced traders as they “get in, get out” with trades that limit capital exposure. What is appealing to traders in this market is the community of professional traders delivering live-trading insights during market sessions.
Avoid the stagnation of trading alone, and check out this daily training and learning option.
Stay on track with a trading plan
The trading lifestyle fans the flame of desires of working for yourself; having an “inside track” with the boss (yourself); and taking breaks anytime during the day while wearing pajamas and enjoying tropical drinks.
Like the visions of pandemic living, but actually making money along the way.
This fantasy world sounds nice until the market shifts and that latest “sure thing” trade goes sideways fast.
Now the pajama-clad trader has to put on the “boss” hat and start troubleshooting. Any wrong decision falls onto one single employee in this newfound world of freedom – the trader.
Consider the concept of a family-run business where there’s always that one relative they can’t fire.
When the market goes against the trader and the trading account takes a huge hit, the trader can’t be fired and can’t quit. The trader is the business.
Traders must turn to the trading plan to get things on track.
A trading plan is the key to managing the lifestyle when a trader starts to act up and most traders are going to act up. Excitement sets in when things are clipping along just fine and frustration sets in when the market turns the tables.
The trading plan is a map showing the discipline and structure needed to hold yourself accountable for trading the way you intended.
There are those who believe a plan may not be absolutely necessary for everyone.
But our team of traders – with a combined 200+ years of trading experience – know that a defined plan is a working tool that serves a great purpose.
It is a whole lot easier to have a trading plan and not need it rather than face the markets without an intentional pathway to profitability.
Seesaw session kicks off ‘dizzying’ second half
As the market moves into the second half of the year following a seesaw session on Friday, traders can take advantage of the three-day weekend to relax and enjoy the holiday.
Remember that the allure of independence as a trader is founded in the independence achieved through the founding of the United States.
Adapt the trading plan as needed to open up opportunities in what is setting up to be a dazzling and dizzying ride in the stock market through the end of the year.