Technical Indicators Keep ‘FOMO’ Trades In Check

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Simpler Trading Team

Oct 27th 2021  .  2 min read

Technical Indicators Keep ‘FOMO’ Trades In Check

October 27, 2021

Trading during earnings this week feels much more like playing a dice game than “Trading 101” – and some traders are sitting on the bench during this stretch to catch their breath.

Technology company earnings so far have traders buckling up for the ride. Anticipation of key companies announcing earnings has the market spinning, almost to the point of being overwhelming.

Simpler’s traders are keeping their trades clean and neat and their strategies simple during this volatile earnings season.

Technical, sentimental, and institutional trading have all had an impact on the market. Retail traders tend to be the most susceptible to sentimental and reactionary trades. As the S&P 500 climbed to new highs, a section of traders was unable to refrain from knee-jerk reactions. As they clamored for tickers to buy… the index appeared to react by spiking even higher.

With this rise upward in the market, “FOMO,” or Fear of Missing Out, can prove to be an enemy of traders and their strategic setups.

While traders can cut losses quickly if a trade no longer works, they can also scale back by trading small. It has been said that traders often go 10 times bigger than they should. In a volatile earnings-week environment, traders can give themselves the gift of time by letting a small trade play out before going too large.

In a culture where people want everything when they want it, acquiring patience can take time.

Traders have proven themselves to be emotional. Finding potential trades takes effort. Charts and technical indicators give traders an insight into the movements in the market. When entering a trade, Simpler’s traders put price and momentum ahead of emotional sentiment.

This is the time for traders to practice patience while anticipating corporate earnings reports while waiting for the market to signal a clear direction.