Try To Be Right… Or Make Money?
The stock market is acting like the weather in Central Texas — wait just a minute and it’ll change seasons.
After days of bleeding to the downside, all three major indexes reversed for a Thursday upswing.
The boost was refreshing to nervous investors wading through a slew of negative news that included surprisingly low new job numbers, rumblings of far away wars, “Mars man” bashing crypto, a gas pipeline shutdown due to ransomware, and escalating fears of inflation.
Much has changed in trading since the pandemic-induced bottom last year. Traders using the same strategy and mindset that worked in the market upturn following that bottom are facing tough trading sections today. This is because it is not uncommon (historically) for the stock market to rally for many months after a bottom and then take back all that gain in just a few weeks.
Veteran and active traders understand this and maintain a constant state of flexibility — they will change their trading approach based on what the market gives.
Simpler’s traders don’t bet the farm based on the daily news or the paid analysts sharing their opinions. They focus on the setup — what an asset is doing and the technical factors being revealed.
Trading for them isn’t about the stock, it’s about the setup. Some of the factors that influence the setup are price, volatility, market (trader) behavior, and specialized tools like the squeeze.
A key component of Simpler’s trading plan — making money — is watching and waiting for the next good setup. They don’t worry about “why” the market is moving a certain way or whether they should be “right” about any certain trade.
May historically can be a rough month for traders so Simpler’s traders aren’t looking to take big risks. They are waiting to see what the market tees up for them heading into summer.
Traders don’t get paid to be right — like those paid analysts. Traders work to limit risk and make money in the market.
The market has a whole lot of crazy going on for one person to tackle solo. That’s why we don’t trade alone.
We Saw: Market bouncing, pushing for rally —
- All three indexes closing up on the day
- Pipeline back online, crypto takes digital ding
- Covid-19 effects on companies, markets still not done
We’re Watching: Not what is “right,” but what works —
- Playing the setups, not the stocks
- Strength of overall market rebound
- For setups based on what the market offers