Thursday 1 April 2010
Markets have been captured and framed by trading ranges of varying
degrees, and this makes trying to catch a trend like pushing on a string.
A few weeks ago, given the tenuous trading environment, at least for us,
we decided to focus on some intra day trading in the S & P E-Minis. The
day trading gods must have been listening because that market has been
moving sideways in a 1500 tic range.
When it appears to be rallying, price reverses. When it looks like the
market is going to cave, a rally steps in and like the gingerbread Man, says,
"Catch me if you can!"
We have printed a 60 minute S & P E-Mini chart to depict a trend traders
nightmare, and a day trader's nemesis. The trading range actually extends
back to the 17th of March, but this pretty much covers it. What to do when
confronted with trading ranges?
Nothing would be the first choice.
The markets, and those who control it, have unlimited capital and patience
to tire out even the best of traders. Those with lesser skills have even
greater difficulty, so best to let the market work itself out and reach a resolve that will lead to the next move. Not trading is not the most popular tactic,
and it can be trying to sit on one's trading hands, but when opportunities are not there, why expend emotional capital along with risking financial capital?