Home > Market Set Up > day trading last Fridays reversal

day trading last Fridays reversal

As a day trader you must make sure if you want to earn a consistent income that you trade stocks with a volatility you can handle. Or to put it another way, day trade stocks that move enough for you to earn a living but not too much that one or two trade can wipe you out. Believe it or not it is quite common for new day traders to choose excessive volatility and excitement over a steadily growing equity curve.

The unprecedented volatility we experienced last week (historic actually, the worst week in stock market history as described by the Wall St Journal on 10/11/08) has made it very difficult for new traders to maintain confidence. Most of our experienced traders have sidestepped the mayhem by either not trading or cutting back their share size significantly.

I am sure you will get one or two traders bragging about how much they made the last two weeks, it may be possible ( we have a few who did very well but they have over 10 yrs experience) but that is not the norm right now. Hedge funds and many traders are blowing up trying to pick a bottom.

The consensus was that the market needed capitulation before it was safe to dip your toes in and buy anything. I am not sure it is time to make an investment yet but Fridays action does lead me to believe that the reversal we saw in the last two hours makes me want to be on my toes for the market to make its lows in the morning and pick a few stocks to get long after 10am and hold to the close.

We didn’t close on the highs but the intra day turn around was impressive. Good luck this week!


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