Home > Apprentice Trader Journals > What to do when markets are in a range??

What to do when markets are in a range??

One of the benefits of working on a trading floor is being able to gauge the type of environment we are in on a day-to-day basis just by opening up my ears.  You can almost feel the energy when the market or even just a stock is giving away money.  And on the flip side you can feel the boredom and frustration when the market is providing nothing.  More and more lately I have been feeling this frustration by the traders on the floor.  But during these difficult times is when traders need to step up and make adjustments in their trading and grind out a living.  You need to grind out a living and basically keep your head above water so when the markets pick a direction you are still around to capitalize on this opportunity.  Here are a few adjustments that I have been making in my trading lately. 

  • Be Prepared.  Far too many days lately have been slow grinds with small periods of activity.  If you don’t have a plan for the market at all times you may miss this activity.  And if you are an undisciplined trader you may chase this opportunity and compound the mistake by not only missing the high probability trade but also taking a low probability scenario. 
  • Lower your expectations.  When the markets are not trending you are basically momentum trading.  The key to momentum trading is taking what the market is willing to give.  Take your profits and reevaluate the trade.  Most trading is grinding out small profits and losses, the bigger money will present itself but don’t try to hit a home run every trade. 
  • Respect support and resistance levels.  One thing I have been noticing in my own trading is that stocks are not only pausing at area support/resistance they are reversing off of these levels.  And if you have not at least taken some of your position off you end up turning a good trade into a flat or a small loss.  They key is to get out at areas you believe will be support/resistance and if we do break through get back in. 
  • Hourly trends are most important lately.  Most of the stocks I have been watching the only trend I have been able to take advantage of has been on the hourly timeframe.  Stocks that are trending are basically doing so on a 3-5 day timeframe.  If you are paying attention to the hourly charts you may be able to take advantage of good setups by trading in this direction.  A good example of this last week was WDC as it traded from 44 to 38. 
  • Your first loss is your best loss.  With lower expectations and less opportunity must come tighter stops.  When markets are trending and the direction is obvious you may be able to let trades breathe a bit.  The environment we are in calls for watching order flow and when the tape doesn’t feel right you need to get out of the trade and reevaluate.

Hopefully these suggestions help you in your trading.  If you have any adjustments that are working for you either post them in the comments section or email me at kylemkramer@gmail.com and I will post them for us to discuss.  As usual best of luck in your trading. 

Kyle

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