Hello Yo’s. I usually try to avoid my computer on Saturdays but I’m dropping in a note for you, thinking about market conditions. Market conditions can go on for months and months, and our trading gains come in like clockwork. And then in one day the market condition can change, and what worked so well for the past six months may not be working as well now. This should make your trading fingers pause. Put down the mouse.
The markets were steadily ranging for the past 4 months, and ranging markets are fabulous for Combo Trading. When the market changes gears and begins to trend, a couple things change for us. Obviously, the trending direction can go on for a long time, and our trend continuation setups have a lot of potential. Secondly, the retracements are fewer but more extreme.
I was comparing notes with Rob yesterday, and in the course of this discussion I made the point that it’s not the time to hold any losses at all. If I enter a trade and it does not move immediately in my direction, I want out. I don’t want to have risk on when the trends are beckoning. I had to laugh when his response was this. While it’s true that this is not the time to hold onto losses, it is a GREAT time to let some winners run. Duh! Why didn’t I think of that!
I’m naturally focused on not losing what I have. It’s part of my strategy for making money. We are all excellent traders, the hard part is keeping what we earn in our accounts, right? Well, I do appreciate Rob pointing out the same is true going the other way, the winning way.
So this is a note to Self, and a note to you to keep in mind that the market has changed. When trends break out they can be huge, but the retracements can be huge too. Here is what that means for me this month. I am more cautious with entries. I want to enter my trades a little late rather than a little early. I want some proofs. Once I’m in the trade and have my stop safely set to break even, I will leave my profit targets open and see if I can capture some larger gains during the trending market phase.
Just a few thoughts as you’re planning for next week’s setups.
Enjoy the rest of the weekend. See you Monday.