Withstanding The Trading Storm

Withstanding the storm as traders is part of the process – it must be embraced. As a trader, you cannot fall victim to the blame game. If you lose money, it is not the markets fault, it’s not your platforms fault, it’s not your broker’s fault; it’s yours and yours alone.

Consistent profitability goes far deeper than just winning trades. It is the understanding behind mass market psychology; not just your own trader psychology.

What does this mean?

We talk about the markets being random and uncertain; however, moves in a security are well orchestrated by Market Makers and Institutional Investors alike utilizing dark pools to fulfill their orders.

For example, we have seen these orchestrated moves in $SPY throughout the summer and continuing into the fall trading sessions. The PM gap (up or down) followed by the quick reversal near the bell heading into the normal trading session.

This is what we keep describing as a trap. The “trend” is forming PM which entices traders to hop on board the PM trend only to experience the market quickly reverse in the opposite direction of their positions.

Ask yourself, is this just a coincidence? No, it most certainly is not just a coincidence. These are well orchestrated moves to lure in unsuspecting traders in order to take their shares and fulfill orders.

This is what we mean by ‘withstanding the storm’. Now, the ‘storm’ can occur at any time throughout the trading session. In fact, the storms that occur during an intra-day consolidation period are often more mentally draining than at or near the bell. The reason being, the storm may last longer than expected.

A good example of this is around VWAP. When a security reverses back to VWAP after a significant gap up or gap down, two things will occur.

1. The security will reverse and continue heading in its original gap direction

or

2. Break through VWAP and begin trading on the opposite side for the day.

Now, this is where the storm can occur. The ‘dance’ around VWAP, crossing VWAP to the upside and downside, over and over again for a period of time is what can be exhausting; If you allow yourself to get stuck in it.

A much more strategic way of trading this is to wait for the move to occur. We do not mean just a few cents in the expected direction; we mean a crystal-clear direction has been established. If you put on positions ‘just when it breaks’, you’ll run the risk of getting caught in the storm and stopping out. Just wait. Focus on catching the meat of the move rather than having the perfect entry.

That being said, as you know, we focus on serious trades with a serious ATR and high volume. We only trade these securities because it allows us the opportunity to capture plenty of upside once we get into a position.

We avoid lower ATR securities because they do not offer enough upside. It comes down to risk / reward. We are not scalpers; therefore, we are looking for targets much more than just a few cents. If you are style is that of a scalper, only holding for the first pop of a stock, then this post is not for you.

We trade big moves and this ‘Withstanding the Storm’ concept is designed for this type of trading. There are many different ways to trade the market, we just share what works for us.

If you have another trading style you would like to discuss, reach out.

About The Street Trading

Consistently Profitable.

That's The Goal.

Start with a crystal-clear vision of where you’re headed, then effectively lay the foundation to reach that goal through a systematic process.

That's The Street Trading.

We provide a straight-forward, no-nonsense results-driven trading education, that cuts through the noise to teach new and existing traders on how the stock market truly operates.

Our attention is focused on building actionable knowledge about the markets from the ground up. We construct a foundation of the fundamentals behind consistently profitable trading that you can build a career on. Take the guess work out of trading and ultimately understand what moves the market to finally flow with the Street and Trade with Clarity.

Day Trading | Swing Trading | Position Trading - It all comes down to managing risk and market psychology.

If you’re interested in learning more about what we have to offer you as a trader, come check us out at www.thestreettrading.com

We look forward to joining you on your trading journey!