Weekly Perspectives – 5/25-5/29

Hi Traders,

Reminder:

The next Montreal Active Traders (MAT) Meetup is scheduled for June 10, 2015 from 7-9pm. Don’t forget we have a $20 promo with Uber Montreal which all MAT members can use to get to or from the event. See coupon below.
RSVP here – it promises to be a fun event!
http://www.meetup.com/Montreal-Active-Traders/events/222506597/

____________

Weekly Commentary –

This week we saw a shortened trading week punctuated by a small gap down at the beginning of the week followed by a recovery of most of those losses by mid-week. Sellers had a small edge going at the end of the week as buyers were reluctant to buy or hold positions over the weekend.

Volatility remains near all time lows.
Experience and history shows that eventually we can expect that volatility will begin to expand again, and when volatility begins to expand and regress to the mean we can expect some significant and violent price expansion.

The market looks like it wants to continue to push higher and frustrate all the bears and hesitant buyers still on the sidelines.
But on the flip side, we are primed cyclically for a big selloff however with summer quickly approaching at this point it’s anyone’s guess when that next big move will start.

Guidance for intraday traders remains the same.
If you find yourself consistently profitable with the current market conditions, then keep doing what you’re doing. 😉
However if you are struggling with the current price action I can offer 3 options –

  1. Do less –
  • The market indices are offering 2-3 good swings per session. Get ultra focused and try to catch these opportunities. If you miss them, call it a day, and don’t overtrade.

Stop trading / Invest in yourself –

  • While the markets are slow, now is a great time to research ideas, backtest, read, take a break, etc.

Change it up / Look elsewhere –

  • There’s always a bull market somewhere. Find and trade instruments that offer more opportunity.

As for intermediate or longer timeframe traders guidance remains the same – there is no compelling reason at this point in time to be trying to short or time shorts as the expectation remains to the upside. Continue to overweight your longs.

____________

Lesson of the Week –

  • Do you find yourself struggling to follow your trade plan?
  • Do you have have a hard time maintaining your attention or focus while trading?
  • Do you experience wild mood swings or emotions when you trade?
  • Does your trading cause you excessive stress?

In “Mindful Learning”, Drs. Hassed and Chambers, discuss how neuroscience has now shown that high stress is associated with poorer executive functioning and hence poor performance, whereas being mindful is associated with better executive functioning and better performance.

An overactive stress center in the brain (the amygdala) hijacks executive functioning, making performance effectively difficult, if not impossible.

Stress has negative consequences both on working memory as well as attention regulation.

A reduced working memory can lead to pronounced and increased reaction times and errors.
Whereas poor attention regulation can have us lacking focus and not alert and responsive with the trade at hand.

Furthermore it turns out that there is no worse stimulus for taking us out of flow or the “trading zone” than excessive stress.

Paradoxically we cannot think our way into the zone, but through mindfulness we can practice not thinking our way out of it.

The takeaway is that taking the time to settle, and engage in a mindfulness practice before starting your trading day (or before making trading decisions) can have some significant positive effects.

If you’ve ever wanted to try a mindfulness practice, tried but didn’t follow through, or are ready to get back in the saddle then check out the “Mindfulness for Traders – 28 Day Challenge” I have put together. All the traders I have spoken to who have incorporated mindfulness into their daily routines have said it’s made a large impact on their trading and quality of life. This challenge will get you there.

Spotlight Trade of the Week –

This week’s Spotlight lesson is an intraday setup on HTRX.
Below is a 15 min. chart on HTRX.

  • This has been my favorite bread and butter setup for the past several weeks.
  • Go back to the past couple of newsletters for details on the setup.

HRTX was identified on the scan as having gapped up on high volume after some positive drug trial news

  • Setup is a narrow range bar consolidating above 30 min. opening range.
  • Bought on break above high of candle @ 17.61
  • Stop 2 ticks below low of candle @ 17.29
  • Closed out 1/2 at 19.25 at the 127.2% pre-measure fibonacci target for a +5.12R trade.
  • Held 2nd half for the 161.8% fib target. Target missed by 13 cents which would have resulted in +11.69R.
  • Instead closed out position at end of session for a blended of +5.9R.
  • So if one would have risk $500 dollars, trade would have netted $2,950 (500×5.9).


Screenshot

Happy trading,
Houston

PS – Are you’re interested in trading? Tired of losing money? Are you treating your trading like a business or hobby? Or simply don’t know where to start?
If you are ready to invest in yourself, and receive the benefits of structured coaching/mentoring click herehttp://thetradingedge.org/coaching/­.

Weekly Perspectives – 5/25-5/29

by editor time to read: 3 min
0
×
Sign up for our weekly newsletter
Stay up to date with the podcast, and get notified when the next podcast drops.