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I have no specific bias towards the market at the moment. There's too many moving parts for me to put together in a clear picture. However, given volatility is low, price is at extremes, there's a higher risk that volatility will expand then contract, which increases risk to the downside compared to the upside.
Can you help answer these questions from other members on NexusFi?
It strikes me that I'm too much of a coward to be a really great trader. I think that I can be a scalper, but to really be a trader....I'm not sure I have the cohones for it. Today being a case-in-point, in fact a second example in as many weeks, where I had 20 ES cars long at 63, kept holding on to it through the downside to 55s before FOMC, then FOMC hit, got out at 65.......when the right trade would've been to hold on to it, as it just kept rallying to ~100. I'm not really sure how to improve this.
A scalper is a trader. There is no shame in being a good scalper. Many of the best traders are scalpers. You don't hear much about them because they don't get the 8 figure paydays like traders at banks or hedge funds make. Its more glamorous to read about a trader pulling down a $50 million dollar bonus than the scalper who pulls in only a million or two a year or even makes a comfortable living making a few hundred thousand a year. Scalpers grind out their earnings with consistency not necessarily catching a monster move.
That is something you have to work on. Maybe since you took so much heat (from 63 down to 55) that once it started coming back you felt relief instead of thinking the worst is over now lets ride this trade and you only got out a couple of ticks from your entry. Is it psychological, probably more so than cowardice. Taking some heat initially in a trade will make you rethink everything. If it was cowardice, you probably would have gotten out at 55 because your thinking would be all messed up and you don't want to make it worse. I don't know if you have a trading plan, like when you get in at 63, do you think it is going to say 85? If you did, then why would you get out at 65 instead of letting it go up?
When I got in at 63, I was looking to the 70s. When the heat started though, especially after two fails right at 70, I started to rethink my hypothethis, and thought maybe I read the market wrong. Since most FOMC days spike up then back down, my line of thinking was I'll use the FOMC spike to get out at break even then reassess the market. Which is what I did.
The question is , should I have gotten back in when I saw that it wasn't just a spike but the start of something, or should I have not wavered from original market interpretation? I'm not sure. I'm wrong quite a lot, so my confidence regarding my assessment is low.
Trading on FOMC days is always tricky because literally the entire world is waiting to hear what Yellen will say. You are going to have big spikes immediately afterward. In today's case, your analysis was already bullish pre-FOMC, you were long and Yellen's comments came out which were supportive to your position then the reason for you being in the trade in the first place is still valid so you should have stayed in the position.
What a day today. It's never as successful as I imagine it would have been in retrospect. I just have too much of an itchy trigger finger. Out of 110 points on the NQ today, I got about 40, and all I had to do was just wait to exit at the end of the day to get the Benjamin. That's disappointing. I figure that if I'm really going to take advantage of futures trading, I have to be able to make 20% of my account on days like this, to equilibrate all the money lost on chop during the rest of the month. At 1 car/10K, that's achievable. Now I just have to recognize the day for what it is and nail my hands to my chair.
Looking at the overall map, it seems the market has been ranging since about October. The range has been pretty wide, about 150pts ES, but I'm not sure what to make of it. Is this a market top range or is this a consolidation for a continuation. Given the incoming rate hikes and high dollar, it seems like we're due for a correction. While the US economy is a bright spot in the global environment, QE in other locales such as Europe and Japan make their stock markets more attractive I would think. So why invest in US stocks when you get a much higher return in other countries? It's also more expensive to buy US stocks if you have to convert into dollars.
Regarding bonds, incoming interest rate hikes should be bearish for bonds. At the same time, there's a large differential between the US interest rates and other world interest rates, which is bullish for bonds. I'm not really sure who would win.
My bias is definitely short stocks, uncertain bonds, bullish USD. Is the strong US tech sector sufficient to prop up the market?
