Friday, April 10, 2009

Determining what kind of day it is (real-time) is crucial in determining how aggressive we are.  When things are working, do more of them.  When they are not, how do we know when to lay off or when to push the accelerator?

Stocks or futures that make a new low or high from the previous day and then quickly reverse (false breakout) are usually great indications of slow trading day.  This happened yesterday with many stocks. 

Tomorrow is a holiday and the stock market is closed.  Right before a major holiday, traders’ like to take long vacations.  This was definitely true today as volume was very light.  If you are in a winning position, it is prudent to take profits.  Adding to winning positions during light volume days before a holiday is not the best set-up.  I have a tough time trading right before a long holiday because the volume is so thin.  The market can quickly reverse and the paper profits than you once had, are no longer. 

I am fortunate to work with a great bunch of traders (you know who you are).  At 930am (central time) I like to get a feel for what is working.  I usually shout out, “what’s working?”  If nobody answers me, I know it is tough trading.  If every trader shouts out a bunch of names, I know that things are working.

Today we had a 12 handle S&P range.  Small ranges can be the kiss of death.  Little movement in the futures is not usually the best setup for making lots of money. 

Enjoy the long weekend