It’s partially goofy, but there is a serious message in this one…
The best days for small traders, are when there are sections of “big money” essentially moving in one direction on a stock or group of stocks. I think most of us operate like this: We sit around in a sea of turbulent speculation, and watch for the big money to move. The key clues that this is happening is higher than average volume, and a break out of a congested price channel. When this happens, we ride the momentum for quick profits.
But, there are plenty of days when a lot of big money players (intstitutions, hedge funds, and mutual funds) are all trying to reposition themselves. We see this on options expiration, and this window dressing time at the end of the quarter. When this happens, the big players are stepping on each others toes, but the small players (like you and me!) are getting crushed. So, what you’ve been seeing me do, and suggest, is not putting any trades on that aren’t just in-and-out quick plays. The markets are sometimes too turbulent for the types of small trader strategies that we’re most comfortable with, in my opinion. I talk a little about maybe being able to make semi-normal trades if you can identify a stable sector. Short of that, find a sector that happens to be surging at the moment, and scalp in it.
Richard,
Great video and GREAT analogy. I am a mouse. I need to be cautious to survive in a sea of elephants….or field of elephants. I am a field mouse.
[...] >How to Play these Tough Markets”> Movethemarkets>>How to Play these Tough Markets By Gav Some serious message from Richard @ move the markets. [...]
@Zoomie: thanks. It makes me sad to see all these trading blogs saying “well, I got chopped up again” day after day. I keep thinking “didn’t you see it coming by now?” If you know the market’s not right for your system today, maybe don’t trade that system today. At least consider it!
Richard — really enjoy the videos. It’s refreshing to actually see another trader. Great topics and insight.
estocastica
Richard – another great episode of the MTM show – we are not only mice, but we are little plump seals in a sea of great white sharks !!!
[...] that I have used in the past are no longer as reliable, because the behaviour of the “elephants” have changed. As humans and as traders, I think we have built-in “mindset [...]