Violent Trend Days Got You Down?

Wow, I’ve been looking around blogs tonight, and am surprised by how much carnage there was in the daytrading community. It’s funny, because days like this are supposedly why we are daytraders in the first place! We can wake up flat, and happily short everything in sight while the long-termers get margin calls.

So what happened? Well, there’s no help for the knife catchers, so let’s ignore them. The #1 complaint I see out there is that the action in stocks was too messy; gains would turn into losses before the real run would resume.

So, I’m going to put forth a suggestion, if you have trouble trading days like this: Don’t try to change strategies to match the crazy action. Even expert traders usually mess up when they attempt that. Instead, use your normal strategy, but only trade liquid ETFs. These will (almost by definition) trade smoother than individual stocks, and on big trend days they’ll have enough range to be worthwhile for trading. Towards the end of my equities trading “career” you may have heard me mention this in videos a couple times. Like, after big Fed announcements I would try to focus on QQQQ or GLD. Some of the more successful bloggers I saw today were trading QQQQ and SMH and XLF and the like. I don’t think it’s a coincidence.