Hi Everyone,
I put this out yesterday to our free email list..sorry for the delay. Be sure to check out the free video report in the link below,
What a wild ride last week was for the stock market! Both sides have been forced into overdrive to sell their views on main stream media. Our turn dates and sentiment data has kept us from having to listen to the garbage they have been selling, as anyone talking is pretty much just pushing their own agenda. Trading with little or no volatility is a totally different animal then trading when we have volatility, like now.
When there is no volatility, a trader can just hold a long position and not have to do much thinking. Sometimes the hardest part is just holding and doing nothing, because most times when there is no volatility, the move doesn't make sense. Patterns, divergences, internals, turn dates get ignored and we see a series of Bullish Sentiment readings before the market roles over. There is almost always an underlying reason why volatility vanishes, and it almost always has to do with central banks!
VOLATILITY IS HERE AND NOT GOING ANYWHERE ANYTIME SOON-when looking at the short/intermediate term low dates Woody has given. Here is the best way to trade a volatile market.
CONTROL YOUR EMOTIONS!! Understand and accept that one has to trade a volatile market! When volatility is here, you are going to get massive moves in both directions, as we have seen over the past 2 weeks. As I just explained, when there is no volatility, the hardest part is just doing nothing and holding onto your long position. But in a volatile market, the hardest part is taking some of your short position off when we see an extreme bearish sentiment readings and we are nearing support.
Unlike low volatility periods where we can see 5-6 extreme bullish sentiment reading before price reacts, we often see only 1 or 2 extreme bearish sentiment readings before price reacts. And when it reacts, it is almost always a spike 75-125+ point rally in a very FAST MANNER. Most traders fail miserably trading in volatile markets, because they just hold their positions and don't take profits and re-enter the position, which allows your emotions to become activated. When we get these massive counter trend rallies, the media starts talking about why low is in and all one hears is how great things are again. One watches a short trade that was +$8000, shrink to +$5000 to +$2000 in a matter of hours/days. Then the little voice in your head becomes activated, you know the one that makes you do the wrong thing at the exact wrong time! (your emotions!) Then when you can't watch your winning trade dwindle anymore, you just pull the trigger and get out of the position, happy you made some money, but angry you let $6000 waste away.
If you are a trader, I think you know what comes next..you wake up to see the SP500 futures down 25 and wait for a bounce to get short again. That bounce doesn't come and guess who gets activated again, that little voice in your head saying-just jump short, you have been waiting for this move and now you are missing it!! You can't watch anymore and pull the trigger on a short trade, some 50-75 SP500 points below where you covered. We get an extreme bearish sentiment reading and the next support level holds and you find yourself in a short trade that is underwater!
How You Can Control Your Emotions In A Volatile Market..
Have a trading plan!! Scale in and out of a portion of your trade. When there is an extreme bearish sentiment reading and the SP500 is nearing support, take 1/2 the position off and look to re-enter at the expected top date given by Woody-which often comes with an extreme bullish sentiment reading. The 2% bullish sentiment reading (everyone was bearish) on 08/05 hit as the SP500 was nearing support. The preferred timing pattern in our premium report was for strength into 08/12. The top hit on 08/13 with a 90% bullish sentiment reading, just as the SP500 was hitting resistance. 08/14, the SP500 dropped 80+ points, registered a 0% bullish sentiment reading as the SP500 was nearing support. Needless to say, the SP500 is now some 60 points off the lows.
The turn dates and extreme sentiment readings, combined with support/resistance has worked out great. Will it always work that way? Absolutely not! So let's tie controlling your emotions to trade example. You in a short position and up $10,000 on the trade and we get an extreme bearish sentiment reading and support is not far beneath. Following the scale in/out game plan, you close 1/2 the position and lock in $5000 profits. What do you want the market to do-move up or down? If it moves up, you are now waiting to buy back the short position you closed at a better price. If support does hold and the move down goes viral, you already locked in some profits and still holding 1/2 a position. I have had worse tings happen to me then in a winning trade with 1/2 a position instead of a full position. You have silenced the little guy in your head, because whatever the SP500 did, you were ready for it!! Part II will go over position size and scaling out of short into a long position. Have a great day--G
I put this out yesterday to our free email list..sorry for the delay. Be sure to check out the free video report in the link below,
What a wild ride last week was for the stock market! Both sides have been forced into overdrive to sell their views on main stream media. Our turn dates and sentiment data has kept us from having to listen to the garbage they have been selling, as anyone talking is pretty much just pushing their own agenda. Trading with little or no volatility is a totally different animal then trading when we have volatility, like now.
When there is no volatility, a trader can just hold a long position and not have to do much thinking. Sometimes the hardest part is just holding and doing nothing, because most times when there is no volatility, the move doesn't make sense. Patterns, divergences, internals, turn dates get ignored and we see a series of Bullish Sentiment readings before the market roles over. There is almost always an underlying reason why volatility vanishes, and it almost always has to do with central banks!
VOLATILITY IS HERE AND NOT GOING ANYWHERE ANYTIME SOON-when looking at the short/intermediate term low dates Woody has given. Here is the best way to trade a volatile market.
CONTROL YOUR EMOTIONS!! Understand and accept that one has to trade a volatile market! When volatility is here, you are going to get massive moves in both directions, as we have seen over the past 2 weeks. As I just explained, when there is no volatility, the hardest part is just doing nothing and holding onto your long position. But in a volatile market, the hardest part is taking some of your short position off when we see an extreme bearish sentiment readings and we are nearing support.
Unlike low volatility periods where we can see 5-6 extreme bullish sentiment reading before price reacts, we often see only 1 or 2 extreme bearish sentiment readings before price reacts. And when it reacts, it is almost always a spike 75-125+ point rally in a very FAST MANNER. Most traders fail miserably trading in volatile markets, because they just hold their positions and don't take profits and re-enter the position, which allows your emotions to become activated. When we get these massive counter trend rallies, the media starts talking about why low is in and all one hears is how great things are again. One watches a short trade that was +$8000, shrink to +$5000 to +$2000 in a matter of hours/days. Then the little voice in your head becomes activated, you know the one that makes you do the wrong thing at the exact wrong time! (your emotions!) Then when you can't watch your winning trade dwindle anymore, you just pull the trigger and get out of the position, happy you made some money, but angry you let $6000 waste away.
If you are a trader, I think you know what comes next..you wake up to see the SP500 futures down 25 and wait for a bounce to get short again. That bounce doesn't come and guess who gets activated again, that little voice in your head saying-just jump short, you have been waiting for this move and now you are missing it!! You can't watch anymore and pull the trigger on a short trade, some 50-75 SP500 points below where you covered. We get an extreme bearish sentiment reading and the next support level holds and you find yourself in a short trade that is underwater!
How You Can Control Your Emotions In A Volatile Market..
Have a trading plan!! Scale in and out of a portion of your trade. When there is an extreme bearish sentiment reading and the SP500 is nearing support, take 1/2 the position off and look to re-enter at the expected top date given by Woody-which often comes with an extreme bullish sentiment reading. The 2% bullish sentiment reading (everyone was bearish) on 08/05 hit as the SP500 was nearing support. The preferred timing pattern in our premium report was for strength into 08/12. The top hit on 08/13 with a 90% bullish sentiment reading, just as the SP500 was hitting resistance. 08/14, the SP500 dropped 80+ points, registered a 0% bullish sentiment reading as the SP500 was nearing support. Needless to say, the SP500 is now some 60 points off the lows.
The turn dates and extreme sentiment readings, combined with support/resistance has worked out great. Will it always work that way? Absolutely not! So let's tie controlling your emotions to trade example. You in a short position and up $10,000 on the trade and we get an extreme bearish sentiment reading and support is not far beneath. Following the scale in/out game plan, you close 1/2 the position and lock in $5000 profits. What do you want the market to do-move up or down? If it moves up, you are now waiting to buy back the short position you closed at a better price. If support does hold and the move down goes viral, you already locked in some profits and still holding 1/2 a position. I have had worse tings happen to me then in a winning trade with 1/2 a position instead of a full position. You have silenced the little guy in your head, because whatever the SP500 did, you were ready for it!! Part II will go over position size and scaling out of short into a long position. Have a great day--G