Deron Wagner offers some advice on how to trade a choppy market like the one we’re seeing now – trade small, or don’t trade at all:
Given the whipsaw market we are experiencing, what is a disciplined, professional trader or investor supposed to do? We recommend the same things discussed in yesterday’s newsletter — a minimal quantity of positions and smaller share size on all trades. Even the most astute traders are likely to sustain losses in this type of environment, so don’t feel bad if you’ve been having a difficult time lately. However, the one thing that separates true professionals from novices is that professionals always have parameters in place to limit their losses when the going gets rough. If you’re sitting on losing positions, don’t be stubborn and fall into “hope” mode. Negligible losses can easily be recovered in a short period of time, but substantial losses cannot be. Trading conditions will eventually improve, making it easier to profit once again, but that won’t do you any good if your trading capital has dwindled away. Capital preservation is your top priority right now!
Recent Comments