S&P 500 dropped by 4.9% since Monday. This is the
worst start of the year for the markets and all FED had to do is raise rates
0.25%. Just imagine what would happen if they continue raising rates as they
are promising now. The market is clearly hinting to the Federal Reserve that it is
not a good idea and they usually listen so I would not expect any rate hikes
How many times did you hear to be successful trader all you
need to do is “Buy Low and Sell High”? I heard it thousands of times. Unfortunately,
this phrase misses few important words. Let me give you an example on below chart.
When you ask ordinarily person or a new trader where is the low and where is the
high? Close to 99.9% will say Point 1 is the low and Point 2 is the high and
they will be right except one small key word. Point 1 is past low and Point 2
is past high. Unfortunately, when you trade and invest you do it in a future and not in the past.
Let’s look at the chart below which looks at the same data as above but few weeks forward. It turns out Point 2 was past high but it is at the same time is future low. So next time people say “Buy low, sell high” they mean “Buy at the price that will be future low, sell at the price that will be future high” or “Buy future low, sell future high”
According to Mark Hulbert if the first trading day of the year is negative bear market is more likely this year:
So what does it mean for S&P 500? Based on high of 2,134.72 in May of 2015 the S&P 500 should close below 1,707.77 sometime in 2016.
A typical day for a trader consists of analyzing different trade
setup or scenarios as they come up during the day. I have about 40 different
scenarios or trade setups that I watch daily. So how do I keep it all in my head
without letting it explode? The answer is I don’t. I have a piece of software
that helps me manage my attention during trading hours and focus on what is
coming. On top it displays trader clock which shows me current time, countdown and
time until coming events such as economic releases, international market open
and close times, FED speeches etc. Next it shows my weekly mental and monetary goals
and progress bar based on my current account balance. And finally list of only
relevant at that particular time trade setups. For example, I monitor some
setups during US open hours so the application shows me setups for US open, my past
notes and stats ahead of US open and hides them later so I can stay focused on
next trades. After trade is done I make notes for next time, update results and
forget about it until the next time so my head stays clear for a next trade.
PS I am not selling or giving this piece of software because
it does much more than that and I am only writing this post so it might help
other trades develop their own methods of organizing their trading days. If you
are penny stock trader, Forex trader or just day trader please share your own
methods on staying organized and prepared.