Thursday, 14 April 2022

Money for Nothing?

 I'm a big fan of Dire Straights and Peter Gabriel so today's title was easy to find. One of my fondest memories is watching Peter Gabriel as guest of Eric Clapton at the Albert Hall in London more than 25 years ago.

The answer to the question in the title is "NO". Making consistent profits trading is definitely not money for nothing. It requires a lot of work and the harder I work the luckier I get 😃

Chart below is a piece of ES just after the RTH open. Huge volatility, even more than lately. Price rocketed upwards and then collapsed. The only way I found to trade these volatile periods is Outside In trades - the old way we all traded as locals and fade the "paper". Its a matter of reading the order flow and fading the paper for a mean reversion. I have my finger on the button and click as I see the reversal beginning. Its easier to know which direction the next trade will be in but catching it when price is still flying out from the mean gives a better trade location and less risk. The medicine for being a bit early is doubling down. But I use context to determine where to trade. I keep my size much smaller in these volatile markets as my stops are very, very far away. Stops are only in case of broadband disconnection. Correct trade management cannot be done from an ATM.

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