BPA trading room Q&A: June 23, 2015
When you get quiet days like this, I get the feeling of anxiety while being in the market. I get a feeling that a sudden, big move can come at any time against me. Is this is a valid concern since the volume tends to be low?
Plus: Al reviews his trades for the day at video start, which he will do most days in the trading room.
Video duration: 3min 11sec
Al’s scalp trades for the day
On days like this, the bars are too small. It’s always hard for me to remember what I did, but on days like this, it’s extra hard to remember. I bought the 6 low. I did one other scalp in here. I don’t remember what I did. I sold 10 as it was forming. I sold 11 as it was forming. I bought 18. I sold 26. I sold more at 29. I bought somewhere — one of these — somewhere in here, I bought here. Then what did I do here? I don’t remember. I did not sell. I tried to sell up here, but I was too slow. I was stupid! When I didn’t get filled, I should have just sold the market, betting against the Buy The Close, but I did not. And then I traded crude oil; I traded bonds; I traded ForEx markets.
Feeling anxiety on limit order days
I don’t think the volume is an issue. Obviously, the volume is low. If you look at the bars, here we have a two tick tall bar, and how many contracts? 1,600 contracts traded. I don’t think that matters. I think the computers just look for patterns, shapes, and direction. The volume is not a reason to be concerned — unless you’re trading 200 contracts, 300 contracts, I would not worry about the volume.
So, in other words, you don’t have to worry about the volume. But I understand the anxiety, and the anxiety has nothing to do with volume. The anxiety has to do with what I said from the beginning of the day — it’s a limit order day. And that creates anxiety because it’s more natural to use stop orders or market orders. If the market’s going up, you want to buy. If the market’s going down, you want to sell. On a day like this, my instinct is to do the opposite — if the market’s going down, I’m looking to buy; if it’s going up, I’m looking to sell. So I understand the anxiety and the fear. And bar 10, my thought was, “Huh, that’s interesting. It’s a chance to make some money.” But bar 62, because of what I said, probable bull leg in a trading range, more likely exhaustion than measuring gap. I’m not worried about the market running away to the upside. I think it’s a trap — a bear leg in a trading range day. And I would have been faster to sell if the pullbacks here were more than 4 ticks. That was what gave me pause.
But I understand the anxiety on trading range days with all of these reversals. It’s reversing every two or three bars all day long. And that creates anxiety. But if you watch enough days like this, you learn that even big bars like 10 do not lead to very much, and bars like 62 when it’s forming, you’re saying, “Wow, we’re breaking out. It’s going to be a bull trend.” No, probably not, right? The odds are against it. When you’ve been doing this for a while, eventually you understand what the market is doing, and you tend to look at things in perspective, and you understand that low probability means just that — it means don’t worry about it. Chances are it’s not going to happen. Have stops in place in case it does, and realize that sometimes your stops will get hit and you’ll lose, but it’s okay. The odds are that you’ll do fine.