Thursday, February 4, 2010

Is this telling, or what?

Today and yesterday serve as testimony to the thrill of victory and the agony of defeat handed to us by the market.  These days are the best back-to-back examples of our on-going market experiences that I could hope to find.  Just take a look at these two charts.
Today

Yesterday

If it isn't obvious to you, our system is at the mercy of the market.  Today, using the same indicators and parameters as yesterday, we made 22.5 points.  Yesterday, we lost 9.25 points.  The difference was the nature of the market -- one trended, the other chopped.

So, what can we do about this?  Or, should we try to do anything about it?  The answer probably lies in the issue of temperment.  If our psyche allows us to accept the losses that a choppy day brings in exchange for the easy money of a trending day, we could regard the whipsaw losses as a cost of doing business -- much like scrap parts on an assembly line.  Or, we could try to devise some way to forecast a choppy market and go for all scalp trades.

I don't know what to do about it at the moment.  My inclination is to understand that chop happens and I just have to put up with it, hoping that my stops and exit points are placed well enough to survive it and maybe even profit from it.  That's my strategy at the moment.

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