Archive for category: Day Trading Lessons

You can never fully know what to expect out of an FOMC (Federal Open Market Committee) news day but they do have a few somewhat predictable behaviors.  In most cases the market doesn't really get a major shock out of these releases as interest rate changes are generally expected well in advance and most things will be priced in, although there could always be some shifts if the language in their statement becomes more dovish or hawkish.  As I type this the interest rate decision and statement are still upcoming at 2PM EST but the trading day had some quality opportunities so it's a good place to wrap up in front of the news.

When I mentioned how the FOMC seems to affect market behaviour, what I've noticed is that it's not unusual for the day before the FOMC releases to actually act like a more typical news day (where price moves slowly or ranges as if waiting for release).  On the release day itself things actually seem to move quite a bit better and the swings are often larger and smoother.  What this means to me is that I typically am a bit cautious the day before the FOMC, in particular about the possibility of trend continuations, but I'm a bit more willing to look for and hold longer runs on the release day itself. Read more

Summer markets can be a bit of a grind at times.  Some days the market is hot with plenty of compelling trading opportunities while others are cold with little movement or momentum and not much on offer.  While patience and discipline are critical elements of trading even in highly active markets, I've found it sometimes takes an extra dose of those qualities to trade well in the summer months.  As much as I enjoy trading and still find the craft to be fascinating after all these years I find the summer grind can sometimes feel like... dare I say it... hard work!

Today a trader in our live class brought up the question of whether experience and accumulated trading knowledge (such as technical price patterns, structure, etc.) were the key to consistency during slower markets or if trader psychology was what really made the difference.  It was an interesting idea because there's no doubt that a trader's mental framework is the biggest piece of the puzzle to long-term consistent profitability but experience very much plays a role there.

Essentially, you don't know what you don't know, and sometimes a trader needs to go through certain experiences in the markets before everything locks into place in a positive way.  For most people experience and having the right mental tools for successful trading are inextricably linked.  There are exceptions where someone steps into the trading arena for the first time and seems to have the framework necessary for immediate success (from having developed a robust mental edge from elite athletic competition, for example) but they are few and far between. Read more