All things must come to an end so it's time to reflect a bit before moving on to 2018. As usual I took a few weeks away from my trading screens over the holidays and I'm only just really getting back into the swing of things and ramping my day trading back up. It's always nice to have those extended breaks to truly refresh myself mentally and as usual I find myself excited to be back trading the markets once again. I hope all of you are feeling equally energised and focused after your holiday break and are looking forward to making 2018 a great year for your trading!
The Trading Year That Was
Trading over the past year had all the normal ups and downs that come with any market, but overall it was certainly on the slower side. I've traded Eminis and Forex professionally for well over a decade and have been through a wide variety of market conditions so not much really surprises me. There really wasn't anything too unusual about last year's continuous grind to the upside but it definitely left something to be desired in terms of "energy" in the market. Volatility was generally low and many of the breakout moves would occur at off-hours when volume was light.
That said, the past trading year was still quite a good one for me even if the results wouldn't be considered spectacular compared to other years like 2009 or 2015 where I essentially knocked it out of the park as far as my trading business was concerned. I definitely wasn't alone in terms of having exceptional results those years but those more extreme conditions don't show up all the time. That's the reality of trading. Some years offer more opportunity than others because of changes in volatility and shifting market conditions, but the adaptable trader must be able to keep their edge even in those times when things aren't quite as energetic. Adaptability - that's the real secret to longevity in this business.
What that meant for me this year was that there were times where I needed to be more patient to wait for my setups and I had fewer times where I could just trade for an hour in the morning then call it a day with lots of points in the bank. With a patient and disciplined approach and by taking slightly smaller profits off the table when conditions demanded it I was still able to have excellent weekly consistency. Of course, the market still had times where it opened up and had the advantage of some larger swings which were adapted to accordingly for bigger average profits. This allowed for plenty of "outlier" days throughout the year with 10+ points of profit available. There were also a handful of truly exceptional weeks which make a huge difference to your trading edge once the final tally is made at the end of the year.
Expect Nothing, but Prepare for Anything!
With 2018 upon us I find myself eager to see what kind of conditions we'll see. To be honest though, I'm not someone who tries to predict these things. After all, the market is always right and can do what it wants at any time. The saying is that price is king so it rarely makes sense to try to predict too far in advance when price tells the tale moment by moment. At this stage the market is still sitting at fresh all-time highs but there's definitely some potential for things to shift a bit in the months ahead so it's important to be ready for that if it happens.
Nothing stays the same forever and the markets are clearly no exception. When watching a chart on a day trading timeframe we know that periods of low volatility are often followed very rapidly by periods of high volatility (as seen in The New York Lunch Phenomenon). It's no different in the big picture on daily charts or above. Just when the market seems to tighten enough that we become used to it and those conditions seem to be the "new normal", that's probably when it's going to change.
Don't get complacent by thinking that this steady upside grind will last forever and be prepared if things shift. It may happen in a week, a few months, or longer, but it will happen at some point. When it does you can expect many of the market participants to get more emotional about their approach and the profit opportunities available will go up substantially for the trader that's ready to adapt.
In the meantime it's just a matter of taking the straight-forward positive expectancy trades which tick the boxes of your plan. Any good day trader will still have plenty of repeatable setups in current market conditions so it's just a matter of being patient, planning well, and keeping your discipline to be consistently rewarded.
What's to Come for Traders
As I've talked about in recent posts I've been doing a lot of trading research over the past year to further refine my edge in different market conditions, developing entirely new methods and systems, and I've been actively trading other futures instruments like the NQ (Emini Nasdaq 100). This work continues but I feel that between my research efforts and the ongoing work with STA students there hasn't been a lot of time for expanding the educational content available to everyone who visits this site.
I've really wanted to make a concerted effort to change that so over the coming weeks I plan to start sharing more on not just my regular Emini S&P 500 trading but also the research I've been doing including some live trading in the NQ. Hopefully these articles and videos will shed some light on the system development process and make it easier for others to map a similar path.
Lastly, thanks again to all those who have been in touch over the past year through email or by commenting on the blog posts, to the STA students who give me such pride and satisfaction as I watch your skills grow and you share your passion for trading with me, and to the many professional traders and friends that I've collaborated with over the past year who continue to inspire me to learn and grow. Here's to a great year of trading for all of you in 2018!