Here we are, heading towards the summer and the market is doing its typical thing – just some massively volatile moves and panic over a good, old-fashioned trade war! Wait, that doesn’t sound quite right.
Yes, things are a bit different in May after a relatively slow and quiet April. It seems the switch has been flipped thanks to plenty of incendiary headlines on trade and the political climate both in the US and abroad.
I often get asked what I change in my Emini S&P 500 (ES) trading when volatility spikes but the answer remains the same – I just stick with the system. I make small adaptations to take bigger profits when available thanks to the larger swings but I still keep stops small. This greater reward to risk helps to balance out the increased number of whipsaws we see from volatility and often sees our trading expectancy increase even with a lower win rate.
That’s the thing about my ES trading, I keep it simple and stick with what works. I don’t make sweeping changes when it’s a difficult week or I take a few losing trades in a row. I just follow the plan and let the edge play out.