The State of the Current Market
I wanted to take a second to reach out to all of you who both follow me paid, free or on a free trial.
I say it almost daily but if you can be profitable (even just barely) in this market right now you will never not be profitable in your trading career. This market is like trading on expert mode in a foreign language. We are seeing things that should not even be possible happening intraday and the market being able to go up 1% in 15 minutes and back down 1.5% in the next 15 minutes. We are living in some wild times right now and we just need to take the small wins and just keep our heads above the water until we finally hopefully by next year return to a more normal market that’s not so irrational.
I feel like almost daily I hear someone say something along the lines of “you seem hesitant to enter on a clear trend” or “I don’t understand why we aren’t playing puts/ calls here?” or “you seem like you aren’t following your own strategy” or “I feel like you are taking too many trades or too many risks now.”
I wanted to take a second to address this. Here is a screen shot from Thursday May 12th intraday trading session. As you can see below this particular day had 6 full 180 reversals and quite a few of $5-7 dollar movements within 30 minutes of trading.
Now here is a screenshot of December 20th and December 21st. Do you notice the difference? On the 20th and 21st we see spy open and steadily ride the 8ema down, find support, cross back over the 8ema and ride that into the EOD. No reversals, no $5 swings, no $3 candles, none of this current market fuckery. Now this is just a random day in time I chose. But choose any day even a bear day from December 2021 and prior and they all look pretty much just like this.
The market was on 100% easy mode I mean literally anyone coulda woke up and said… hmm SPY is up 0.2% pre market I think I will buy a 0dte call and hold for the day and by EOD that person probably would be sitting on a 100%+ gain.
That market is long and gone. I wont say its gone for forever because I know some day, when idk, but someday that market is going to return. I would like nothing more than to have the year of 2021 to trade again. You litereally had to try and make money. There was no need for the 10% challenge, there was no need for doing 20 trades a day to scalp profits. You bought, held and won every single day. Day trading was not a skill it was just easy.
Now you have to trade with a sense of purpose, emotionless, and calculated risk and reward. We are seeing SPY following the 8ema upward looking as bullish as we can be with volume, VIX and every other indicator pointing to bullish. And then the next candle opens and we are seeing SPY literally do a 1% sell off. Only for the next candle to open and go back up 1.25%.
We are having to decide whether we are seeing a true reversal or whether we are seeing a rest and continuation of trend. Up until about March I was saying constantly how any rest (as in say SPY goes up 1.5% and the drops back to 1%) as a buying opportunity. Because almost 99% of the time SPY would then EOD make a new high of day. However, now we are having to decide when we see even the smallest red candle on whether we take profits if we are green or immediately take a loss if we are in the red. We have to decide in pretty much 1 second whether we are going to hold through the red or whether we are going to cut our losses and look to re-enter.
I speak from experience and everyone on my discord or those who follow my night TA can see that I am very transparent whether I win or loss. Im not here to say look at my I have a 100% success rate and I NEVER lose. I am here to be raw, real and essentially vulnerable with you guys.
I have seen in my chats lately quite a few guys saying things like im down 30% portfolio today or this week. Or im down 90% on these calls or whatever else. I hate seeing those things. I am not here to tell you guys you are even doing anything wrong I am here to take a second to hopefully help clear a few things up and also to give a few tips to help survive this environment. For those of you who are trading and just doing this for fun and truly don’t care about the gains or losses then you can stop reading here lol. But for those who the losses hurt or this is not money you can lose (you really shouldn’t be trading with it then but I get it). I really recommend everyone right now ½ their position sizes. So if you are attempting to trade with $1000 per trade then you need to drop down to $500 per trade.
Why would I want you to do that? Because when we catch these reversals sometimes by time we can even sit there and thing is this real or is this a fake out our trades already down 50%+. We need the extra ammo on the sidelines to re-enter trades.
My motto is always 10% per trade and never let a green trade go red. This environment is even more important for that. If you are in a trade that’s going green and you are even 1% green and you see that trade stall. By stall I mean price action is either bouncing between a $1 range or literally looks frozen you need to exit that trade immediately. You are more likely than not about to see a massive reversal. I find myself more and more in this environment entering a trade on a run and seeing it pause the exiting with 5-10% gains.
You can ALWAYS re-enter a trade (unless you are out of BP I guess) but you can NOT always get back you profits or minimize a loss. With this current environment and especially when we are trading over VIX 30 you have to “live to trade another day”. I have preached since day one that day trading options full time is NOT a race it 100% is a marathon. You have about 250 trading days per year. You do not need to make 10k per day.
I tell everyone to figure out what they want to make per year day trading and divide that by 250 when they first ask me about what their daily profit goal should be. So for me… my daily profit goal is only $500. Now of course id say almost every day I beat that goal (of course somedays I miss that by a lot too). The one thing that I have seen myself struggle with over the last two week specifically is making 3-4 great trades in the first hour that put me up 3-5x my daily profit goal only to erase all those gains from 11am to 2pm and have to fight back the last 2 hours to end green again.
We HAVE to be patient and we HAVE to be fast and quick on our trades. If you are right get your profit set a trailing stop loss and don’t EVER touch it. For me I open a trade and IMMEDIATLEY open a MARKET sell order so that if things go south quickly I am two fast taps on my phone away from exiting. Once I get to 10% gains I will usually throw a 5% trailing stop on so that I KNOW I 100% will NOT exit this trade red. If I really think I got a runner and might see some volatility I will cut back my trailing stop to 10%. BUT when I have my trailing stop open I do a cancel/ replace MARKET open qued ready to go so that if I see price action stall or I am at a great profit spot (usually 25%+ for me) I will lock that profits in.
But on the flip side IF your trade immediately goes against you we HAVE to be emotionless and willing to cut losses quickly and early. Don’t second guess yourself on a -10% or even -20% loser and let it become a -50% loser cause you couldn’t cut it. Current market conditions make this right here the HARDEST part of trading. Being confident in a position and closing it red to protect yourself from further downside only to watch it be a fake out and it rip back green is the biggest mind fuck out there… because the next time you let the loser run you know 100% that its going to -99% and never coming back. You have to live in the PRESENT and think ONLY about the CURRENT trade do not let past mistakes or experiences hinder your thinking.
In the end guys we are already trading one of the most risky investments and there are not many of us out there that are consistently successful. This market makes it about 1000x harder than it is usually too. Don’t beat yourself up. Also a new rule I have is that if I make two trades in a row that go red that I take a step back and say okay im not seeing something right here and usually I will wait about an hour before I re-enter so I have time to really visualize things. This market will chew you up and spit you out faster then you can hit sell.
I love this community we have built guys and truly do not want to see anyone lose anymore money than they already have. I too have lost plenty of money over the years. I promise you if you can mitigate losses, capitalize on winners and keep your head above water till this crash/ correction is over with you will some day be a 1000x better trader and will have more tools to be nimble in different environments than you ever did before.
If you guys ever need anything or need help please reach out to me before you capitulate for good.
Submitted May 15, 2022 at 02:54AM by DaddyDersch
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