Trading in News
Amid all the political events today of the US federal government being shut down, another Trump ally, Roger Stone, being indicted, and everyone finally agreeing to reopen the government, the market traded back and forth. In this kind of environment where events or news can have a surprising, if temporary, effect, I like to keep size small and targets close-in. This discipline has served me well over the years. A few large moves may have been missed, but overall, it’s been the right way to trade.
Today offered two choice trades, both in the upthrust family (red arrows). The close-in target for the first was at the level of the low at “d”. The price action and volume indicated “d” would likely break, however, making the area representing the lows at “a” – “c” the next target, which was easily reached.
Next week, I’ll be teaching a webinar on the signs of strength and weakness. Although you need to know the signs, what’s really important is to know how to use them. Some traders see them as signals to initiate a trade. That’s generally not true. I’ll show you how to treat them as indications that the market is doing something important, and when those indications become compelling, to initiate a trade. Plus, I’ll give an introduction on to how to use of the higher time frame to refine your analysis and weed out less than choice setups. Learn more here: Signs of Strength & Weakness