Monday, 24 August 2015

Monster Monday

Normally, I look forward to big days and volatility. This time however, the market has become too big to trade, at least for me. Last Friday, I was trading 30 point retracements. On Monday, deal with 300 point reactions!
Of course, opportunity is there, so is the risk. If my stop loss size was 15 pips last time, why should I risk 100 points today? Risk aversion. Not only because of the size of the market, but mainly because of my broker's trading platform.
My spread betting broker was not reliable, although I am not complaining (it should  be expected on such days). I don’t remember day trading this kind of market range-wise, maybe except for the flash crash day in 2010.
At the opening, the DJIA was ‘unavailable’ for trading. Later, initially, the price was not tracking the market fluently anyway, only jumping by 20 or 30 points every 10 seconds. I decided not to take any of my setups.The additional risk was that my stop loss order would not be executed without negative slippage, or if I decided to close the trade, I couldn’t tell then if the market would be available for trading, or for how long unavailable!
But I was watching out of curiosity. At some point I decided to make a small scalp, but I had a lucky requote - the trade would go 50 points against me (I had no stop or profit orders in place). A few minutes later, I tried again and I got a fill. I placed the stop loss at break-even when the price was in my favour by 30 pips. Unfortunately, it got back to my opening level and I was out of position. I wanted only a “small” 100 pip scalp on a big day and thought that 30 pip distance would be safe for break-even exit order.
The market did go more than 100 pips higher from there, then reversed. I was ready to enter at the close of the second reaction candle, almost 300 points off peak (last reaction size was 300 points). I was ready and right to enter there....but my broker was not ready and the DJIA was "unavailable for trading", only later, 60 points higher, so I gave it up.
The market’s range got narrower, but it soon moved up again into fresh territory: while it was accelerating, I placed a trade and luckily got filled. It went against me by 6 pips only, I set the stop loss at break-even when the trade moved 30 points into positive territory. This time the price didn’t look back. My target was 100 points, but also I knew that each peak was coincidental with the 5m candle close, So I made sure I exited two seconds before the candle closed. Profit of 103 pips in 3.5 minutes.
What’s next for the Dow? This monster Monday is looking like a big reversal Monday, I doubt the market goes any lower. However, it is the biggest correction since 2011, so it may last a bit longer. Is it the end of the Bull? Of course not...I mean it is too early to tell that the Bear has begun. I am certain though that the volatility can only decrease from here!