From the Trading Desk

Two-Day Rebound as Volatility Continues

Many traders on Friday were rejoicing they had found the bottom and were long the market. While Friday’s action was a first good start we are not out of the woods just yet. Our strategy isn’t to pinpoint market turns. We and other professional traders have found it’s a fools’ game. Do not get us wrong we would love to see Friday as the low and we continue to work our way back to all-time highs. In fact, odds are fantastic we see new highs again sometime this year. We can only execute our game plan as stocks present proper buy signals and us implementing proper risk management. This is how we win. Those who promise get rich schemes are not preparing you for the long haul. We will be on the lookout for a follow-through day with solid gains and big volume to confirm Friday’s low. Until then, we will continue to operate with an open mind and take signals as they come.

Most cannot control their risk at all. While it is easy to say “ride your winners and cut your losses” it is another to actually execute. Visions of million dollar accounts cloud the minds of traders and really force bad behaviors. Our job is to present our strategy and how to control our emotions through the ups and downs of the market. From the very first blog post at MauiTrader and the launch of Big Wave Trading we have been consistent in our approach. Big Wave Trading beginning in 2007 would not be here today if our strategy was junk. Longevity is the key to this game. If you want to stay in it for the long haul and grow your account you have come to the right place.

What would be great would be the market to consolidate by retracing some of the gains the past few days on very light volume. We don’t necessarily need a follow-through day on day 3 or 4. Ideally, we would see the market pull in and get a few days of tight closes on very light trade. This would certainly be a welcomed sight for us. Who knows what we will get and when we’ll get it. Trade what the market gives you rather than trading the market you want. We will react according to the market and nothing more. Do not try and be a hero. Stay disciplined.

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