Does Insanity reign?

If you take a look at the last couple of days, you can see where emotion rather than rationality commands the market.  This is a good thing to watch, as it confirms that the market is a place often dominated by fear.  Fear can be a powerful force causing people to act quickly without thinking through the consequences of their actions.  This is the exact reason that some people become heroes. There may be times when havoc is upon them and without thinking it through, they do things they would otherwise not do. From that a Hero is born.  Thank goodness we have them among us, for the world is better with them than without them.  But that emotional quality is not something you want to control your trading.

This most current market volatility should have come without surprise.  We were thrilled to see the rise yesterday and now we grimace at the dive of today?  So, in short I am saying to you is that the market has been highly unstable lately and if you feel that it is causing you difficulty, then simply stay out of it.  You all know that a market falls much faster than it rises because fear is stronger than greed.  And fear and greed are pretty much the primary drivers of the market even if we do not care to think so.  We would much rather think that our superior intellect and sharp trading skills will always give us the edge.  But if we do not factor in the emotions of the market they will bite you every time.  

So, how bad is it anyway?  Well, let us compare to the past.

This looks like a regular day trading chart but, in fact, it is a weekly chart for the last 3 years.  It is a bit difficult to read so I will explain it.

The first box of blue and gold lines is actually the high and low of the period defined by the two vertical time lines.

The first box shows a spread of 357 points from the high to low of the period from 1/29/18 to 3/19/18.

The second box shows a spread of 652 points from the high to low of the period from 9/25/2018 to12/16/2018.

The last box is for a current period with a spread of 297 points for the period between 5/26/2019 to 8/14/2019.

So, in fact, it is not as gloomy as we seem to perceive. In fact, I just checked the 30 and 90 m charts and they both have Doji candles so maybe they have found a bottom for the day.

Yet, this is not the kind of market I care to trade.  So, I don’t.  There will always be another day and trying to make something happen in an environment that is unsuitable to one’s personal trading style is not wise.  There are some of you who really love this violent “hair on fire” thrill runs buying and selling on the flip of the short trend.  If you have the stomach for it and can stand the whipsaws then you should be very happy right now.

This little post is just to remind you that the market will do what it wants, when it wants and we have to live with.  As long as we respect it and respond with reason we will be profitable.  Do not be in a hurry, nor allow yourselves to be caught up in the grips of emotion.  It is just another day.

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