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Hi, everyone.
It's Eric from Indicator Warehouse.
And it is Tuesday, October the 15th.
Tough trading day today.
You can see here I lost a little, and I won a little.
I got a couple other charts that are not on this screen.
Overall, I'm a little bit to the good on the day, but I
think only my broker is going to be happy.
I probably made enough to cover my commissions and fees
and not a whole lot more.
Not a stellar day today.
Lots of things still going on in the US government, and
those stoppages in the work of the US government is wreaking
havoc on the marketplace.
So what is a trader to do?
I thought that would be a good topic to cover today.
What you do when the market is throwing you a bunch of
curveballs?
Here is the NASDAQ.
And let's take a look at here, the NASDAQ on my
Falcon Swing Trader.
And I'm going to show you a couple of things that are
going to give you the heads-up that this market is not
behaving as it should.
First off, in the Falcon Swing Trader, we have a
trend change signal.
It occurs when the trend line changes color.
So you can see here, the trend line is
moving from red to green.
And what we wait for is we wait for the market to give us
a push to the downside, which occurred right here, where we
got a couple of red bars against the green trend line.
They actually printed a signal, not that we would take
that signal, because our trend line is green.
And then we come back with a buy signal, with trend.
And now actually, this one is practically textbook.
It occurs near the top of where would be resistance at
the moment.
So let me pull this over, and you can see what it would have
looked like when it unfolded.
So here, the market is moving up.
Here is our up.
We've changed our trend line.
Here's our down.
Here's our up.
It's right back at resistance.
Now this is normally a signal that we would expect good
follow-through on.
And you can see, we didn't get it.
The market came well short and, in fact, would have
stopped us out.
And look at what happens.
We've got the same thing happening the other way.
Here's our trend change signal now.
See we've gone from green to red.
Here's the down.
Here's the up.
Here's the down, and you can see, perfect placement.
I would actually probably enter below the lows, but
that's not going to help us.
Because once again, the market reverses shortly after
bringing us in.
So what you do when you see that type of thing happening?
Well first off, you need to recognize that these types of
days exist.
Not every day is going to be a strong trending day.
There are days that the market is just going to be
unpredictable.
And today was one of those days.
So you need to recognize that you are in a
difficult trading day.
So what can you do about that?
Well, with my Trade Manager here, I'm actually able to
dial down my risk exposure.
Currently, it's set at 2% of my account.
I'm going to change that to 1%.
So if I get a signal that looks promising to me, like
this trend change signal that I know is a high-probability
signal, I can still take it.
But I'm going to dial down my risk amount to where I'm only
risking 1% of my account.
So if the trade works out, great.
If it doesn't work out, well, at least I'm not
going to get clobbered.
The other thing that I tend to do is I tend to have a limit
on how many trades like this I will take.
So you can see right here in a short matter of time, in about
the space of 45 minutes, we had two signals that should
have worked out.
I got two signals with trend--
strong signals, I know they're strong signals.
And both signals did not reach their targets.
Now I actually didn't take these signals, because we had
indications that the trade would not work out.
You see all these double dots here?
You see a double dot there.
You see a triple dot here.
That's actually an early warning that a
buy signal may fail.
So I actually didn't end up taking either of these trades.
And thank goodness because of that.
But regardless, these trades should have worked out.
So I got two signals that are not working, signals that
should work, signals that are high probability signals.
So that tells me it is going to be a tough day.
So I either dial down my risk amount, or I just recognize
it's going to be a difficult day, and I don't trade.
The last thing you want to do on a day like today is end up
over-trading.
And these are the days that are the easiest
to over-trade on.
Because if I had taken this signal up here, I would have
incurred a loss.
If I had taken the signal down here, I would
have incurred a loss.
Well now, I'm starting to get a little bit hot and heavy.
And I may have missed this move here to the upside, or
maybe even this move here to the downside, both of which
would be profitable.
And now I'm getting really upset.
And now I'm thinking, OK, well, I've got to take some
sort of trade.
And you may end up selling here, only to
get whipsawed again.
So it is extremely easy to over-trade
on a day like today.
Recognize it is a tough day.
It is a ranging market.
Either step away and come back tomorrow, or dial down your
risk amount, like I showed you, so that if you do take a
trade and you do get hit, at least you're not going
to get wiped out.
You're not going to damage your account.
And that's exactly what I did today.
So end of the day, I made a little, I lost a little.
I printed a small number in the green, like I said, just
enough to cover my expenses.
But the important thing is, I did not damage my account.
So that's the lesson you can take away when you're trading
in difficult times, like we are right now.
Hopefully tomorrow will be a little better, but until
things work out with the US economy, at least where
investors can anticipate some sort of stability, I think it
might be more of the same.
But we'll see.
This is Eric for Indicator Warehouse.
I'll talk to you tomorrow.