The broad averages have been trading in a series of ranges through the first 5 months of 2015 with many traders referring to the action as a "meat grinder".
Grinding markets that make little upside progress frustrate short term traders as increased trading fees and stop losses can chew up your account. There tend to be fewer really good setups that were present in prior periods, and the ones that do show up don't work as well.
So while longer term traders absolutely need to stick with the longer term trend, swing traders and shorter term traders need to do less trading and/or significantly reduce position sizes.
The markets are looking for clarity on a lot of issues, and until the outlook becomes more clear, less is more.
Here's a chart markup of the QQQ that shows the trading ranges. There's a fairly distinct pattern of 4 down swings and 3 up swings inside these boxes, followed by a larger move out of the box.
Take note that the latest move in early May out of the box was smaller than the previous one in February.
Click on charts to enlarge.
Grinding markets that make little upside progress frustrate short term traders as increased trading fees and stop losses can chew up your account. There tend to be fewer really good setups that were present in prior periods, and the ones that do show up don't work as well.
So while longer term traders absolutely need to stick with the longer term trend, swing traders and shorter term traders need to do less trading and/or significantly reduce position sizes.
The markets are looking for clarity on a lot of issues, and until the outlook becomes more clear, less is more.
Here's a chart markup of the QQQ that shows the trading ranges. There's a fairly distinct pattern of 4 down swings and 3 up swings inside these boxes, followed by a larger move out of the box.
Take note that the latest move in early May out of the box was smaller than the previous one in February.
Click on charts to enlarge.
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