facebook  youtube  blogger

Trading Educators Blog

#1 Trading Blog Site

Coming Back

Sometimes a stock, futures, or Forex pair you like to trade just seems to become un-tradable. You start having more losing trades than you would like to have. You find that what you have been doing just doesn't seem to work any longer. You are bored and frustrated. Although you wait patiently for things to get better, they don't get any better: in fact, they may become even worse. Finally, in despair, you learn how to trade something else, until your newly chosen stock futures, or Forex pair forces you to once again make a choice for a better place to trade.

You decide to take another look at the market you previously left. How will you know when to start trading that market again after taking a so-called "vacation?"

The things I look for are:

  • Normal tick size, in the event that what caused me to leave was abnormal tick size.
  • More, or even less volatility, in case previous volatility was not to my liking.
  • Fewer fast market conditions, if fast market conditions were what were previously causing me problems.
  • Greater liquidity, if lack of liquidity had become a problem.
  • Decent fills with little or no slippage. In a normal market situation, positive slippage should come almost as often as negative slippage, with many fills at exactly my price.
  • Less noise, if there was too much of it in the past.

Any of the above or a combination of any of the above can cause me to stay or leave what I've been trading. I know that many traders "marry a market" and try to trade it through both good and bad times. But it has been my experience that looking elsewhere is often a lot better than suffering through the difficult times in anything you choose to trade.

I can recall a time back in August of 1997 when a friend of mine, who was trading the S&P500 at the time, called me up. He was almost in despair. "What's going on with the 'SNP?' he asked. There's no order flow." He was right. The CME was about to cut the contract size in half, and at the same time introduce the e-mini S&P 500. There was much confusion about what it all meant, and the order flow in the 'SNP' had dried up considerably.

In my own trading I had dropped the contract entirely and was busy trading the bonds and grains. But my friend was frustrated for quite a while because he was "married" to the S&P 500.



Sign up for our FREE weekly Chart Scan newsletter.

Master Trader Joe Ross wants you to learn trading and he created products to do just that, teach you how to trade. Go to our website to find which ones best fit your trading style.

 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Monday, 03 October 2022

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.