Use This Trading Tactic Today To Avoid Mistakes

Posted 9:30 AM ET - The market is in pre-holiday mode and trading volumes are light. Seasonal strength will push stocks higher. I will not be trading the first 90 minutes this morning. Under these conditions moves are over exaggerated on the open and they often reverse. The bid/ask spreads are a mile wide and you are not in control of the trade. Yesterday I took a few positions and as soon as I got in I felt like the sand was being pulled out from under my feet by strong undertow. There was not a lot of volume traded as stocks retreated and the bid simply vaporized. You are not in control of the trade when you have this type of situation. After 90 minutes I will have a good feel for the market and a good feel for the stocks I'm following. I will miss some great trades, but I will also avoid costly mistakes. If I had waited yesterday I would've made excellent money. Instead, I spent the day managing risk. Focus on finding three or four really good trades today. Let the market unfold and watch the volume in the stock. If the momentum is strong, consider the trade. You will not have a market tailwind (or headland) so the stock needs to be able to make the move all on its own. Favor the long side, sit out the first hour of trading, trim your size and reduce your activity. . .

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