The Daily Market Forecast... knowing when to change.

Friday’s Blog Results: Neither suggested level triggered.

Quick Tip: Knowing when to change        

Markets are like the weather, always changing. Trends become ranges. High volatility becomes low. Vice versa.

If you carefully analyze your drawdowns you may find that the change in market character was the cause. You can only do this with confidence if you’re logging plenty of data points in your documentation process. We track 43 different data points for every trade, taken or not. This gives us evidence to know when to change.

Here’s an example: The war in Ukraine contributed to an increase in volatility. Losses accumulated. A review of prior periods of abrupt volatility increases showed something counter-intuitive. Reversal trades perform better than breakouts.

Huh? It sure seems with wild swings in price that breakouts would be fine. Maybe for some strategies but not one of ours. Until calmer times we’ll focus the reversals that have a confluence of favorable factors and likely improve performance.

Today’s Best S&P Futures Turning Points: (look for confluence with supply/demand clues)

Short Level: Sell 4562.00 stop 4467.50.

Long Level: Buy 4510.00 stop 4506.50.

Trade well,

Mike Siewruk

P.S. Does your trade plan need a tune-up? Watch the Ultimate Trade Plan mini-course (free). Click here.