Stop Stop Losses
No, I don’t have a problem with stuttering.
You read the headline correctly.
Have you noticed the game that is being played lately by the gang of thieves?
Under the guise of “volatility” and “congressional testimony”, the boyz have endeavored to pick our pockets in broad daylight.
The normal one to two point stop run has been stretched to 3 to four points; then the market reverses trapping the pullback buyers or sellers.
Playing a little more conservatively may be warranted during these challenging times. Add a little more “breathing room” to our trade; either by being a bit more patient before entry, adding an extra point or so to our stop loss, or a combination of the two.
Alternatively, avoiding hard stops entirely, playing with options, and not playing at all are also available choices.
“Averaging in” or scaling into positions is another well known technique. The problem in volatile markets is that fast moves can get us into a pile of trouble quickly. Just “taking the heat” may be a better way to play, and manage it until we reach our pain threshold.
As “uncomfortable” as this may be if we are used to 1.5 point stops, we need to do the math: the two to three point stop loss may provide us entry into a twenty plus point trade.
With the ten day ATR almost 45, opportunity abounds in great range trading both ways.