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Oct 09, 2008

Nick Fenton

DayTradeTeam
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This market is very dangerous. As I said in the Live Trading Room, "This market has more whips than a bondage store." And no, I've never been in a bondage store. ;)

In order to survive these volatile times, I have a few suggestions for you...

Keep Swing Trading activities to a minimal for the time being. There is no rhyme or reason to the action we are seeing. It's best to hold cash overnight, not positions.
When Day Trading, take fractional positions. If you typically trade $100k per Day Trade, consider trading 1/4 of that amount, or $25k. This minimizes your capital exposure per position, and helps you stay alive during these periods in the market.
Use Limits! This whippy market leads to nasty fill if you are entering and exiting positions at market price. Use limits in most cases to assure you don't get screwed out of your hard earned money.
Scalp! Don't wait for technical formations to hit their targets. Settle for quick moves in your direction. Holding intra day positions has proven to be the wrong move for the time being. Scalp, scalp, scalp!
If you're going to trade Options, sell the premium! We are at all time highs in the VIX. Options are expensive due to the extremely high volatility premium built into the price. Take advantage of the excessive volatility premiums by selling it to others.

Hopefully this advice helps keep your portfolio alive. Keep in mind that this is my opinion, and these suggestions are based on my experience with Trading this market every day.

If you have any additional suggestions, please leave them in the comments section.

Regards,

Nick Fenton