To The Thread:
Strap on your seatbelts! It looks like things are going to get even more volatile and wild rather than settle down anytime soon. This will be a risky time to be a daytrader, but perhaps an even riskier time to be a buy and hold investor. For example, today I had a mediocre day, making a net ~$300 profit on 7 trades. However, the Nasdaq was down ~140 points (5%) and many good Tech stocks with good fundamentals were down 15-20% or more (ATHM, AOL).
In times such as these, I sleep better at night knowing that my account is in 100% cash. The buy and hold investors have taken a beating during this past week and are probably feeling very anxious. Hopefully, the market will stabilize and not begin an ongoing selling frenzy, which would be very costly for the long term investors. A selling panic, I believe, would also demoralize and eliminate from the market many of today's traders/investors, resulting in substantially less volatility and less opportunities for daytraders in the months to come.
The bottom line is this: The upcoming days could offer huge opportunities with the increased volatility. But, this is accompanied by a substantially increased risk. DO NOT allow yourself to be burned too badly by the inevitable share of poor trades in the coming week. Too many people have learned this lesson recently due to one or more devastating trades. Cut back on your position size as required to reduce risks. It may also be wise to give your positions a bit more room before stopping them out => the increased volatility will warrant this and the reduced position size will help keep this from being too costly.
Good luck in the exciting days to come!
-Eric |
