Larry’s Note: “If you think the panic we saw in early April was big, just wait. I believe we’re about to see a whole new market shock.” That’s what tech insider Jeff Brown is warning…
And it’s why he’s holding an important briefing just a couple of hours from now at 1 p.m. ET.
There, he’s sharing why he believes the next six months will be chaotic… and the name and ticker of a popular stock that could be about to tumble.
He’ll also offer his solution for profiting in this environment. So if you’re not signed up yet, don’t hesitate… Simply click right here to automatically RSVP for today’s event.
When markets are swinging wildly, how often should you trade?
On the one hand, you don’t want to miss the action… But if you try to jump on every move, you risk a rapid succession of losses.
I initially struggled with this when I started my career in the trading pits of the Chicago Board Options Exchange (CBOE) more than 40 years ago.
I was too eager to catch every move… or chase trades that had gotten away. I blew up my trading account multiple times as a result.
Of course, the size of your trading account plays a part in how many trades you can have open.
But if you don’t have a clear plan, you’re going to run into trouble no matter how much money you have to start.
And that’s what I want to look at today…
What’s Your Strategy?
Some folks simply don’t know what their strategy is.
For example, one day they think they’re a trend trader. The next day, they’re trying to jump on a stock reversal.
Both are genuine strategies. But trying to do both simultaneously can lead to confusion and frustration. If you’re already in a “trend” trade (expecting a stock to keep rallying or falling), then the rationale would likely contradict a “reversal” trade you want to put on.
So you’ll end up second-guessing yourself at every move.
Until you clearly define your strategy, it’s only a matter of time before the market shakes you out.
That’s why I know what my strategy is… and I stick to it. And that determines how active I should be.
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Avoid No-Man’s Land
The strategy that I use is “mean reversion.”
Put simply, I look for stocks that have overshot in one direction. I aim to profit when they snap back the other way.
The strategy’s premise helps me avoid stocks drifting in “no-man’s land” without a clear reversal coming.
Instead, I focus on stocks that are trading at extreme overbought or oversold levels and are vulnerable to a sharp reversal. That limits my number of potential trades.
That doesn’t mean I have few options, though. My strategy thrives when markets are crazy and uncertain and volatility is high. When markets are swinging wildly, there are plenty of promising setups to choose from.
So the number of trades I do factors in my trading strategy and market conditions… Not how many trades I want to do.
So rather than feeling like you always need to be active, try flipping things around…
Choose your strategy. Then let that strategy help you determine how much to trade based on the market conditions.
That helps alleviate the pressure of feeling like you’ve always got to find something to trade. And it will likely lead to greater profitability in the long run!
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict
P.S. We’re just a few days away from launching my newest project… And I hope you’ll enjoy getting trading advice in a whole new format.
I’m going to start sharing live video updates on where I see the market heading each morning… alongside one of my key analysts. These are insights you won’t find anywhere else.
So please plan to join me for Trading With Larry Live next week. I’ll share the final details soon…