When not to trade

I find that remaining on the sidelines is just as important as identifying trading opportunities. I often follow a very simple strategy in volatile markets that keeps me out of trouble. Look at the charts below that show the NYSE Advancers and the SPY for the past 10 days. There were really only three days where it made sense to place trades Nov 9th to short, and the 10th and 11th to go long. I don’t use the Advancers as a trading signal, but it does have a significant weighting in deciding if I should trade or not.
And it means that I have been sitting on my hands most of the time in the past few weeks.
Writing the analysis prior to entering a trade in my journal has helped me identify when to stay out of the market.

Advancers Vs. SPY

Advancers Vs. SPY 5min

About Stock Trade Journal

The information in this blog is not investment advice. Please consult a financial advisor before investing. I have been trading stock since the 1990's and survived the .com crash. I am developing software applications to help me trade better and now I am making them available to help other traders. This blog is also a way to share my experiences and observations in the market.
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