I have been thinking the past few days about what is the best way to trade in a market like we are in now, a market that has never existed before with a pandemic and election going on. I know many of our traders are not feeling confident in how things have progressed over the past few months, it has been hard to trade. I will outline a strategy I suggest you try as I have started using it myself this month. When we're looking at the track record since July when I started keeping track of our trade performance, it doesn't match how many of us feel. We have actually had more winning than loosing trades.
So what can we do to ensure everyone does well? My thoughts are this: as we are trading in a difficult market and we do not need to be taking big risks. There are so many unpredictable variables in the economy right now. As we outlined in this post on the website on 8/26, http://www.wadeassurance.com/speculation/sentiment-trader-struggles, only 59% of S&P 500 members are trading higher than the 200 day moving averages yet the S&P 500 is near record highs. How does that make any sense? Simple answer, it doesn't in a normal market which we are not in. The Fed is allowing increased inflation and historically low interest rates while we continue to talk about a stimulus package in a range of $500 billion to $1.5 trillion in value. Who knows what they will decide on or when. Soybeans and corn are in their worst time of year for price seasonally and we will have the third highest carryout over the past 10 growing seasons yet price is skyrocketing. None if it makes sense, so if we are going to trade during this time we need to be doing so cautiously.
Again, we will not get every trade right but this strategy can help mitigate risk in a market that is unpredictable. We do not need to be taking big risks in the market we are in. Their is no telling when the market will normalize. I am guessing hopefully after the election but that is an educated guess. This is a recommendation for a strategy from me, do not feel pressured to trade like this. You have control of your account but this is something to consider.