Now that we are in the last couple of weeks before the Presidential elections, we need to prepare ourselves for a continuation of the volatility we have seen in the last couple of months. The overall market continues to show that it is not sure what to do as we are having big up days followed by big down days. And in the end, we have not seen a lot of movement in any one direction. Traders generally like to see prices move in a deliberate direction without the inconsistency we have seen as of late.
With a non-deliberate type of market, it is even more important to know how to manage our trades in terms of risk and when to get in and out of them. Many times, traders will try to take advantage of the markets by buying and then hoping that the price action moves quickly in their favor, without really following a plan. They see the markets move up big one day and they try to catch the next big move and buy without having the evidence to take the trade. Hopefully, this is not the case when you are looking to take a trade. Your goal as a trader should be to have a plan in place that will allow you to buy and sell based on a set of rules.
When you have a set of rules, and when you know how to properly place your risk in your trades, you will have something that will allow you to trade with the confidence you need to be successful over time. Without these things, you will be more likely to trade in fear and make decisions that can hurt your trading account.
With the last Presidential debate behind us, we will see how the market reacts over the next couple of weeks before the election. This could be a good time to look at your rules and your risk management to make sure you are trading properly. This next week’s news will continue to focus on the elections, the pandemic and the overall economy and how those things will affect the markets.
Today we are going to look at the daily chart of the NASDAQ:
NASDAQ:
On the daily chart of the NASDAQ you can see the past 4 days this week have been about as flat as you will see. We are currently building a level of support on this chart that may be the area where we will see prices move up from. While there is no guarantee that this will happen, it is a pattern that is commonly seen as prices pull back to support and then cycle back up again. The overall bullish trend of this market could suggest that this might be getting ready to happen once again. Of course, the reactions we may see can certainly be impacted by any news that might come out this next week.
Take some time to review your trading rules and your risk management so you are prepared for any additional volatility that might be presenting itself the next week.
Have a great weekend!