By The Disciplined Trader
The stormy volatility and indecision in the markets continues un-abated, important central bank meetings have kept traders on tenterhooks as words, actions or inactions have the power to whipsaw these current markets in both directions. Traders had high expectations of market moving reactions out of the FOMC and ECB meetings this week, it is because of this that one of my rules is not to trade ahead of such important announcements, unpredictable outcomes have the tendency to squeeze you from a winning position.
In my last post I was waiting for the S&P 500 to rise above 1380 with an overbought RSI 2-hourly confirmation before going short, this occurred on the 27th July, however because of the pending central bank meetings I maintained discipline on my trading rule to avoid trading over important announcements and did not go short as planned.
The FTSE 100 became overbought yesterday with a confirmed sell-signal but again discipline ahead of the ECB statement meant I had to wait, unfortunately after the announcement the market started to slide fast. So today’s rally enables me to prepare for a short.
The important market-moving US Nonfarm payroll figure announcement is due today, as a measure of growth in the economy it’s an important and widely anticipated number. The numbers came above expectations and markets are rallying as a result. My plan is to go short if we get a small lift; I’d be happy to short the FTSE at 5780 with a stop at 5950. My target is 5500. The drawback here is that if markets fall I’ll miss the move. It would be a pity but discipline is paramount in these volatile times.
The Disciplined Trader is an average guy who has little fundamental knowledge of the financial markets, yet he consistently makes money trading. He simply applies the basic rules of trading discussed in bettertrader.co.uk and executes his trading techniques applying great discipline.