Tuesday was very interesting. Many traders bet on a hurricane, and the put losses were astronomic on the first day back to the market, and floor trader pros were surely in evidence, jumping the market up 200 plus points in early trading, causing massive put losses as traders covered, and promptly bringing the market right back down to the 590 moving average.
We took first entry to the Sept610C at OEX 595, and many traders took two entries as the market plunged.
Chartwise we had seen a downturn FIRST to the 11,400 area, before a jump to near 12,000. The "lack of hurricane" and lower oil prices were the trigger and catalyst for the type of upsurge this morning that is impossible to catch.
Most important, the trader must recognize that conditions are truly erratic. We had a 200 point decline in Friday, and 200 point run up on Tuesday, and 230 point drop again Tuesday. The Bell Curve analysis of "6 to a put" or "7 to a call" appears to have no historical perspective in massive runs like this. Some traders use VIX as an additional "pressure tool", and others are trade range playing on support lines, but profits will be harder in a market that has no bearing.
Not everyone can learn to trade successfully. I am asked this question all of the time, and always answer honestly. In Advanced Mentoring I use Floydian therapy :) to help the client understand often why they choose to trade to fail.
Working strategies can be taught, but a great deal cannot be. Some of what cannot be taught, but must be self learned, is to ignore market interpretations, and opinions. Far too often new traders interpret sentiment and believe "what should be", and take astronomical losses holding too long, or buying big after winning large a few times, or both.
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