I have NEVER seen the market move like this (I didn’t trade on 9/11). At one time, the market moved down 40+ handles on a single trade. Almost all the depth orders are pulled.
So how do you trade in an environment where the market is moving through 10, 20, 40+ handles? You have to trade with very small orders. For the E-mini, you should only put 1 lot order. If the market slams against you, you have to take the loss and move-on to the next trade. Do not attempt to fight back the market in this volatility as you will build up bigger positions that may smash you. Remember, volatility is always your friend when you are a trader. Extreme volatility is your opportunity. With that much volatility, you need to ride the wave - not fight against it. Take the loser and move on. The next trade can sweep back all your losses and more. Obviously, you have to know when to enter a trade, when to fight back a bad trade, and finally when to dump that loser. With the volatility today P&L swung quite a bit. It was easy to be up 5k and then down 5k. But the key thing to any trade is loss aversion. It’s like playing poker. You may have a great trade or you may even have the right trade, but the market can be completely irrational and bust you. It’s like going all in with aces at the turn and get busted. You never know what the market can do. You can only base your trades on experience, quick reactions to the market, and a little bit of luck. Derivatives trading is zero sum. So remember, when you win, someone else loses. No one wants to be the loser at the end of the session.
Happy trading. I am sure the next couple of days will be great for smart traders and terrible for investors.
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