Yesterday’s selloff created some great opportunities. It is easier than you think to grab those wins when things drop. Especially when they plummet. Last week Keith Harwood outlined how the market had bear tendencies and looking for short opportunities or trading the downward momentum was the logical option. He also pointed out some other less obvious quick grab potential but it was great to see a pro outline the choices.
Fitting a trade to your style and risk tolerance is key to being successful. Now we have to wonder if we are going to see any reaction to yesterday in today’s market. Taking Keith’s advice to exploit the obvious is very realistic.
Using an inverse ETF like SDOW which goes up when the Dow goes down is one of the easiest ways to grab bear wins. In fact you can see that using it last week when we talked with Keith would have produced a nice payout. Being able to scan the market and spot the various potential paths to find a trade helps ensure you are putting your self in a confident position. This makes it much easier to manage the trade when it is active. Taking on more risk than you are comfortable with makes the chance of a panic buy or sell more likely.
Be sure to check out Keith’s other tips he picked up as a market maker on the floor of the CBOE.
Keep learning and trade wisely,
Market Wealth Daily