Why the Stock Market Falling Equals Opportunity
The stock market is finally giving us a reason to be a buyer.
Not quite yet but we have the start of a better trade. One of the biggest mistakes unprofitable traders make (over and over again) is chasing price. They desperately want to place a trade because they are “traders” but often the reward is small compared to the risk.
With price action offering a healthy decline yesterday the distance between a profitable trade and reward potential is increasing.
Thus increasing the quality of the idea.
The ATR (average true range) of the SPY ETF $1.93. On Monday the high to low was greater than the average, AND closed in the lower 10 percent of the trading range.
All good signs that set up my next trade with high probability to be successful.
What I want to see today is for the SPY to open lower, trade lower the distance of the ATR ($1.93) If this happens then is sets up a trade for tomorrow that offers great reward with lower risk of further decline.
That's my plan for the next 2 days. My best case scenario. Anything away from that lowers my conviction in the ideas.
Have a great day.
Pete
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reuters.com/china-trade-deal-2020
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