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Which Way Is Momentum?

Hey Market Pilot,

The other day I was hanging out in one of our trading rooms and a member was saying how exhausted he was with all the movement going on in the market. Movement itself isn’t bad if it is smooth and trending, but is not preferable when price goes wildly in both directions. 

John Carter, Founder of Simpler Trading, was on the mic when the subscriber was telling us how mentally exhausted he was, and John called it “decision fatigue.” I thought that was a perfect description and probably the sign of a newer trader who was getting whipsawed by the market.

I can very much relate to the exhaustion the trader was feeling. Not so many years ago, when the market would move like this, I tried to trade in the volatility and experienced the same whipsawing and frustration.

I was behind the curve on most of the directions the market would go. Because I wasn’t as seasoned at the time, being out of sync with the market meant I was expending more energy than a pro and probably losing while doing so. This is a bad combination and will mentally exhaust you.

With wild market action in January, I am reminded of my own past experiences, and how much better I am now at navigating these volatile waters.

Last month I had a very clean +50% Ultra VIX Short Term Futures ETF (UVXY) trade, which I saw coming days in advance. I know the old me would have botched that trade a few times. I have had the short positions either go against me for a few days or spike on me due to news.

The old me would have panicked and I would have exited at the worst time. But now, I am comfortable with the real trend and can handle those bumps as noise, allowing the trades to become very profitable.

When I heard the trader describe this “decision fatigue,” it signaled to me that if this isn’t the market for you and it is wearing out you and your account, then just stay in cash. You can use the time to paper trade and learn so you will be better prepared for the next time this happens, because there is always the next time.

I don’t think a trader will feel “decision fatigue” if they are riding the waves of the market well and making proper setups. Being in tune with the market doesn’t cause too much stress.

So the next time the market corrects like this, and you aren’t mentally exhausted while also making money, then you can reflect on the progress you have made over the years.

Your Profit Pilot, TG
Want more ways to catch up with TG? Watch his free “Urgent Market Update” webinar. There, TG will outline current market conditions and how he is identifying actionable setups.

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