Fitting Quote for a Slow Week

Monday, November 23, 2009

Intraday trading has been tougher throughout the latter part of 2009 as volatility has significantly declined and action has become less predictable. With markets up over 60% off the March bottom stocks are stalling and traders are generally indecisive about the future direction. Recently though, traders have watched as the equity markets continue to push higher but intraday opportunity is limited at best, and frustrating at worst.

The short-term scalper has seen high frequency trading come to dominate the tape now accounting for over 70% of the daily volume. This means that a trader whose strategy has intraday speed built in as his edge is notably hindered. Traders must realize that they will likely pay a few pennies more for their positions and lose a few pennies to exit as the black boxes capitalize on our inefficiency in order execution.

Yet, traders have seen ups and downs from the beginning of markets. Markets go through phases of high volatilty, low volatility, bull markets, bear markets, and more. Traders that survive the tougher times come to reap the rewards when things pick up again. And, survival is solely dependent on discipline: the discipline to admit, the discipline to accept and the discipline to adjust to changing market conditions. The year 2008 was great for the active trader, terrible for the investor. On the whole, the year 2009 has been good to the investor, tough for the active trader. Have you admitted, accepted and adjusted to the changes? The following quote sums up the successful trader quite well and needs no further explanation:

Hat tip to Ramblings of a Systematic Trader

"They say patience is a virtue. For me patience is synonymous with discipline. You must have the discipline to know that markets change and poor periods are followed by good periods. Longevity in this business - I have seen it again and again - is measured by discipline." ~John W. Henry


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