Five of the past six emini sessions have been narrowed range, consolidation days where price covers no distance anywhere at all. The sixth day (Thursday 2/07) was an algo-surge dive straight off the bell and slow, hours-long staggered ascent from there.
That chart above pretty much covers all other emini symbols and quite frankly crude oil futures as well. For whatever reason(s) known or unknown to anyone, U.S. markets are all coiling and consolidating for directional trends to come.
One thing I’ve learned thru my years of watching financial markets cycle thru the endless process of volatility wax & wane: most individual traders lose patience (if they ever had any to begin with) with the reality of their chosen profession. I know this firsthand myself from personal experience, and I know it second hand from personal observation of countless traders across the world for this past decade plus.
The main thing traders want to do is trade. Would that be an understatement, or revelation to anyone out there? After all, that’s what traders do. They trade things in expectation of profit and reward for the time=effort expended in staring at charts. I’ve often heard struggling traders say, “I need to catch fish every day in order to feed my family”… as if trading is akin to a structured job where one shows up for work, puts in their time and is guaranteed x-amount of dollars in return.
Well the realistic truth is, trading ain’t a job. It is an entreprenuerial venture where work is fixed but payment is variable. We realize that flies in the face of instinctive animal-human desire but then again, so does everything else involved with long-term successful trading. If this profession catered to and assuaged man’s basic human natures, the failure rate would be a meager 5% instead of 90+% in actuality. Now wouldn’t it?
When the market(s) we trade go into their natural cycle of low volatility, we lose patience with the inactivity involved. We look around for something else. We seek other markets that are more active. We seek other times of the day/night where any markets are more active. We search elsewhere for active markets that can be actively traded, so we can catch a fish each & every day… to receive a steady paycheck from our job.
Truth is, chasing different markets and different times of the day or night will only result in keeping you on the wrong end of changing cycles all the time. As you find other symbols and timeframes that are active now, you are likewise getting on board just about when that cycle of highly active price behavior is peaked and headed towards contraction and lull. Chasing markets means always keeping yourself behind the curve in everything.
Dislike it or not, trading is much more akin to selling real estate than punching a daily timeclock. Real estate agents accept the reality that they will work every day, sometimes long, hard days in return for lump sums of payment from time to time. There are many different weeks and even entire months in most real estate agent’s careers where no money comes in. That is an industry fact. Handling phone calls and paperwork, viewing houses to list, showing houses to sell and a million other tasks demand daily attention and actions. But none of that guarantees anyone of a real estate sale and steady, consistent payment.
Trading for all individuals with absolutely zero exceptions on earth is a somewhat feast & famine type career. Same as selling real estate. You will have periods of the proverbial fatted calves and periods of lean times mixed in. For the balance of your entire career. Forever.
I think it’s important for you to know that, so you are mentally = emotionally prepared for reality. I also know that most if not all other educators out there are afraid to tell you that. They are scared that you might think along the mistaken lines of, “his/her market stuff doesn’t work every day(week) so I need to find someone whose market stuff does work every day(week)”. I don’t concern myself with such nonsense, because I know that eventually everyone who survives this game long enough will grasp that realization for themselves. Nobody’s anything works every day(week) in any market. Period.
We also know for an absolute fact that no one and let’s emphasize that NOBODY in the entire history of day-trading has ever made big profits inside the troughs of low volatility. Not one time, on purpose or by acident. Ever. These tail-end periods of waning volatility which usually coincide with markets at or near relative highs are stingiest of profits for all.
Said tail-end periods of trough volatility always resolve themselves sooner or later the same way: immediate, abrupt spikes in volatility where daily ranges blow wide open and potential profits skyrocket all around.
Meanwhile, every individual trader on earth with zero exceptions does the same thing right now: treads water, and waits. The smartest traders, those who will succeed wildly when market conditions turn cycles the other way are preparing themselves right now. They are honing their skills, performing their study and research, perfecting their knowledge of reading price action => taking proper actions when market activity returns to normal and above.
Are you a smart trader who patiently prepares for the cycle changes about to come? Or a misguided trader who chases the present and therefore keeps him(er)self in the past?
For more daily updates from Austin, visit his blog at Coiled Markets.