Choppy Waters

US stocks have been choppy this year, to say the least.

Maybe “calamitous” might be a more appropriate word, assuming you are long on stocks this year.

The S&P 500 index is now down 11.3% from its record closing high on Jan 3.

This is not a good time to be holding on to stocks, and if you are holding the bag right now, I wish you luck.

I’m not saying stocks won’t rebound, but I’m saying holding the bag can horrible for one’s state of mind.

This is the reason why I stopped swing trading. I just can’t stomach overnight risk. It’s really not my kind of thing.

I have experienced it enough times to know it for a fact.

I’ve had many trades in the past where things just went south after a few days or weeks, and I lost big time from those trades. Not a good feeling.

Been there, done that, never doing that again.

And that is why I personally feel that day trading suits my mental health better, because I have a system whereby my maximum risk per day is always fixed, regardless of the nature of the market.

I trade calls and puts, so it doesn’t matter to me whether the market is going up or down – I try to capitalise on green or red trends that fit my strategy criteria.

Once again, I’m not saying day trading is the best way to trade. It is definitely possible to practise good risk management in any form of trading, whether you are holding for days or even for months (something which I failed to do in the past).

I’m just saying the nature of day trading suits me best.

You’ll have to experiment for yourself, maybe take a few hits along the way, and eventually find what style suits you best and go with it.