TVO Market Barometer 4/27/15

TVO MB 4-27-15b

Selloffs are quick and volatile by nature. Trading our volume based system relies on a much slower process of accumulation and distribution to capture bigger market swings. In order to profit from a short trade you’ve either got to be vigilant with lighting fast reflexes or you wait until the market gets high enough so that, no matter how much you get whipsawed around, you can still benefit from the wider reward/risk ratio. Think Jesse Livermore right before the ’29 crash. Since we don’t have the luxury (or desire for that matter… Review my post “12 signs you might be a trade-o-holic“) for the former, we stick with the latter plan. Right now no one is certain if and how far we’ll drop (well somebody always knows somewhere), but from this height our exit from a short will likely come too soon to make a sizable gain. If you treat a short as if it’s just the reverse of a long, you’ll end up turning your head upside down, as well as your wallet. -MD

For more on market volume, The TVO System, or how to trade options follow me on Twitter (@TradingLicks) and StockTwits!