Tuesday, June 28, 2011

Being Flat is a Position Too

As the market is running on all cylinders higher we are to assess the current structure of NQU1, ESU1, and EUR/USD and derive from it that they are now at the top of the well-established range. We are to be constructive in our thinking and to realize that a major vote (at least in eyes of many scared market players) will be taking place on Wed @  5 am EDT. With NQU1, ESU1, and EUR/USD trading at their respective 4hr top bollinger bands it know seems like the gains will be limited from here. Market always surprises those who are not ready. I am ready to sell into this and sit back to wait for another trade opportunity. Some brave souls may even short into this. I simply choose to be out and flat.
On the subject of being flat (meaning no position). Many beginning traders have a misconception that they always have to be in a trade. Absolutely not, I say. Flat is a position too, it is a neutral position. Traders are flat when they have just completed a trade (good or bad) and need to reflect on it, as well as assess the current situation. When you are flat you have dry powder loaded in the gun and ready to pull the trigger when opportunity presents itself (I hate violence by the way). Being flat is not a bad place to be when you are not sure if there is a trade or not. DO NOT FORCE A TRADE which is not there. It is a recipe for disaster.
So with NQU1 @ aforementioned 2281 it is time to relax and be flat. 1291 on ESU1 is not a bad place to take profits as well. And EUR/USD reached 1.44 as well. Am I missing some upside?? Perhaps... But @ 5 am tomorrow morning 300 people will be deciding the fate of the financial world (great exaggeration, but nonetheless a perceived fact). Believe me, they have no slightest idea if it will pass or not. Even if the vote passes, there is yet another vote next day. The unknown is going to create some turbulence, through which I simply choose to sit flat and observe. And how is a small trader thousands of miles away to know what to do based on that unknown anyway?? Let the chips fall where they may, wake up a few hours after that and decide all you want. Market will still be here, that I know for sure.
So I am flat as a pancake (no offence to IHOP lovers).

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