Satuki @ Home

The past 2 days were relatively easy to make money because the markets had great volatility.  On Thursday (10/29/09), all 3 markets (each was close to 2%) went up a lot.  And they went down a lot (2.5+ %) on Friday. We have not seen this kind of volatility for a long time.

Why is it easy to trade that kind of markets? There are 2 reasons. One is that most stocks move with the general markets. Even the markets themselves move together. For example, DOW, Nasdaq, and S&P move together 99% of the time. Hang Seng and Nikkei move with us most of the time too. As long as your direction is correct, your odds should be well over 70%.  On Thursday, you could literally long any stock and still make good money.  On Friday, you could short any stock and also make good money.

The second reason is that the markets were trending during these 2 days. There were very few whipsaws. You make easy money in a trending market as long as you can hold onto your winners.  During a choppy market, your entry/exit and stock picking skills are rigorously tested.  Unfortunately, the markets chop around most of the time.   So when there are opportunities like these, we ought to hit them with some size.  But I have issues with bumping up my position size. My comfort zone is always like 15000 dollars per position at most.  I think it will be like this for some time util that one magic momement comes.  I would be like “Ha, I got it. 15k and 50k are just the same…..” 

S&P 500 (10/29/2009)

S&P 500 (10/30/2009)

I did not trade on Thursday because I had to run a few errands. On Friday, I took 2 trades only in the AM and then found my website was down.  I had to take care of that since my husband was at work. It almost took a whole day to bring it back up.  BTW, I took 2 long trades and made bit money on Friday.  Basically I traded against the general trend.  LOL, I was just lucky.