Nothing stronger than creep
I have recently already spoken about this, and when I saw it was reminded how I went belly up early in my trading career when the dot com bubble burst by the following phenomena.
I kept detailed journals from all my years of trading and made it my business to try to anticipate market cycles and their typology of trading behavior.
After I saw the creep last week, I immediately went to these journals and read through all my creep experiences.
Twenty years ago, after intense volatility, gradually range and volatility seized, and creep took over. It allowed little intraday entries and was psychologically draining since it is emotionally the most counterintuitive price behavior.
I since have two rules:
1. Nothing is stronger than a creep.
2. Never fade a creep
The definition of a creep is a slow directional market on 5 or 15 min charts with "bearded"(wicks) candles.
Why creep is so strong has two reasons.
One is because the action/reaction principle can't be applied, so it is hard to fade it since there is no washout or otherwise action.
And the even more vital part is that it is counterintuitive since it feels as if the direction is over any minute, and one wants to fade the direction into the counter direction.
The creep is a challenging environment to participate in in small time frames!
Typically there is no significant retracement, and the market offers no low-risk entries.
FOMO can quickly arise as an unwanted emotional drain.
e mini S&P500 futures market:
(chart courtesy of TradeStation)
Entry on the double bottom at 66.25,
half position out for 4 ticks to mitigate risk,
13 ticks for the first target
and 15 ticks for the second runner
At times after the doldrums, a brief retracement is offered to participate in the third leg of a directional day.
Cultivate various systems and mindsets to trade larger/multiple cycles of the market
Have a weekly and daily call to trade rule-based and, as such, escape intraday triggers that lead to losing streaks
Keep detailed trading journals to develop a meta system of anticipating market cycles and their specific makeup.