Why is the market so volatile around a big event, especially the few days ahead of it? The Non-Farm Payroll numbers will be announced today at 8:30 AM. This number, usually announced the first Friday of the month, has become THE number to watch each month as a gauge for the depth, and possible length, of the current recession. There cannot be an economic recovery without a healthy job market and without a healthy job market, or at least some clues as to an improving one, there cannot be a healthy stock market, thus the volatility over the last few days going into today’s report.
Market participants are squaring up their positions or placing their bets (whatever you wish to call it) going into the report and in so doing looking for a big move one way or the other at the open. THE CROSSHAIRS TRADER’S position: sitting on the sidelines with little, if any, money in the market. Why take a chance on the Market’s action at the open when instead you can trade the reaction? Thrill seekers trade through major market events hoping that their best guess is the right one. Thrill seekers do not last very long in this business. Sure, money can be made if your guess is correct but you better be right most of the time or your big losses will keep you from ever trading again. You will be broke.
SUN TZU, considered to be one of the greatest military strategist who ever lived, wrote in his ART OF WAR, that “good fighters first put themselves beyond the possibility of defeat, and then wait for an opportunity to defeat the enemy.” THE CROSSHAIRS TRADER considers this 2500 year old wisdom to be just as relevant today.
Put yourself beyond the possibility of defeat and wait for the best opportunity for successfully defeating the enemy.
TRADING IS WAR. PREPARE YOUR WEAPONS.
