4/18 Daily Market Note: Market Algorithms Change with Rising Yields In Focus
Trading Blunders Shared Today: How to Safeguard Against Such Mistakes
Today’s 4/18 session recap is posted on Instagram: Personally a quite challenging session for me. I’m going to call it a Bad Green Day. Will discuss journaling below.
If you want to learn how to trade bear markets, check out the video I made on intraday scalping earlier this year on Youtube. Link here.
Hey Folks -
On April 8th’s letter, I posted this key opinion on Bond Yields which I’ll share again here. It is a very important observation which I must repeat and re-emphasize.
As Bond Yields go UP, the market will move FASTER, candles will be Larger, and Velocity of Momentum will pick up.
As Bond Yields go UP, Put Premiums will HOLD their value BETTER because higher yields support the VIX.
As Bond Yields go UP, traps/reversals will be more severe as Stop-Loss hunting gets more aggressive
Selling Puts as a strategy is NOT a theta strategy anymore. It’s a DELTA (directional strategy). For this reason, I have been very very selective when discussing Sell Puts.
While we are not yet officially in a bear market, we are undergoing a correction because of a confluence of market issues that we’ve talked about on a daily basis since the note from beginning of Q2. The market’s algorithm is changing. We can expect the environment to get more challenging as yields go up.
One of the primary reasons yields is going up again is that the Fed appears to be distancing themselves away from rate cuts, when only 30 days ago, rate cuts were almost a certainty. This type of back and forth - keeping you guessing - type of Fed rhetoric will further add volatility to the Bond Market. Volatility in the Bond Market keeps the VIX high, and the equity market on edge.
Onto today’s session
Today was a not an ideal session for me. I had originally wrapped up my intraday work by 7am with a neat profit. Towards the opening bell, I decided to go for a 2nd entry, and this ended up being a gigantic mistake (even though it worked out due to pure luck). Even though I ended green today, I am not proud of it. It was not clean execution.
Below, I will talk about this blunder (what I did, which many traders often make), and share how I plan to safeguard myself from this going forward. Learn from my mistakes. They can help you find more profits, and more importantly, keep them when hard-earned.