Volatility: It's a Good Thing

August 2007 is now history.
It was a good month to come back to intraday trading because, to paraphrase Gordon Gekko, volatility is good. We had good trading ranges for the major stock indexes, and even though it may feel scary to trade when the market is on a roller coaster, that’s what we get paid the big bucks to do.
The feedback from The Trading Clinic was positive. The point I spent all month hammering in is this: trade when it’s moving, when there is plenty of range. In other words, if you see a car travelling east at 60MPH, it is not hard to predict where it will be one minute from now; however, if you see a snail on a hot pavement at high noon, betting where it might be an hour from now is a waste of money.
The other important point I emphasized is the fact that risk is asymmetrical in that there is no remedy available to the trader that selects a symbol and time frame that is dead, dead, dead. Losses are sure to follow in the chop. A trader that selects a large time frame in a volatile market can simply reduce size, and stands a good chance of making money from big swings.

Here’s an updated screenshot of how the intraday trading system has done with index futures since the beginning of the September contract. The model portfolio is now up $126,877.50 since June 6, 2007.
Have a good and safe long weekend.