Yesterday was a rough day for indices and the $VIX’s sudden jump saw fear creeping into the market for the first time in a long time. BTFD seemed to suddenly have gone out the window. Yet we closed a bunch of shorts and flipped long for a trade, specifically on the $TF Russell futures. The after hour session in particular proved useful in picking up some nice prices for a bounce.
Why bounce? Well there are times to be short and times not to be and it’s driven by risk reward. For sellers of this rally the hardest lesson to learn has been that shorting into the hole does not work. Fake downs I call them. Most breakdowns are fake and immediately reverse leaving those that shorted the break down to scramble and cry in a bucket.
No, those old tried trading rules have long been abandoned. Yesterday”s big clue that at least a temporary bounce was in the offing?
In context of our larger trade strategy the bounce made perfect sense and today we are grabbing the rewards. On to the next trade. Have a trade plan in place?