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E-mini Trading: Can We Still Trade In The Current Volatile Market?

E-mini Trading: Can We Still Trade In The Current Volatile Market?

With the price action in the e-mini market ricocheting about in unpredictable patterns

, it seems that scalp trading is more difficult than ever before. Ive listened to countless traders complain that the e-mini price action is too volatile to trade, and have suggested they are going to take a break from e-mini trading for a while.

We could spend a good amount of time talking about the European debt crisis, our own housing debacle, high unemployment or a host of other problems that are currently having a negative effect on the marketplace. That is not the purpose of this article, though. As a trader, I trade most conditions in the market, except when the Average True Range (ATR) exceeds the reasonable stop/loss points I employ. However, a bit of volatility is not enough to deter me from trading if the volatility is within the parameters of my risk tolerance.

Its true that the usual trend followed by a consolidation channel-type of formations are far and few between. The market seems to be in perpetual motion, often times in very unpredictable directions. These conditions can be unnerving and unless you are willing to make some adjustments to your trading style, these new conditions can result in some very difficult trading situations.

So why not change up your style a bit?

In my trading, I generally am patient with my trades to see if they will run a bit farther than my initial expectations. So I have taken a simple approach; its not overly difficult to see which way the market may head in the short term, but the runs are often punctuated by dramatic retracements that can take you out of a profitable e-mini trading position. In my trading, I have simply shortened my stop/loss points and profit targets and been willing to exit trades with smaller profits, say, 7-9 ticks. Its not my usual style of trading, but we are trading in unique times and unless you are willing to adjust, you may have a difficult time trading effectively.

This problem is especially important for traders who trade systematically; those who rely upon a battery of indicators and price formations to initiate a trade. Unless you are willing to adjust you trading you may well find yourself in untenable trading situations.

My adjustments are not the only effective adjustments you can make to your trading style. Any adjustment will have to be within the parameters of your e-mini trading system and personal trading style. Be creative and find a method to shorten up your up your profit targets before the market turns against your position. There are many logical solutions to limiting risk within your system, you need to be creative and work within the limits of your e-mini trading system.

In summary, the current economic conditions have caused volatile market conditions and it is up to us, as e-mini traders, to adjust to those conditions. Those that fail to adjust generally find themselves on the red side of the account ledger.

by: David S Adams
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E-mini Trading: Can We Still Trade In The Current Volatile Market?