Now that we are firmly in the month of August, many of you will have seen how tough this month can be. After all, there is little in the way of liquidity, as many of the larger institutions send their traders on holiday during the month. This isn’t to say that there won’t be trading opportunities, just that you will have to “dial down expectations” of substantial moves. (Most of the time.) This is the one time of the year that I actually start trading on smaller time frames. (Those of you that have been following me over the last few years know I hate scalping.) The reality is that you have to take what the market is offering. It won’t always be a “grand slam” that is offered.
The Choice Is Yours
This allows the trader to do one of two things: Take the month off, or simply look to something along the lines of the hourly charts. I don’t suggest that one is better than the other, but I do know how difficult it can be not to check the markets during the day – so I am going to go ahead and suggest that you will more than likely look to shorter time frames. The markets tend to get range bound during this time of year, so I simply look for those set ups and will also quite frequently cut my position size in half. This is because you have the possibility of the thin trading conditions causing a massive move on a random headline, which can be frustrating. (It isn’t as we can make the news flow stop, even if the markets want to.)
With this, I normally look to the second week of September to be the official “kick off” to the trading season. This is the time that I begin to look for some signs of a trend forming for the year, and can be very profitable. However, between now and then is almost always an exercise in patience at best. With that, I love the idea of smaller trades, less stress. Remember, the idea is to be profitable over the long term, and as a result it is alright for you to have a slow month – just like the rest of the market. Besides – summer is ending. Go enjoy what’s left of it.