Why savvy traders don’t give up

By Jani Ziedins | End of Day Analysis

Apr 13

Free After-Hours Analysis: 

Wednesday turned into another promising session for the S&P 500 as the index attempted a second bounce off of 4,400 support.

While it feels like we are chasing our tail when trying to catch the next bounce, that’s simply the cost of doing business. And I most definitely prefer tail chasing to the alternatives of holding a big tumble lower or missing the next big rebound higher. Compared to those alternatives, a little tail chasing isn’t bad at all.

I bought Tuesday morning’s bounce, sold when prices retreated back near my entry points Tuesday afternoon, and bought the next bounce Wednesday morning.

By starting small, getting in early, keeping a nearby stop, and only adding to a position that is working, getting in and out of the market hasn’t been a problem for me. And given Wednesday afternoon’s nice close, my stops are already near my entry points, making this another low-risk, high-reward trade. (That only happens when we are willing to act decisively.)

Maybe Wednesday’s bounce sticks. Maybe it doesn’t. But if I’m wrong and I get dumped out near my entry points, no big deal, I take my money and try again next time.

The most important thing is I stick with it because the real bounce is coming and I don’t want to miss it. (Every failed bounce brings us that much closer to the real one.)

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.