Watching and waiting

While we are still close to all-time or multi-year highs on a lot of major indices, the recent price action has seen one long position fall by the wayside this week. This trade never really got going, and today's price action triggered a small loss.

The good news is that of the remaining three stocks held, two are big winners that have held up really well, alongside the USD/JPY trade that was initiated last week. The trailing stops have moved up nicely, closer to the current price action. As things stand, open profits are still around the +15R mark.

What has been noticeable over the last few days is that a high proportion of stocks I had on my watchlist have seen their price action pull back, and instead of breaking out to new highs, some have actually broken out in the opposite direction. This in itself is a warning sign that things are not favourable to my style of trading.

There has also been a dearth of new stocks coming up on my scans, highlighting that the criteria I use for potential stocks to trade is not being met. While some people might find this frustrating, I see it as being good, as it is keeping me out of the market. The bulk of my equity remains therefore on the sidelines.

Patience and discipline are critical at times like these. You should never trade out of boredom, or trade simply for trading's sake. You want to trade when you have an edge, and in my case, that is when stocks which meet my entry criteria are breaking out.

Therefore at this time it is a question of identifying potential stocks which are setting up and waiting for an entry to be triggered. Until then, there is no need to stay glued to the screen.