The stock market offers some great opportunities to investors/traders who practice different styles. I appreciate the flexibility over various timeframes. In the old days, we might be lulled into complacency, just preferring to let our money sit and expect it to grow to the sky. But, in today’s interconnected world the options are vast. The old saying goes, ‘there are many ways to skin a cat’ (my apologies to my two cats Simba and ‘the Troublemaker’).
Today, we can put our money overseas and invest completely away from the US, hedge our positions using options, trade commodities and use fixed income as our equity alternative. Many of these positions can be made rather simply and without much effort, but we have to be aware of our own risk tolerance. That brings up knowing your style and awareness.
We all have to be aware of time frames, as they offer us different opportunities and challenges. If you’re into technicals and charts, are you using intraday moves like the 5, 15 or 60 min time frames to chart your course? If you’re a swing trader, are you more inclined to use 60 min, daily and weekly charts as your guide? It is critical in every market type, bull and bear to pay attention to time and how it merges with your style.
Futures traders often trade from one day to the next and rarely hold positions overnight, and given the recent volatility and gap opens it’s no wonder that is the right action. One gap in the wrong direction can blow out your account. Option traders usually have much shorter time limits than stock traders but can hold positions overnight (with a bit of fear but not panic).
The point here is this, be aware of your preference for trading, your style that makes your comfortable and blend that with the proper time frames. This is a critical alignment that will save your from being in an unfamiliar position.
