Trader Mike

Michelle B submits:

Having read a few comments at trading blogs—OK, I have read zillions—I have encountered more often than not, a frenzied, harried, stressful approach to time when one is trading. Some feel the demonic pressure crushing them as soon as the market opens; others feel enervated by its demands needling and pinpricking them throughout the trading day. Regard time, instead, as a wonderful and gracious friend, accommodating your need to focus and execute successful trades.

Specifically, I rely upon my friend, time, in three concrete ways:

I. Using Time frames

All time frames are useful and valuable–monthly, weekly, daily, hourly, thirty minute, fifteen minute, five minute, and last, but not least, one minute. My motto is: …

A little while ago I was asked why I take the last two days of options expiration weeks off. I know I’ve mentioned the reasons several times and they’re scattered all over the site so I’ll list them here:

There are usually strange things that happen during expiration week. I’ve seen what appeared to be the beginning of big moves early in the week reverse on a dime later in the week due to pinning to strike prices.

Pinning doesn’t always happen, nor does it affect all stocks. But over time I’ve learned that it was pointless for me to try to trade close to expiration. I’ve also read that many other traders recommend …

Here we go gapping up again. -sigh- I certainly don’t trust this gap since this is a Fed interest rate decision day and it’s options expiration this week. Whether the pop sticks or not, I’ll be sitting on my hands until after the Fed decision. The market continues to act poorly — selling off in higher volume and rising on lower volume. I doubt that we’ll get a bottom that sticks until the buyers give up in the morning. I’m still waiting on my big hammer day. I should probably take the rest of the week off due to the likely expiration pinning, but I’ll hang around looking for a few daytrades.

This is why I tread lightly, if at all, during expiration weeks. This had to be one of the ugliest, choppiest, silliest days I’ve seen in a long time. We started off into the red but quickly rallied because of the capture of the Ace of Diamonds. Hello… the war has been over for weeks now. Why buy on this ‘news’? Once that enthusiasm wore off, the market fell back. Despite that impetus, I think much of the choppiness/nuttiness is due to options expiration. I’ve never been able to game the effects of expiration, so I usually step aside and wait it out.

As for …