5 Tips for Fall Trading Success

With September here options traders are excited about the prospects of a market with more volume. The last two weeks of August tend to be some of the lowest volume weeks all year. Traders are off and who wants to make large bets in the days preceding the busy fall trading season. Here are 5 ways that traders and active investors can adapt to the changes coming.

1) The trend is not your friend

Whatever trend has emerged during the last weeks and days of August is most like not going to continue. The first weeks of September typically bring a whole new dynamic to the market. The new trends typically emerge quickly and will last for the fall. Give the market a few days to find a direction and then start looking for trades in that direction. Don’t try and guess the trend in an attempt to beat the market, sometimes you might get lucky and it will work, but most of the time it is better to put the probabilities in your favor and let the market find a direction and then look for trades in that direction. Trading is very much about probabilities, the most consistent traders make sure that they are placing options trades with probabilities in their favor.

2. September is a good time to take a look at what’s working and what’s not working.

Now is a good chance to take some time and evaluate and refine your strategies before the markets gear back up in September. The trades in the last few weeks of August can be hard to find and are not always the best quality. Take the time now to make sure your strategy is working and you are feeling confident in to September trading. Markets change and strategies do not always work in all markets, see if the strategies you are using are still applicable for the type of market you see in September, adjust if needed and be ready for the opportunities that will come with trading the fall session.

3. Cash is Your Friend

Make sure that you have cash on hand to execute on trades you want to place. Don’t tie up your account fighting the market in the last few days of August, when you can take a much needed break and return fully charged in September. Once the market is back to the fall trading session you should then begin to look for more high probability trades that might be setting up. Cash is a good position to have going in to September, have the flexibility to place the trades you want when the market begin to trend in a direction you want to trade. This also relates back to point number 1, don’t try and load up a bunch of trades hoping for the big win, be patient and make sure that you are slowly getting back in to the market. This is especially true if you haven’t traded for a few weeks and are just coming back to the market, take the time to orient yourself to what is going on then slowly start to get back in to the options market.

4. Watch for Increasing Volatility

As the market begins to trade again with more volume, implied volatility will also tend to rise as the market finds it’s fall trend. The increased volatility can mean that the put and call credit spreads that make credit difficult to find in August will once again have enough credit to make trading them worthwhile. With the unpredictable geopolitical events that we are currently seeing, volatility is going to be on the increase, make sure that you are trading in such a way that a surprise large volatility day in the market does not wipe out your entire account. We are going to have some surprise moves, that no one can predict this fall, all we can do as traders is make sure that you are not trading to large for your account, unpredictable moves happen, the most consistent traders are diversified and do not take overly large positions in any one options trade.

5. Spend Some Time Looking at New Stocks

The next two weeks are as good a time as any to take a look at your watch list and delete some names that are not working or that you haven’t traded for a long time, declutter and keep only the stocks you regularly trade and that you are having success with. This is also a time to look a few new names that may have been removed from your watch list months ago. Stocks that did not move or trend over the summer might once again become tradeable. Keep an eye out for subtle changes in the market and see what stocks and options are the best trading candidates and add them to your watchlist.

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