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Video Transcript:
Yeah,
I mean, in this environment there’s something to be said for booking profits
and scalping, because—again—I’ve said this for the last week or so: these are
not normal conditions. You know, the VIX being elevated up to 30, 40, 50, even
60 is not normal. An ATR on a 10-minute candle is, right now pre-market, at 8,
8.5, or 9—and it has been up to almost 20. I’ve seen it in the pre-market, and
when the cash session hits, I’ve seen it up into the 55s, which is untradeable
if you ask me. There’s no way—unless you’re really momentum trading—that you
can operate in that. If you’re really good at momentum trading, maybe that’s
your thing, I don’t know. I can’t seem to make heads or tails or make any kind
of decisions in those kinds of conditions. I just think that when I do enter a
trade, the heat is just a bit too much for me.
Yeah,
I know you’re supposed to let it ride and handle a bit of heat, but it’s
just… yeah. I mean, for sure, there is that balance of not suffocating a
trade and not exposing yourself to too much risk—and that really comes down to
the preparation of the trade and the position sizing. You know, if you’re
working off a $50,000 account and you’re trading 10 contracts, that’s a lot.
That’s a big percentage, especially with an ATR even at 10. Think about it: 10
contracts at an ATR of 10 means you’re risking—what is that—$5,000 per trade.
That’s a lot. That’s 10% of your account on each individual pull of the
trigger.
So
my suggestion, especially when rates—or when the VIX and the ATR—are what they
are, is to scale down if you’re going to engage at all. I mean, I know a lot of
people who just sat out last week. They didn’t do anything. It just becomes
unreadable. And I mean, for the way that I trade—and the way a lot of folks
trade—you just can’t make decisions when the market’s moving that fast and
you’ve got to risk that much. I’ll bet it was probably a very healthy week for
the prop firm industry last week.
Oh
yeah, absolutely. With this volume and volatility, I remember when I used to
clear for them—they used to make massive, record profits every time in these
conditions. I guarantee you they’re collecting that reset fee like crazy right
now.
Yeah,
sorry—I was talking about the hedge funds and the big prop trading firms like
Jump Trading. They’re making a killing. I mean, there are some models out there
that thrive in this environment. Mine’s just not one of them. You’ve got to
understand where you’re willing to risk capital and under what conditions. I’m
sure there are people out there making a killing on this increased volatility.
I do like increased volatility, but there is a threshold. There’s a law of
diminishing returns—as soon as the ATR gets above 15 or 16, that’s where it
kicks in. I can’t make solid decisions when the ATR is 20 points per candle.
That’s just the way I trade. I know that about my technique and my strategy.
So
when it gets up to that level—unless there’s a setup smacking me right in the
face—I’m not taking it. And even if I do, it’s going to be on the micros in
those conditions because I’m just not willing to engage much in that type of
environment. There are times to step on the gas pedal and lever up, but right
now is not one of those times—at least for the way that I trade.
How
long do I think this environment lasts? That is the multi-trillion-dollar
tariff question, isn’t it? It lasts as long as the uncertainty lasts. It lasts
as long as China and the U.S. are locking horns.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm-funded traders every day, then click the link below the video and hop aboard. We’re looking forward to trading with you!
