A Veteran Trader Explains "The Essence Of Mayhem-Day Survival"

"On days like today," Bloomberg's Richard Breslow explains "there’s a penalty for overthinking. And a premium for being able to pull the trigger." That’s the essence of mayhem day survival...

It’s done. Britons voted to leave the EU. But this isn’t the time to be sitting around with mouth agape, shaking your head. Market technicians talk about “key day reversals.” They’re important signals that are ignored with peril. Warning of a powerful rejection of a trend at its most extreme. If you look at the charts this morning you’ll find them all over the place. Daily, weekly and monthly charts confirming each other.

 

In this case, it’s an even more imperative call to action because it had a major fundamental cause. A key day reversal for U.K. governance with global economic implications.

 

Traders can’t sit with positions that are obviously wrong way round hoping for a bounce. Hit the bid, get square, sell some extra if you think it’s going to keep going. There’s no clear thinking while you watch your trading life pass by your eyes.

 

 

Better if it bounces and you didn’t get the best level than keep passing on lower and lower prices: which is soul-destroying.

 

Volatility is scary because central banks have tried to distort it out of existence. But the truth is, this is going to be a traders’ market. You don’t have to do size, just be active. How rare it’s been to have multiple opportunity days.

 

And I hear most banks are accepting stop/loss orders again.

 

If you believe that huge moves are coming, try to get in. At least have a plan. You can’t say, “this is going to go 15% but I’m not taking a position.”

 

Everything in trading isn’t buy the dip. Sometimes you have to think out of the box and get short.

 

And please, no matter how upset you may be with the result, there’s nothing immoral about taking advantage of the opportunities.

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No matter what, there will be blood on the streets today.