[smwinc]

This is interesting. The Market Psychology section has had a few more posts recently than average.

We have had extreme days in an already extremely volatile market lately.

Friday 14th was a very big day. In 5 years of trading, Friday was the best day I have ever had, period. Friday, let alone the entire week, has truly been a gift as far as volatility.

We all trade differently, but something that applies to all of us is in these volatile days/week/months, you have to:

- analyse the market without bias
- analyse how YOU are behaving
- analyse how you think OR can see (if you trade with others) are behaving

We have continued to see the big moves and relative highs/lows for the day occur before the start of the US day session OR right near the open. I can't stress enough how useful it is to follow and understand the European markets.

Let's take a step back and look broadly at the last week.

Many big traders put positions on around the time the fed announced the $200 billion in 28-day Term Securities Lending Facilities (March 11th).

After a few minor pushes higher, on the 13th March it retraced back to the areas where those original long positions were initiated. This is a standard pattern you see over and over again. Government intervention causes a move, we retrace it, and bounce off it. Longs were still happy to be long.

March 14th - This is where it got interesting. Things did NOT go like a few people I know of expected. The Bear Stearns rumours were already out, and the market was not looking that great, and you're stuck LONG a few 1000 contracts.

Before the news release on Friday, we had NOT seen any big selling yet, in fact we saw buying come in on tests of lows in the European markets before the CPI figures. This was a great opportunity to take a long position with size. This good news release was the last opportunity to get OUT of big long positions.

By the time the US opened, institutional longs had already been liquidated, and the free-fall occurred basically because no one was there to step in.

As a day trader, in the long run day to day you are making your bread and butter. Recently we have been extremely lucky and been given multiple "home run" days. When you have fundamental events, they give you an opportunity to hit a move with size and confidence.

Take the time to analyse how you traded and hit it hard next week. We ALL pay the price of education multiple times throughout our trading career.

SMW