Monday, May 5, 2008

Making Money in Slow Markets

On days like today, I will trade much like I do in the evening. Corn is less than 4 cents from Friday's settlement price, and has barely moved in the past two hours. Stocks and treasuries are relatively slow also. Stocks are lower for the day, but haven't moved too much from their opening prices. I will only trade instruments with no more than 1 tick spread, which limits my trading to a few currencies, treasuries, the S&P 500, and corn. I will take a position fading the market when they reach their most recent extremes, taking profits of only 2-3 ticks. This is extremely risky, but allows me to put a few dollars in the till. I keep even tighter stops than usual. As soon as prices move just 1-2 ticks in the wrong direction, I get out. I do not recommend this form of trading.