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Volatility doesn't matter for certain trades like trying to catch the
uptrend/downtrend on a pullback (dips/rallys), continuation of the
previous trend or breakouts and also for confirmed trend changes, but
before one can confirm the trend change, it is better to avoid high
and medium volatility trades. I was able to exit my medium
volatility AUDJPY trade at break-even, but I would not have been able
to do it if it had been a high volatility trade, because the trend-
change is not confirmed. The signal I got today for AUDJPY is a non-
confirmed trend-change with tight stops signal and I played it
perfectly. If I had day-traded it I would have made a handsome
profit. Infact, I predict a non-confirmed trend-change without tight
stops for tomorrow. Trading is not gambling; it is the toughest
(speculative) game which requires the greatest skill to master it...
rgds, Pal
--- In amibroker@xxxxxxxxxxxxxxx, Yuki Taga <yukitaga@xxxx> wrote:
> Hi palsanand,
>
> Monday, November 17, 2003, 11:53:41 AM, you wrote:
>
> p> I just got stopped out of my AUDJPY position at a break-even
> p> price. Better to wait for a stronger signal and listen to
> p> volatility as it might have increased from last week.
>
> Well, there is no question here that volatility has increased. When
> you have a stock trading around 800, and a base ATR range that gets
> established for that price area, and then just a couple three weeks
> later the stock is trading smack on 500, with an ATR value the same
> as it was when the stock was significantly higher, you have
> significantly increased volatility.
>
> Volatility is great, but playing with it beyond a certain range is
> just gambling, IMO. I prefer playing increasing volatility as it
just
> begins to come out of a low-volatility period. Once it really picks
> up steam I stand clear again and wait for the cycle to play itself
> over again. Risk control becomes very difficult the greater the
> volatility. Stops have to be set with a nod to volatility, and that
> means position size has to be decreased, or else one smack upside
the
> head will undo a string of nice plays, just like that. I like
larger
> position size with volatility that I can embrace, rather than
> volatility I need to be really wary of.
>
> That's probably why I stand aside a lot. There is no *need* for me
to
> do anything today (as there is no *need* for me to do anything on
> most days), and unless I get a solid signal this afternoon on one of
> my short term plays, I won't do anything. My short term system has
> already turned itself completely off for tomorrow because of the
> volatility explosion today. I already know that I will have no
> setups tomorrow, and I may go to the mountains -- it's coming into
> peak fall color season this week in the Kanto region, and the
weather
> today and tomorrow is to die for.
>
> Best,
>
> Yuki
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