The most important report of the week was the NFP report at 8:30 AM EST. The market immediately lost about 1.74% on the /NQ. It recovered significantly almost going even during the day. It is currently at -1.23% as I write this.
Here is what I want to point out. This is something that is very important to internalize as you trade. Most of the time it is better to think the opposite at least over the last few months. The NFP report was amazing. It nearly doubled the expected numbers. Why would the market go down as a result? That is because of the implications of a strong jobs market. Basically, this forces the Fed to increase rates more than the market was expecting. I find it fascinating that while I agree with that view, why then would the market snap back to almost positive? The games they play as amazing! Just setting you up. You still have to respect it if you are day trading since it can represent a big loss to your portfolio if you stay in with some short-dated options contracts. How do we deal with that? Well, you have to have a plan and you have to use your stop losses. Remember your portfolio has to live to fight another day. I did just that. In fact, it happened so fast that I could not alert my discord. But it was not where I anticipated placing my trades. I thought I would be using puts at around 13117 when I first saw the numbers. In fact, I placed puts around 13285. I played it safe like I always do but should have taken the long ride with more contracts. That is okay the risk management allows me to save lots of funds when things do turn around on me. After those put the push and bounce from 13136 was tricky, I actually lost on a premature trade, but managed to find the reentry to absorb that loss. Sometimes you forget what you already know in the heat of the moment. The lesson is that you have to be nimble and flexible. That does not mean you enter the day without a plan. In fact, having a plan, allows you to be flexible because you know why you are changing things. I hope you all have a great weekend! Happy Trading!