Good morning, traders…
Ben here.
I hope you spent (at least) part of Memorial Day studying and preparing…
You should’ve been building your watchlist, evaluating your recent trades, and identifying promising setups.
As you know, we’re in a shortened week of trading. I’ve seen four-day trading weeks go a few different ways…
Sometimes, the price action is muted due to traders traveling and less overall volume.
Other times, if major catalysts occur, the condensed nature of the trading week can lead to elevated volatility.
But in either scenario, the market trades differently than it does during a normal five-day week.
It’s about being prepared for a slightly different environment with less time on the clock.
CAUTION: This is especially important for options trading, where timing is everything (but more on that later)…
With that in mind, let me show you three crucial considerations for the shortened trading week…
Focus on One Trade at a Time
If you’re trying to track too many trade opportunities simultaneously, you risk missing the ones that matter most.
For most traders, this means having no more than two or three charts up at a time.
Our brains can only pay attention to so many things at once.
Even if you have eight screens, you can only truly focus on one at a time.
You can’t go to a theater and watch three movies at once.
Worse yet, tracking too many charts, stocks, or positions simultaneously can lead to analysis paralysis…
For traders, this means spending too much time researching, watching, and analyzing stocks without actually buying or selling anything.
Here’s what happens:
Information Overload: You gather a ton of data, news, and reports about a stock…
Overthinking: You keep thinking about the pros and cons, trying to predict the perfect moment to trade…
Fear of Losing: You’re afraid of making the wrong choice and losing money…
No Action: Because of this fear and overthinking, you end up doing nothing…
A vital part of being a great trader is having the skill to identify a perfect setup from a false breakout or pullback.
Then, you should zero in on the ‘play of the day’ and tune out the noise.
Be Careful With Weekly Contracts
As I mentioned earlier, options trading is all about timing…
And in a four-day trading week, you need to be especially cautious about the timing of your trades.
The weekly options contracts expiring Friday, May 31 have one less day to realize their price targets than during a normal week.
Be careful trading these because poor timing can ruin an otherwise ideal setup.
You can be 100% right on a trade thesis, but if you enter the position too early (or too late) … you might as well be 100% wrong.
If you’re trading stocks without leverage, you probably aren’t gonna lose more than 20-30% on your worst day (unless you’re scalping sketchy penny stocks).
But if you’re trading weekly options and the underlying stock moves just a few percentage points in the wrong direction, your contracts could lose more than 50% of their value.
This week, the time decay will be faster and more unforgiving.
So, if you’re gonna trade weekly options this week, make sure the setup checks all your boxes and keep the trade on a short leash.
Leave Last Week in the Past
Some traders tend to let the sting of their losses — or the confidence from their wins — carry over into the following week.
But in this short week of trading, I want you to avoid bringing past emotions (or any emotions, for that matter) into the present.
Now, that doesn’t mean you should forget about valuable lessons you’ve learned from your past trades. I’m not saying that…
I’m simply suggesting that you start the week with a fresh outlook, unaffected by the feelings that prior trades have brought you.
If you’re walking on eggshells because of a brutal loss in the recent past, you may lack the confidence to pull the trigger when a perfect setup comes across your screen.
That said, overconfidence can also be a trader’s worst enemy…
If a string of lucky wins makes you feel invincible, you may overtrade or oversize your positions.
All this to say, don’t let your recent results affect your decision-making this week.
Every month, every week, and every day is a clean slate in the market.
Treat it as such.
Now, before we go, let’s look at:
💰The Biggest Smart-Money Bets of the Day💰
- $1.39 million bullish bet on MRVL 07/19/2024 $77.50 calls @ $5.55 avg. (seen on 5/29)
- $1.31 million bullish bet on AMZN 08/16/2024 $200 calls @ $4.15 avg. (seen on 5/29)
- $1.02 million bearish bet on SCHW 06/21/2024 $70 puts @ $1.27 avg. (seen on 5/29)
Happy trading,
Ben Sturgill
P.S. Still unsure about how to approach the 4-day trading week?
There’s no better place to start learning than in my Spyder Webinars.
TODAY, May 29 at 4:00 p.m. EST — I’m hosting an URGENT LIVE BRIEFING where I’ll show you my entire game plan for the week.
Don’t miss out — CLICK HERE NOW TO RESERVE YOUR SEAT.
*Past performance does not indicate future results
