SHIFT STRATEGIES TO FIT THE TAPE

The Market is subject to change with little warning just like the weather on a peninsula like Florida.  Traders experienced a thinly traded tape with low volatility all summer.  This helped identify relative strength for momentum day trades and overnight swing trades on low risk set ups.

Now with so much uncertainty starting with Euro Debt Crisis in the summer, next Presidential Elections early fall, and currently Fiscal Cliff it may be wise to evaluate your past trading plan and incorporate changes to better fit the tape riddled by uncertainty.  In my case, I shifted to Value stocks during “Sell in May and go away” using only around 10% of my capital.

November and December are historically the two best months out of the year along with the last 6 months in the Presidential cycle, so I started scaling in last month increasing my holdings to 55% of my capital for speculation and core positions to trade around into the new year.  I scale in because it is too difficult to time the bottom.

If your trading strategy/plan is no longer working, you may want to remain flexible to shifting your strategy to fit the tape.