The market's been rough lately. I'm sharing my experience with how this conflict has impacted my trading and how I'm handling it.
I've got two strategies that combine price movement with volume analysis. One is a breakout strategy and the other a mean reversion one, which balance each other. This mix has been really strong, working well in various market conditions and staying profitable for at least 2.5 years. When one strategy underperforms, the other usually shines in 99% of cases because they react to different market conditions.
After about two weeks into the Iran situation, my breakout strategy lost its edge. Makes sense since markets were more ranging and trends usually appear during Asian hours. But last week, even my mean reversion strategy struggled. Consolidations turned into a brutal battleground. Bulls and bears are fighting over every tiny move. Every time buyers push prices up just a little, aggressive sellers swoop in to bring it back down, creating insane chop that's never happened in my 4 years of trading.
This is different from usual geopolitical stress, which can be expected. I think it's related to Gamma exposure and how Options Market Makers have to hedge it. If someone could explain that, I'd appreciate it.
I've decided to step back from trading until the market settles. I was just $1000 away from winning a $100k challenge, now I'm $3500 behind after losing 8 trades in a row. One trade was a fluke, the rest were bad luck. I thought my dual strategies would handle a crisis well, but it seems even that wasn't enough. Still, I know I'll recover when things calm down.
I'd love to hear your thoughts on this too. This could be a useful discussion for many here.