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Dear Trader,

The past two months in the US stock market prior to the recent explosion, have been perhaps
the most difficult trading environment since 2008. The market kept inching higher, but in an
extremely narrow manner. Many stocks kept hitting air pockets, but their downtrends did not
persist, challenging both trend traders and counter-trend traders.
To verify this personal impression of a difficult market with hard numbers, I looked at
performance figures of SpikeTrade.com. At the top of this worldwide group of traders are 18
Spikers –pro and semi-pro traders. They compete weekly for the best picks, and at the end of a
quarter winners receive diplomas and bonuses.

At the end of March of this year the gold winner was up 29% and the 18-person Spiker group as
a whole was up 3.76% for the quarter. In the second quarter, the gold winner was up 62% and
the Spiker group as a whole up 4.42%. Now, as we approach the end of the 3rd
quarter, the leading Spiker is up 19%, while the group as a whole is down .5%.

There are two weeks left in this quarter, and these numbers may well change, but the message is clear: this is a very difficult quarter even for the best traders.

A natural human tendency of someone experiencing a drawdown is to trade more actively, trying to dig one’s way out of a hole – but this is not the right way! When the market is hard, when you find yourself in a drawdown, the intelligent approach is to slow down, take fewer trades, put on smaller positions, and dedicate more time to your trading education. Markets keep cycling through trends, reversals, and trading ranges. A better environment will emerge as surely as they day follows night. Read some books, study the market daily, and you’ll see when a new tradable environment invites you to jump in.

Elder.com