Contentment in Trading

If, in your heart, you possess contentment, then you and those who possess the world are equal.
— Imam Shafi, b.767-d.820

You can't place a price on peace of mind. Successful traders are often able to step back and block out all of the noise in the markets; it is this ability that ensures their peace of mind and provides for mental clarity when assessing trade opportunities.

Over the past month, volatility has been especially high in the equity markets, and instead of being reactionary to it, find contentment in observing your favorite stocks from a distance before assuming any trading positions, especially of significant size.

Don't force trades. Instead, have criteria in place which will allow you to increase your chances for success, regardless of what position bias you may take. The market provides opportunities for entry points if you give yourself time in monitoring your stocks and assessing price action.

Let's apply this contentment approach by taking a look at $GD (General Dynamics Corporation: NYSE) from the daily and weekly time frames:

$GD : General Dynamics Corporation

On the daily chart, -DMI has been above +DMI since the end of August, so the bears are in predominant control. However, +DMI is creeping back up, and a MACD spike above the signal line would indicate short-term bullish action being in favor. The ADX line is flat lined for now, so the trading action is range bound primarily between the $140 and $145 price levels.

On the weekly chart, we can see that the $130 level has been a key support area since October of 2014. There has not been a close below $130 on the weekly time frame for nearly a year. The content trader would be mindful of this and watch for any price action weakness in the weeks to come. If RSI breaks decisively below 50 and bears apply further selling pressure, then a close below $130 would be a signal to consider going short on price action weakness.