‘When in doubt… get the h*** out’

A wildly choppy market Tuesday gapped down with a final-hour selloff that took another bite out of the major indexes – and some traders’ accounts.

The Dow closed at 26,379.28 points to fall .77% (dropping 205.49 points on the day). The Nasdaq dropped to 10,402.09 points for a 1.27% tumble while the S&P 500 lost .65% to 3,218.44 points.

More after-hours earnings reports were set to be released – and more to come this week – as traders also watch for an expected Fed announcement on Wednesday.

This “turn-on-a-dime” market has left many traders staring at computer screens showing trades working against them.

Human psychology – at least in trading – leads traders to “justify” loyalty to a losing trade or even tempts them into staring at a chart long enough to rationalize executing an “iffy” trade.

Any questionable trade is best left alone, and there’s only one answer at Simpler when a trade turns sour.

When in doubt, get the hell out.

No reasoning. No cross-checking charts. No back-data resourcing. No news searches.

If the trade doesn’t feel right after a situation changes, just get out. You can always get back in if the setup changes to your favor.

There are no “perfect” setups that work “every” time.

There’s simply no 100 percent answer to what’s going to happen in the market. Follow the clues the market provides. Simpler traders focus on setups and work to have fewer losses and more wins.

Profitable traders miss out on gaps, dips, and rallies all the time.

Whatever that “hot” opportunity was… just doesn’t matter. If it didn’t fit the trader’s plan, it was best to ignore the setup.

Building trading discipline requires waiting. Traders wait for opportune moments that work for them, not what others might be rushing into.

Waiting, especially in a strong cash position, can give traders a stronger edge when the right moment for them comes along — even in a volatile market.

We Saw: choppy market with stocks selling into close – 

• All three indexes suffer losses on the day
• Key sector stocks dropping after earnings reports
• Third negative session in last four days

We’re Watching: how earnings reports play out this week –

• Market internals for continued stability
• Effect of Fed in current conditions
• Setups in: ROKU, SHOP, AMD, LULU, SPX