The number one question people have asked me recently is: How do you deal with such a crazy, volatile market, especially knowing that at any minute a headline regarding the Fiscal Cliff could come out and lead to additional volatility?
1) The market is volatile period! If you can’t stand the heat, get out of the kitchen. In other words, if you are such a nervous wreck, maybe trading isn’t for you.
2) Stop watching EVERY single tick! If you have 19 monitors that each show 1-minute charts, maybe you should re-evaluate your strategy. Sometimes it’s best to step back and look at the bigger picture. It’s possible that your over-analysis is leading to your paralysis. Yes, I know that rhymed 🙂
3) Reduce your position size. Again, if you are too nervous it’s probably because your positions are too big. Consider reducing them to relieve pressure and gain clarity. You’ll make better decisions with a clear mind.
The final and most important point: Have conviction in your ideas! You should have a process that you believe in. Do your homework, have confidence in your ideas, and let the MARKET prove you right or wrong. If outside opinions are influencing you that easily, it shows that you really don’t believe in what you are doing. Don’t get me wrong, be open-minded but don’t let someone steer you away from your plan so easily. There are plenty of stocks I believe in right now that should move higher, regardless of the Fiscal Cliff outcome.