Well The Volatility is Back!

by Larry Levin

I'm sure you noticed the volatility is back and many people are asking why. Well here's the reason:

There was a little rumor going around the trading floor and it was that the Fed (after the horrible home sales report) was thinking about a surprise rate cut (not the Fed Funds Rate but instead, they were looking at the Discount rate.)

The Discount Rate is the rate at which banks are charged for borrowing short term funds. This is the rate the Fed cut by surprise several weeks ago before the market opened.

Well there was no surprise rate cut today and I don't know if there will be one tomorrow either. But what the news did to the market is good and bad.

If you are an experienced trader, you love this volatility.

But if you are a beginner it could be a different story.

If you are new to trading, please keep this in mind: The next several weeks could be very crazy and if you are trading, please keep your contract size very small. There will be plenty of good moves in the market, don't shoot all your bullets at once! Take it from a guy who's been around the trading block for quite some time.

Real Time Trading Signals*for

Trade Date: 10/24/07

E-Mini S&P Trades*
(before fees and commissions):


9:10 ID VA Sell 15.75 = +.75, +2.50, +1.25

1:31 FT BUy 7.25 = +1.00, b/e

1:33 FT Buy 7.25 = +.75, +3.25, +2.25

E-Mini Russell Trades*
(before fees and commissions):


1) Sell @ 8:30am at 816.0 = +.5, +1.0, +1.0

2) Sell @ 8:36am at 814.4 = +.5 & -.6

3) Buy @ 8:50am at 816.6 = b/e (1 lot)

4) Sell @ 8:56am at 816.5 = +3.5 (1 lot)

5) Sell @ 9:05am at 814.2 = +.5, +1.0, +5.0

6) Sell @ 9:22am at 810.3 = -.7 (1 lot)

7) Sell @ 9:27am at 809.8 = -1.0 (1 lot)

8) Sell @ 9:30am at 809.7 = -1.0 (1 lot)

9) Buy @ 10:34am at 801.6 = +.5 & +2.0

10) Buy @ 10:45am at 803.3 = +2.8 (1 lot)

11) Buy @ 11:18am at 804.4 = -.7 (1 lot)

12) Buy @ 12:31pm at 804.5 = +.5 & -1.0

13) Buy @ 1:55pm at 807.4 = +.8, +1.5, +6.0

14) Sell @ 2:49pm at 811.9 = -1.0 (1 lot)

Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!

Log in for Larry's Daily Trading Tip each day too!