Why January's Mixed Market Results Have Me Excited For February

It looks as though I’ll be wrapping up the last week of January with a mixed record. Although I’m leaving the month in the black overall, the last few days have been a mixed bag for my main trading account.

Thanks to some minor technical snafus and a couple of unforced errors, I started the week about -$9,000 in the red in my regular account. While I’ve climbed out of that hole and am poised to end the week in the black, I just haven’t seen the same full-force momentum that was in the market at the start of the year.

My cash-only TD Ameritrade account, on the other hand, is chugging along well and closing in on a $160 daily average over the seven days I’ve traded it. While I’ve had to remain strategic about what stocks to trade and how much buying power I can use, the results have so far surpassed my expectations. If I can keep growing my account by 5% or more every day I trade it, I could reasonably surpass $10,000 before spring. Three-hundred percent growth in three months isn’t bad, particularly if I’m only trading 10 days over the course of a month.

All told, January’s closing days have made me optimistic for all of my trading accounts. While I’m not seeing the same crazy momentum playing out as at the beginning of the year, the rising volatility in the broader market usually entails more opportunities to capture some of the upside in the increased beta. The start of the presidential primary season is almost guaranteed to tweak the market through February.

Although I’m still likely to stick with stocks in the event of a spike in volatility, I’ve also seen increased interest on the part of Warrior Trading students in learning to trade options when stocks get more reactive. I talked a bit about options trading a little in Thursday’s recap video, primarily focused on their risk of time decay when trading options. Of course, increased volatility can help in-the-money moves before expiry, especially when implementing reliable options strategies. Still, traders should brush up on the best-practices when playing the options market.

Regardless of how you plan to approach it, February promises to be a wooly month for traders. While volatility might cause some strife for the broad market, retail traders will likely look forward to some big moves in the coming weeks.