• Skip to primary navigation
  • Skip to content
  • Skip to footer
Daniels Trading

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
 

Panic Trading 101: Technical Reliance for Unclear Trading Fundamentals

August 11, 2020 by Daniels Trading| Tips & Strategies

Panic!

Simply mentioning the word strikes fear into the hearts of most conventional buy-and-hold investors. But, for active futures traders, panic equals opportunity. And, for astute traders, panic is profitability.

So what is a market panic? In general terms, a panic is defined as “a sudden overwhelming fear, with or without cause, that produces hysterical or irrational behavior.” During a market panic, many traders and investors are the ones behaving hysterically or irrationally. Textbook market panics occurred in 1929, 1987, 2008, and spring of 2020. All were shocking crashes, featuring periods of intense rebound.

When it comes to trading fundamentals, panic is both risk and reward. Let’s take a look at how technical analysis can be an invaluable part of your approach to seemingly chaotic markets.

When All Else Fails … Use Technical Analysis

The onslaught of the novel coronavirus (COVID-19) pandemic of 2020 brought unprecedented uncertainty around the globe. Beginning in late February and throughout March, a full-blown panic swept the world’s leading currency, commodity, and equities markets. Asset values fluctuated wildly as capital market participants of all sizes attempted to “price-in” the virus’s potential impact. At the end of the day, traditional trading fundamentals meant little; all that mattered was the intense buying and selling.

Ready to think like a technical trader? Download our free guide to learn how to  identify chart formations and take action when the time is right.

Enter technical analysis. Technical analysis is the study of price action―past and present―to determine the future path of price itself. Accordingly, technical devices such as support and resistance levels, chart patterns, or momentum oscillators are employed to identify a trend or its pending reversal.

Although these tools may seem abstract, they are concrete. No matter how crazy the news cycle or volatility gets, market technicals are a reflection of price action―nothing else.

During the initial stages of 2020’s COVID-19 contagion, panic trading became an everyday event. March 2020 brought multiple triggerings of the 7 percent S&P 500 “circuit breaker,” making it the first since the global financial crisis of 2008.

Subsequently, many traders were left in limbo. Trading fundamentals was certainly out, yet there was profit potential in the robust volatility. For those with a healthy risk appetite, technical indicators became the go-to reference for navigating the financial storm.

From energies to metals to stocks, futures traders around the world lined up to get in on the action of late winter and spring of 2020. Of course, one ultimate question was on everyone’s mind: How can I enter and exit the markets safely ? Savvy futures traders answered this question with countless strategies. Two of the most common are listed below:

  • Support & resistance levels (S&Rs): Implementing S&Rs into a trading strategy is one way to place topsy-turvy price action into context. Theoretically, S&Rs inhibit price action, thus limiting the ability of panic-driven markets to trend directionally. Though their effectiveness is ultimately dependent upon order flow, S&Rs provide traders with market entry and exit points exclusive of fundamentals.
  • Oscillators: Momentum oscillators indicate when a pricing trend is strong, exhausted, or primed for reversal. During times of extreme volatility, oscillators quantify whether a market is overbought or oversold and place evolving price action into a manageable context.

The beauty of technical analysis is that it knows no market state; volatile or quiet, technical indicators don’t lie. If a market is a buy, then it’s a buy. If the same market is a sell, then it’s a sell.

Unlike trading fundamentals, there is very little guesswork involved with technicals. Price action either dictates a trading opportunity or it doesn’t―simple as that.

When Trading Fundamentals Fails …

For hordes of active market participants, trading fundamentals is a solid way to consistently secure profitability. However, when the unexpected dominates market sentiment, technical analysis can be a viable alternative.

A great way to begin your career as a market technician is to study Daniels Trading’s online e-book 10 Rules For Technical Futures Trading . No matter the state of global finance, this essential resource can assist anyone interested in pursuing market share via technical trading.

Ready to think like a technical trader? Download our free guide to learn how to  identify chart formations and take action when the time is right.

Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Subscribe To The Blog

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure
  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top