With the increase in volatility and faster price action in the markets caused by the volume and speed of high frequency traders there are ways to adapt our trading to stay out of much of the randomness and chaos caused by these new market participants.

Here are some things I have started to do more of in recent years that helped:

  1. Increase your trading time frame form the minute or hourly chart to the daily chart. Do not be shaken out of positions prematurely due to intra-day noise. Wait for real signals from key levels on the daily chart.
  2. Switch from intra-day trading to just taking signals at the start of the day or the end of the day. Fading the open for an hour or stopping out of a position at close is much easier than trading against high frequency traders for 7 hours a day when much of their moves are random scalping attempts.
  3. Trade small enough so you can use end of day stops versus intra-day stops. If you are able to let the close confirm you were wrong you can avoid all the intra-day noise and see how the professionals close the market.
  4. After the first hour it is much easier to go with the flow of the trend for that day than to try to fight it. Piggy back HFT instead of fighting them as they ramp in one direction.
  5. Find patterns in daily price action to exploit that are caused by HFT and quit trying to fight them.