



The second market development is that we're all daytraders now. Of course that's an overstatement, but the dramatic rise in volatility over the last year, combined with losses at banks and hedge funds, has meant that traders have to manage their risk intraday. That is helping to create significant volume and significant intraday market swings. I can't remember a period in which so many longer-term traders have stayed so glued to their screens, making decisions in a potentially reactive manner.
All of this is relevant to what you watch when you trade, how you size positions, and how you view your risk when positions are correlated. In the end, there's just two settings on traders' current thermostats: risk seeking and risk aversion. And the two are playing themselves out daily.
RELEVANT POST:
What's Carrying the Stock Market
.