It is Friday afternoon, February 6th and I am just thinking that it is nice to get it right.
The markets were up almost 3 % today across the board with an overwhelmingly large amount of the market participating. The depth of today’s move was impressive with 6 stocks going up for every one that went down.
Just after the open today, the market had a real nice trend line break, 4 points across the bottom, forming a declining wedge in short term downtrend, then, BOOM – IT HAPPENED! The market went up so fast like I had said it would, catching so many at their pain thresholds, having to cover in a hurry.
The Dow went up 170 points in less than 30 minutes, as well as all the other major indexes. It kept going up and closed near the high of the day, a positive for a follow through in tomorrow’s session. The daily chart is now positive, with the weekly trying to turn into positive territory, maybe next week. I have a chart of the two below. The weekly chart may turn positive, but I do not think the monthly is going to go positive for a long time yet.
As I was discussing yesterday’s daily price action, I could see that the pattern was a bullish one that I have literally seen thousands of times before. You can see the same patterns in small time frames giving you the same results, time and time again. Reading the markets is not a science, it is more of an art. You do use probabilities and pattern recognition to help you identify areas that have low risk and yield you positive returns, but you have to know what you are doing. The only way that happens, well you guessed it, practice.
Make no mistake about it, trading is not that easy overall. If it were, there would be a lot more people making money at it and you don’t hear that very much these days. Having said that, I would beg to differ with those people who say that the average guy out there cannot compete with the professional traders all over the world. I say you can, if you have what it takes.
You may be asking yourself, what does it take then? And if I don’t have it, how can get it or find it? That is a question every one needs to take seriously if you plan on being successful. You need to find out what it takes and are you willing to pay the price. I had to ask myself that question a long time ago and my answer was, what ever it takes and how ever long it takes.
Let me say, I would not do anything unethical to advance myself for the sake of advancement of my goals, but barring that, you have to work hard. If you have a mentor or someone who can show you how to cut down the learning curve, I am all for that. Without learning from someone who has already done it, you will add many years to becoming successful, something I never had.
First, there are the three things you need to find within yourself to be successful and they are, “Discipline , Focus and Patience”. Those are the first things you must have. I will go into more depth with these at another time, but these are essential. These qualities are from within you and you may have to dig inside yourself to find out where you stand. There are mental exercises you can do to bring the best of those qualities out.
I say all of this because trading is not only about putting on a buy or sell order. It goes way beyond just trying to make money. If you are not prepared for the mental side of trading, you will end up doing everything wrong and you won’t know why that is, even when you know better at times. You need a solid trading method and solid mental skills and be willing to be honest with yourself and not think more highly of your skills than you should. The markets have a way of dealing with people like that and I would call it an old fashioned humbling.
We need to stay thankful for what we can take out of the market each day and resist the temptation of GREED. That word I just mentioned has killed a lot of good traders. The other word that goes with the last one is FEAR. Those two go hand in hand with each other. Again, these are emotions and they need to be controlled or they will control you. You first need to be aware of them to try and control them and that is why I am bringing it up. It takes a lot to become a consistent trader who can take money out of the markets on a regular basis and you just need to ask yourself, do you want to become one of those people.
You can make a lot of money when you can come to terms with the points mentioned above. To control greed, you can come up with a modest profit target that you would like to make each day. That right there, in its basic form, can do wonders for you. An example from today would be taking a small profit of 1 point on the S&P when I could have had 3 or 4 easily. If I let my emotions take over, I will be kicking myself saying why did I take my profits so quickly while I could have had a lot more. Next time I see that, I will go for it. When you talk like that to yourself, you are setting yourself up for something that may not be there and you may be wishing for it. You place the trade it moves up over 1 point and then backs off quickly stopping you out. Then you say, “why didn’t I take my 1 point target.”
It never ends with the mental battles you face unless you come to grips with sticking to your plan and taking what you need for the day, 2 or 3 points. I guess this story fits well for me today, because I knew I was not going to trade a lot today. I just needed to get my daily goal and be done with it.
I had 4 trades today, +3 ticks, -2 ticks, +3 ticks and the last was split into two sells for +7 ticks and +4 ticks. This got me my minimum daily goal for the day of 2 points after commission in just a few minutes. If you follow my trading plan of gradually increasing your contract size as your profit increases, you don’t have to trade all day to make more money, just increase your size gradually.
I will be increasing my size next week to account for this myself. Also if you learn to pay yourself a little each week, you will come to see that you will be rewarded for your discipline, focus and patience. Starting with only 1 contract and following my plan as outlined, trading for only 2 points on S&P per day can make you all the money you could need to live a very comfortable life. For someone to make that kind of money, you would have to be a top executive, doctor, or other highly educated profession. The one thing that they don’t have is the time and freedom to enjoy what trading can give. In 30 to 60 minutes per day, it is possible to get a modest goal of 2 points and keep doing it.
That is one more reason why I like the way I trade. There are so many opportunities to pick that up in just a short time. If you didn’t get it, you stay with it until you do. The trades are posted below. I’m still doing an introduction to my method tomorrow for those interested. There is no charge. I will be starting at 8 am West Coast time and going to about 9:30. Email me at vinnie@sniperdaytrading.com . Read my post from yesterday if you missed it and it will explain what to do.
Bye for now.
Vince
http://www.screencast.com/t/LMfgyPXvu Some of today’s Live trades
http://www.screencast.com/t/gv4Xif7zBo Today’s equity curve
http://www.screencast.com/t/AZAJpcM1 S&P daily chart update
Related posts:
- S&P 500 bounces off double bottom & Trading Lesson
- Wall Street Rally – Mission accomplished
- Day two / Sample Training
- Called the Stock Market Bottom!
Tags: patterns, Price Action, probabilities, rally, reading the market, Sniper, time frame, trading method, trading plan, trend line, weekly chart
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