Archive for January, 2010

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Trading Tuning Points – S & P Emini & Two Stocks, Video !

Friday, January 29th, 2010

Today is Thursday, January 28th and the market did not follow through from yesterdays run up.

At the open, the market was in a very good spot for a pull back, because in the night trading, things moved up pretty nicely. We saw close to a 10 point move with the follow through from yesterdays close. It wasn’t the 20 points I thought we might see but it was still a good move. Well, since that move came when no one was able to trade it, the market at that point set itself up for a nice retracement, which was exactly what we had. Just after the open, it rolled right off a nice little ledge and dropped pretty hard for the next few hours. After consolidating at the bottom for a spell, we did see a nice rally back up of some significance, only then to fail again. Pretty typical market action

Currently, the daily momentum is down as well as the 120 minute time frame (2 hours bar chart). If the market is going to attempt a reaction rally from this point, it is going to have to first get over 1088, then the next hurdle is 1093. Those are two area’s that need to get taken out if the market sell off is going to slow. Other than that, the momentum is pointing down currently and the path of least resistance is that direction. Each day unfolds more pieces of the puzzle and pretty soon, the picture will become clear what the next move will be, straight down or reaction rally, putting in a pivot.

Over all, I still do expect that the market will trade back to the middle of its long-term range on the daily and weekly charts. That is quite a long ways away still and it could take some time to get there.

Tomorrow I will be back in my home office and will do a little trading sometime in the morning. It should go well. The price action is pretty normal and I am sure, enough good trading moves to get a few points.

Below is a video from yesterdays price action. I almost made it to the end of the session. There were some nice moves that you may not have seen, but I think you will get the picture.

With yesterdays post in mind, the chart is marked as the turning points take place. I don’t say that I could or would be trading all of those turns, I would only need 1 or 2 small trades from the pool that is on the video to make my daily goal. Once a traders goal is had, I feel it is best to close it up and move on to something else, but that is me. There is a good reason for that. You keep the trading struggle to a minimum, as I know I have said before.

This is a trading method that I follow. The indicator that I brought up afterwards,  just happens to matches the overall method. This can bring some degree of confirmation to a trader, who is trying to bring it all together.

Again, all of these turns are not really meant to be traded. It takes a lot of concentration to keep up the pace of trading for the whole day like this. Again, that said, this is really pretty typical of the trading day. After looking at todays price action, I don’t see anything that is very much different. A lot of really good trades. Using discretion on which trades to take is defined in the trading method itself. I often, do take trades counter trend, but other less experienced traders may not feel comfortable doing that and that is fine. Going slow and only taking the best trades in the direction of the trend is really probably the best strategy for new traders, but you will have to exercise your discipline and patients to wait through some of the setups.

The turning points that I have marked, is really something that happens everyday, and those turns are identified by something other than the indicator I have up on the screen. I don’t say what that is or how I changed it, but it is something that is not going to change. If it did, the markets would have to do something it has never done, since its beginning and I don’t that is going happen.

The second video is the stock charts that I mentioned in yesterdays video. A 60 minute bar chart of AAPL, Apple computer and daily chart of Rimm. The same is true here as I have said above. The signals are generated by the trading method, which is as I said yesterday, not rocket science. If I were to put up one of the indicators I use, like the one in the first video, It will match near perfectly generating the same signals, which only confirms or coincides with my trading method.

I think you get point, so I will end it for today. If anyone has any questions, feel free to contact me, vinnie@sniperdaytrading.com .  I do have my email back up and running and getting my computer back up as well, it was a lot of work and slowed me down, while traveling, I am glad that is over.

Good Trading to All !

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Trading Questions answered – Sniper Day Trading

Thursday, January 28th, 2010

Today is Wednesday, January 27th and market did exactly what I thought was going to happen.

The market traded the way I thought it would today, in it going slightly lower to the 1085 area and then bouncing up. The first move would get the sellers to bite, placing their shorts positions and then the next move would be a short covering rally that would make them all cover their shorts and we would see a pretty good move up to around 1100.

You would not know, but I wrote all of this out last night and decided not to post it, but I erased it.  I felt pretty strongly that this was going to happen, but I chickened out, making as bold of a call as this. O’ Well. I guess I need a dose of courage, to post the next market moves. I had it spelled out as above with the rally coming in the afternoon session taking us up to the 1100 area. It is pretty cool, looking back now, that is what happened exactly.

Follow through long, is in order for tomorrows market. In-fact we could see upwards to 20 points  over the next couple of days in a reaction rally to the sell off.  It is possible. The hourly momentum is up, but the 120 minute chart is still down, as well as the daily.

All of that did me no good, because I did not take part in it. I should be back in my home office on Thursday night, ready for Fridays session.

I am trying to get my email back up as well as establishing all of my programs and files that were lost in my computer going down hard, like crash. I never had that happen to me before and I am not sure what caused it. I will be backing up things more regularly at this point. It is not a good feeling to lose your data and important files. ————————————————————————–

Here is the email that I was going to send out to an interested person in my trading program. I was able to recover it today. I just cut out the first paragraph because I covered that in yesterday’s post. Today’s post if a bit long, but that is what it took to answer the questions. ——————————-

In the event prices are jumping all over, we train ourselves to wait. If certain conditions are present, then we are able to act with some degree of confidence. If those conditions are not present, we wait. We should never feel compelled to take a trade just because we are ready to do so. We read the market. Back to your question, a trading method will be able to see changing conditions ahead of time and make the decision to wait, only trading when the best conditions of our method are met.

I have never been worried about what I use to ever stop working. That is why I trade the way I do. What happens on the screen is very predictable because people are very predictable. People are the same today and they will be the same tomorrow and the day after that. So, this has never been an issue. The way prices move on the screen is what we follow. We don’t follow indicators. I know I have shown a little on my blog, but that is because traders like to follow something that helps them see what the price is doing. Every turn or change of direction has a reason and is predictable to a certain percentage. That percentage is high enough to make a profit on a regular basis. The indicators only reflect what the price is doing and that is why the price is always first. I could never take a trade just because an indicator told me to go long or short. It only reflects what the price is doing, so I need to know why the indicator is giving me that signal and that is uncovered in a traders ability to read price action trading.

I have a chart of Apple 60 minute and Rimm Daily. I know you told me that you follow 60 minute charts mostly on stocks. My method works on any trading instrument. Corn, Oil, Soybeans, Gold, Stock, Forex, Index’s, All emini’s, (Russell, Dow, S&P, NASDAQ), in Monthly, Weekly, Daily, hourly, by the minute, by the tick. The reason for this is All of these trading instruments are traded by people and people are predictable as I have said. There buying and selling decisions are played out on the trading screens all across the world every day.

The Stock Market and all of these trading instruments I mentioned are “Fractal” in nature. Meaning they are the same and act the same, at every level of their existence, highest to smallest time frames. So, it does not matter if you trade hourly, daily, minute or tick charts.

Going back to the example I have included. The trading turns on the screen are not generated by indicators. They are generated by my trading method. When I put up the one of the indicators I use, the trading signals from the indicator match nearly perfect to the trading signals generated by my method. Which came first “The Chicken or the Egg”. The price comes first and that is how the trades need to be seen as.

In the beginning all traders will not see what it is that I see, but that is where I come in. I am there to teach them and show them what it is that is on the screen and why. When certain things happen, you can come to expect a result. That result is the trade moving out in your favor.

It is not rocket science and it is not a mystery. I am not and do not want to build it up to be some kind of magic or holy grail. It is simple in its basic form, but being still so simple, most traders are not aware of how things work and why prices do what they do.

It does take time to get better at seeing all the ins and out, but trading is never easy and it likely never will be. I just try and make it as simple as it can be. When I do that, I can take advantage of the setups.

Traders starting out or even traders with a couple of years under there belt, still need to exercise discretion. Trade by exception. Only take the trades that show all the best qualities of the method. Any trader trading my method, may need to trade for a little longer to hit there goal, 2-4 points, because you may want to be a bit more selective. You can’t go in as a gunslinger and expect to nail them, right away. It does take time. Everyone’s ability to see, learn and absorb is different. But what I teach is very clear, and understandable.

Commissions can definitely eat into your profit. If the market is not giving clear trading signals, patience needs to exercised. There is no two ways about it. I or anyone can not make the market give us anything. We can only take what it clearly gives us, nothing more. We need to wait for a good clear trading signal. If you are trading 10 contracts and you had 10 trades where you find that you have just broken even, in price, but have all the commission against you. You need to wait for a trade that will give you that back. Again, if it is not there, then take the very high percentage scalps or 3 or 4 ticks. If you get one trade that you average just 2 points on, trading 10 contracts, that is 10x$12.50= $125 per tick x 8 ticks = $1,000. Your first 10 trades cost you about $40 per trade or $400. Here you were able to cover all commissions in one trade and still net +560 after that. Even, one point will still cover you with a touch of profit. The key is focus on the trade and hit an attainable target and the commissions will cover themselves.

In addition, I always recommend anyone starting out to just trade 1 contract. If you can grasp the method and make it work for you, you will see the profit, in one or two weeks you can increase that to two and so on. Anyone trading, needs to get good at making the small contract size work first before ever going larger, in my opinion. If someone has a very large backing, I still think it is wise to trade with one. It will not be long, before you could be trading 10 and if you did it this way, you will have made a large sum already with some money that you will have taken out of the market, putting your at risk funds in a very comfortable position. If a trader is not able to do this while he is learning, you may need to check your trading motives and objectives. Are you trying to create a daily income or are you gambling and looking for action. It should be the first answer.

I think I covered your questions and tried to just be honest. I did not have to think to hard to write this or explain it and I might save it to help answer others who may have the same or similar questions.

Also, I did not write this out to try and convince you to come on board. I just found myself writing to explain how things work and here I am still writing. I know that what I use works and it always will. I have seen these core principles at work for many years. I was a struggling trader once, trying to put all of this together, but it does take time. Those who are determined to succeed are the ones who will make it. Not many traders across the globe are able to bring it together and maintain that. It does not stop the traders who have a passion for success.

I can not guarantee success to any trader, because each traders ability, understanding and decisions are different. What I have works very well for me and I don’t’ expect that to change any time soon. I can give you or any trader the tools and education he could use to build his empire, but I can not guarantee results. What I can do is that I will work with you or anyone so that you understand what to do, when to do it and why.

Good Trading, Vince   P.S. I will post the video’s on the stocks above as mentioned later tonight or tomorrow

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Trading System or Trading Method, which is better ! – Part 1

Wednesday, January 27th, 2010

Today is Tuesday, January 26th and the S&P market closes near the low of the day.

The major market index’s close near there lows for the day, not usually a good sign. We also put in another inside day from Fridays selloff. An inside day is when the market trades inside the previous days trading range. When that happens, we build up pressure and that pressure releases itself back onto the market, but which way? The current momentum is down on the daily and 120 minute charts very clearly, but are we going to bounce?

I did not trade today, I am traveling to the S.F. Bay area from my home in Norther Cal. I had a bit of misfortune with my computer today. It CRASHED. I lost a lot of stuff. I have some things backed up on an external hard drive, but not everything. It is very sad. I don’t have my email working through vinnie@sniperdaytrading.com . I have to reconfigure everything and I really don’t know how to it. It is going to take a little time. Anyone wishing to contact me, can do it still through Skype and leave a message under my screen name Sniper Day Trading or at an alternative email, vinnietarantino@yahoo.com .

I did see late last night an email message from an interested person in my Sniper Day Trading course and mentoring program and typed up a detailed response and saved it. I was going to send it off with a small video, more fully addressing his questions. To my surprise, it was all gone with the Crash, not “Trading Crash”, but computer crash. So, I will respond here, so I can give everyone the answers to the good questions that he asked.

The first question was, commenting on “Trading Systems”. He stated correctly that it is a fairly known fact that trading systems fail over time. There developers are always tweaking the settings to try to keep up with the changing market environment. What worked well for months, now is failing terribly. That is the nature of system trading. The question and concern was with the indicators that I use. What is going to stop the indicators that I use to stop working thus becoming ineffective.

My answer is; I do not have a trading system, but a trading method. There is a big difference. A trading method, allows for unseen things like yesterdays very choppy open. On gap days, as we had yesterday, the S&P moved up 6 or 7 points on the open and the Dow around 60-70 points almost immediately. It was catching up to the futures which had already gone up substantially in the night trading. Most often, the gap gets filled, but the choppy trading action can occur when you have the two pairing back up to each other. They are temporarily out of balance and until they get rejoined, you can have opposing forces at work. Well, a system is going to take the trades without regards to things like this, where a trading method, is going to give it time to get back in sync. Many times 30 minutes is a good cooling off period. In yesterday’s case, that indeed was true, where the market started to flow better and trading price action was pretty typical the rest of the day.

To continue, a trading method uses discretion, but has rules and certain conditions need  be met, before  initiating a trade. A system is just going to take the trade without regard to conditions. It is trying to remove trading emotion, which in many cases, does just the opposite. You end up putting your faith in something that you have no control over. Many traders abandon systems as draw downs eat away at their equity, which is where the added emotion comes back in. When do you throw in the towel or do you keep trading only to blow your account out, thinking that your trading system is going to make a come back. The whole thing is a big trading bummer for most.

In the above, you are not learning how to trade but putting your faith and trading future in the hands of a system that showed great results before only to leave you high and dry now.

That is no way to meet your trading goals and dreams. I will continue with this and other questions latter tonight or as soon as I can.

Until then, Good Trading to all !

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Only One Trade Today – Quick and Easy !

Tuesday, January 26th, 2010

Today is Monday, January 25th and the major index’s seemed to have stabilized.

The S&P, Dow and  Nasdaq markets took a breather today, after the last few sessions of getting beat up pretty badly. The S&P and company, traded sideways, bouncing up and off of temporary support zones. It is being strung out, across the bottom. When that happens, you can look at either two things, a continued break down or the early session continues to string things out. The upside looks like it is capped, slightly over todays session highs for the time being.

Pretty tough to call this one ahead of time. We just need some time to see how the market handles these critical area’s. This is for the short term direction. Somewhere in here we should get a bounce and once that happens, we will have more clues on the next move.

Currently, the momentum on the 120 minute chart is pointing lower, the daily is lower, the weekly is getting close to rolling over, but not yet. A lower close this week may push it over the edge, but it is currently still up and the monthly is up.

Today’s trading was quick and pretty painless. I took just one trade and scaled out of it in three places. The first part was for 2 points and closed out in the first two minutes after I entered, the next was for 3.25 points and took 16 minutes and the last part was for 2.25 points and that took 20 minutes to close out.

I didn’t need any more than that, so closed it up. There were many more trades that I could have taken, but as I often say, I like to keep the struggle to a minimum and today fit the bill.

I have a video of most of the trade below, nothing to earth shattering, but it is what it is. I don’t have my screen built up, but just the raw price data. When I build my screen with the tools I use, It makes it easier to see for those who are trying to learn, but I can only show so much. towards the end of the video, I do have a screen shot of the chart I have used to show some of the recent turning points and as I flip to it, you will be able to see some of the turns in the middle of the session. I do have them marked and all of those would have been good trades. There are about 8 or 9 excellent trades in a row there and I feel I could have had most of them if I was going for it. The thing is, I don’t often push it, but some times I do. I need to be ready for that kind of day. I will have some of them again, where I do a mini marathon and may pick up 10-20 points in one session. It takes a lot out of me to do that, but I am sure I will have my moment in the sun. No great need to do that at this time. Last week would have been a good, but I was not ready. I don’t like thinking about the big score. It can be nice once in a while, but steady as she goes is just fine.

I have to make it short today, going somewhere tonight. In-fact, I will be traveling for the next couple of days, I may only have a short time to trade, but I will be checking email, so if anyone has questions you know how to find me. vinnie@sniperdaytrading.com

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Learn Day Trading Skills – offer – Through Sniper Day Trading!

Saturday, January 23rd, 2010

Today is Friday January 22nd, and the sell-off continues.

Well, the only thing I can say is, I am not surprised with today’s price action. The market is doing everything it would normally do after a break in formation, as I layed out in yesterday’s blog post.

There may be a bounce somewhere in here, but time will tell. I know there are people out there that love to buy the dips. Engrained by the media and such, you have the sheep step up to the plate, ”FOR SHEARING”.

I did not see the news, but I can only imagine. I see the market through purely a technical lens and reading moves as they unfold. It is easier than trying to predict far in advance. With the break two days ago, it was not hard to imagine or expect the kind of downward price action we have seen. Institutions, investors and traders have their stops at those key support points for a reason, to protect themselves against a sell-off. Once the first domino was tossed, the next one gets hit and there you go. I am sure we have all seen the domino effect, that is what just happened the last couple of days.

At some point, there will be the brave, to step up and buy, thinking they are getting a good deal and maybe they are, but it is risky. The S&P is now in an area of support. It is the same area that I was looking at, but on the Dow Jones. That index traded below where I thought support would come in today, but the S&P over-road the support by breaking to the similar area where it now may try to find support. If I had called the support for the S&P yesterday, I would have used the area close to where we are now.

The S&P price of 1085 was hit 5 times over the past couple of months which may be a temporary spot for the market to pause. Currently we are at 1091.  If we trade past that, you will probably see a whole new wave of selling come in and we could find ourselves down to the S&P 1028 level. The middle of the range as I point out yesterday is Dow 8100 to 8600 and S&P 910 to 855.

Pretty scary stuff, but this is what I was warning about for some time. When the formation breaks, you will see the sell-off, sharp and deep.

When we bounce, where ever that is, what happens after that, is going to tell us how quick all of this may take. A slow gradual process will probably be better for most people.

On, to other topic’s;  In todays trading I was only at it, for 10 minutes and picked up my daily goal. I did mark up some trades on the screen after that for a little while and picked up some nice turning points. I may trade for a little higher point return next week, but with this Monday being a holiday and Tuesdays session flat. I wanted to make sure I picked up my net goal for the week safely and I did that. So, next week, I may trade a little more. Also, I needed a little cooling off period for the bad trades I took on Tuesday. It all worked out well and look forward to next week.

Below, I marked up my screen with the turning points as I did yesterday but I took the indicator off. I just have the signals as they were generated. I screened out only a few of the very obvious no trades, but marked up most of the trades generated just by that one indicator as I did yesterday. I look at a lot more than indicators, I look at price action through its structure, to see if the components are there for the trade. The indicators, only confirm what I see already through the price. That is how it works for me. I know others use it the other way around. Using the indicators to confirm price. I don’t teach that or do that. If you learn how good price structure looks like, you will be looking for something very specific. When the indicators confirm your timing, it can give the learning trader a little more confidence to take the trade. But over time, seeing the same patterns again and again, we learn to look for what makes up a good trade just by its structure.

Anyone who wants to learn more, can. I do teach this as the “Sniper Day Trading Method” designed by me.

It is a collection of techniques and repeatable price pattern structures that happen with a great deal of consistency. Using the full spectrum of indicators I have on top of the price as well as under the price, will only make the job easier to see what is already present on the basic clean chart itself. This stuff speaks out its own language as the swings taking place, each and every day. 

There is something here for everyone. If you like to scalp trade as I do, trading with the trend and counter trend, I have that. If you prefer to only trade in the direction of the dominant trend we can set that up, if you like to trade higher time frame charts and go for a higher profit loss ratios, we can customize that for you. The principles are all the same. This will work great on Stocks as well as Forex currency pairs. The higher the time frame, the higher the risk, but the higher reward. You also get fewer trades as you go up in the time frame spectrum.

I use a small 1 point stop on most all my trades or less, but that is me. I know some in my group use 5 ticks. That is fine, but I urge all to move there stops up with price as things go your way. I like to scale out and put myself in a no loose situation and I teach that too.

I don’t only offer the trading course, I work with each trader, to not only answer there questions, but to explain it and call it out during the live market, so you can see the same thing on the screen live. I will work with any trader as long as it takes to fully understand how he or she can use the Sniper Day Trading method through screen sharing technology over Skype.

If you have questions, feel free to contact me through Skype, my screen name is SniperDayTrading. Have a great weekend.

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S&P 500 Index & Dow Jones Break Rising Wedge Formation

Friday, January 22nd, 2010

Today is Thursday January 21st and it finally happened, breaking the “Rising Wedge” on the Dow and S&P Index.

This has been in the works, building up pressure for some time and today something sent the major averages south for the winter. I popped on an internet news source and I think Obama plans to tighten regulations on banks and their investment practices. Banks don’t like being told what they can and can’t do, when it comes to investments, but that may be the case? I just saw the headlines.

The point is, what ever tipped the market, it happened. I would like to be optimistic, but when I see a pattern like this and a break like today with the market closing at the lows of the day, investors should be concerned. With day traders like myself, it does not really matter, we welcome the increased volatility, it is long overdue.

We are coming off the highs just two days ago and getting pinched between two trading ranges, that were getting smaller and smaller as time went by. That is why the movement has been so shallow. I think that has now changed and if nothing else, you will see a lot more swings and tradable moves going forward.

I can see the market trading lower to the next pivot low of around 10250 and possibly trying to rally. That would be normal, as there seems to be support at those levels. A short rally off that price will give you the next clue. What ever happens from there, will begin the next chapter.

It is very possible that we go back to the middle of the range we just finished making. That is what I would expect if I was looking at a tick chart inside of one day. The stock market is “Fractal” in nature. The patterns it presents and plays out are the same no matter what time frame you are looking at. This to me is just amazing. When I discovered that many years ago, it kind of blew me away.

So, back to the point, we could see a move over the next few months in the Dow to 8600 to 8100 if we get a retracement back to the middle of  the nine month long rally. That represents a 50% and 62% retracement from the March 6th low to the January 19th high, set just two days ago. No one knows the future, that I understand and accept, but I am just stating the possibilities. We will need to see how the market handles the next pivot low.

Investors will be buying the dips, that is for sure. People and the so-called experts will come on TV and tell America that what you wanted to buy a couple of days ago, just went on sale and everyone likes a good sale, right. Well, I can’t tell anyone what to do, but  I am not buying now for any long-term investments myself.

This is another area, where traders and investors get in trouble. I know there is no guarantee and the market can do what ever it wants when ever it wants to, but the odds favor a decline. If nothing else, this is a good time to lock in profits, but Greed many times will sneak in and tell us, it will go back up, it has too. Says who. Wishful thinking will not move the markets and Greed will more often hurt you bad and leave you for dead.

I was going to put off talking about Fear & Greed for a day or so, after the dust settles on this recent move.

In my trading I did well early on and stopped with about 10 minutes of trading. I did see and mark my chart for the next few trades, including the start of the big drop.

I have a video of the todays trades as well as the signals generated for most of the day following. When watching, keep in mind that you only need a couple of small trades to make really good money, but doing it daily is where the real reward comes in.

 

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Scalp Trading Lesson Today -

Wednesday, January 20th, 2010

Today is Wednesday, January 20th and Stock Index futures sell off in the early session.

The market did manage to pull up towards the last part of the day, which was critical. A break in support took place in the early morning sell off, bringing the 9 month rally in jeopardy, only a rebound saved the day. I can imagine, when support breaks, what kind of price action we are going to see. It will pick up, that is for sure, as it did today. The volume on the S&P 500 emini futures came in at 2.3 million contracts traded. Anything over 2 million and I consider that busy and good.

Along with the volume, came some long anticipated movement in price range. After a long sell off, the market usually goes into a small trading range, trying to shore up its losses and find a bottom. That is a good time to either step aside and let the price catch up with itself. Backing and filling, is normal after a big move up or down. If you are not skilled in picking small scalp trades in between these ranges, it is better to wait and be much more selective until a clearer break is setting itself up, in either direction. But in an accelerated drop, you will often have many opportunities to add-on, in the direction of the major break, until you get to that longer resting place. The market will often start to put in a rounding bottom, as time is passing and stop orders are adjusted and placed, to show new turning points.

Today was an interesting day. I just keep missing that opening bell. I will get there, sooner or later. It just makes things harder for me to get my daily goal. When I have to fight dull price action, it does make it harder, take longer and tries my patients. If I were trading the open, there were some real fine low risk trades for several points each.

My day turned out OK, not real happy with it, but it was fine. I do put a high standard on my trading. I took 18 trades which was a lot, and picked my daily goal plus.  I traded double the size that I have usually been trading, because of the holiday and yesterday being flat. I don’t know if that is a good idea for everyone to follow that line of thinking but it worked for me. Those with less experience, should not attempt such a bold move.

Today, I have a video, of one of the indicators I have been using, but I do not say what it is or how I have constructed it. I wanted to show a couple of bad patches that I had and how this indicator confirmed that I should not be entering the trade long. I got a little stubborn and re-entered the trade a few times, which really hurt me. I saw the move I was waiting for, but they were taking it down only to push it up. I only saw the pushing it up part and took my eye off the ball.

This is one of the things I often talk about, “do not form an overly strong opinion of market direction”, let the market tell you which way it is going. Well, I did have two bad little patches where I only saw what I wanted to see. That can really kill you. This was one of my biggest problems. I was temporarily blind to the price action which said, “I am going down, not up”. Pretty simple, but at times we lose focus and concentration, only to make mistakes like this. Being able to come back and maintain composure is vital. With decent movement, following the rules will guide you to the destination.

I have usually two indicators that I look at underneath the price and a few things on top of the price to guide me through my method setups. The thing is, I have trained my eyes to see what the price is saying by itself. The price is what reflects movement of the indicators, so price is always first. If you can understand why prices move and how stop orders play a big roll in thrusting the move up or down, you will be making progress.

So, take a look at the video below and see just a touch of what I use. This is not the time frame I use, it is something in between the two smaller time frames. The smaller time frame, is a bit more sensitive to price moves and you will get a lot more of them. This is where I usually take my “Scalp Trades” from. My next higher time frame works in conjuction with still yet the smaller time frame, but it is set very differently and reflects the ability to take longer moves out of the market of several points. They are both color coded and sychronized to each other in all aspects.

My highest time frame is able to see the bigger picture, this is clasified as the dominant trend. The other time frames trade in unison with this time frame, at times it trades counter trend and often with this dominant trend to capture larger point moves. It is all structured and synergistic to each other. I use other key techniques to screen out which trades are better than others, which is not really hard to do.

Scalp trading has been classified as the hardest of all trading methods, but the way that I address it, makes it a  lot simpler to get a handle on. In a trending market, you can clean up. In a choppy market you still come out on top. What ever the market does you have the upper hand.

Stops are apart of trading and I always use them. I usually start out with a 4 tick stop on all trades, whether it is a scalp or a set up for a 3 point plus move. I almost immediately move my stop to three ticks after I enter, when I see that I entered the market correctly. One tick in my favor will get me to move my stop up and often times depending on my entry, I will be able to move it to three immediately.

When I trade my method correctly, I will be getting 80 to 90 percent winning trades. The key is, trade it correctly. Many days last year when I was trading a lot more and with more contracts, I had 20 to 30 trades in a row without a loss, in one day. The price action was a lot better than with bigger ranges.

Wow, I see I have written too much. Tomorrow I will continue on “Fear & Greed”, with the focus on greed.

Good Trading

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Fear & Day Trading – continued

Wednesday, January 20th, 2010

Today is Tuesday, January 19th and the market moved right on time, S&P up 14 points and Dow up 114.

We were on that critical support and other traders knew that too, that is why I feel they stepped up to the plate and bid the market up. When you have trend days, where direction is mostly one way, price action is and looks different.

You won’t have that back and forth price moves that are usually present, but shallow pull backs with continuation moves in the direction of the trend.

If you came late to the party, after the first hour, there were really only 3 moves of any significance for the rest of the day and they were all up, but not anything large, maybe a couple of points each. There was a dead spot today from 10:00 am to 12:30 pm West Coast, that probably killed a lot of traders. There was no movement, even after the New York lunch, there was absolutely nothing. I had not seen it that slow during that time, as far as price range is concerned, in a long time.

I quite trading around 12:00 and hour before the close and did not hit my trading goal for the day. It is really alright, I was not worried about that part, I can make it up later this week, but I was getting a little frustrated. My entries were not very good today and ended the day flat with 4 small gains, 4 small loses, and 3 break even. The commission cost for the transactions put me under just a little. I did had my chances but it was one of those days. I did see the market move out for one more push at the end of the day, but I had stopped.

I did not want any more of my emotions to work negatively against me, so I just stopped. I was really OK with that. This is a little lesson for me. Can I stop trading if I don’t like the price action. The answer is ”Yes”. When the conditions are more favorable for me, I can step it up. So, for the things just mentioned I still felt good over all. Staying in control is so much apart of being successful, it can be the breaking point for many traders. Frustration sets in and then you begin to make reckless trades, “don’t do that”.

OK, back to where I left off yesterday; I was laying out fears that traders often experience and commenting.

Fear;  Afraid of being wrong. This is a common one and I will expose it. When you trade, non of us know if the trade is going to work out or not. At that point we are all on a level playing ground. The difference is, one trader knows what he is looking for and when he see’s it, feels comfortable enough to put the trade on. He has a high degree of confidence, only because he has seen it work out before when the conditions were the same. On the other hand, the trader that does not have screen time and does not know what he is looking for, is like a guy poking around in the dark looking for the light switch. If you are that guy, then it is normal and understandable that you will experience fear and or be afraid as you put a trade on. You may not have the screen time you really need to go forward, but you decide to push the envelope and start trading anyway. The result is, you place trades out of fear and uncertainty. Your results are going to suffer and eventually, the market will drain your funds. Traders tend to increase their mistakes and exhibit poor judgment when faced with this emotion running through them. Dont’ let that be you. Get educated, trade your plan and stick with in. Stay in control. If you feel you are starting to lose it, STOP. There is always tomorrow.

Fear; Fear of failure before friends. This is something I learned a long time ago. If you are telling your friends and people you know about your trading venture, it is a big mistake. Let me say that again. I feel if you talk much about your trading to others, it is only going to hurt you form getting to the very place you want to go. There are many reasons for this. One is, we tend to build ourselves up greater than we should and when we don’t live up to what we have spoken, we feel like a failure and this increases pressure. If you are under increased pressure, your trading is going to suffer. When your friends ask you how is it going, you will feel compelled to either tell the truth or lie. If you tell the truth, you make yourself out to look foolish, since all they heard about for months was how you were going to make it big. If you tell a lie and make yourself look better than it actually is, that will only add to many more problems down the road and stretching the truth like this, is not good for anyone. So, either way, you loose. Don’t put yourself under more pressure than you have to. If people know what you are doing, you can tell them, but keep it real simple, don’t get into details and play it all down. You will be better off in the long run to meet your real goal, steady profitability.

Fear; Afraid of never making it as a day trader. If you are not ready to compete in the ring, don’t enter yet. If you are afraid of not making it, it may just be a nice early warning signal for you to do more study on price action.  How and why prices move up and down, support and resistance, pivot points, price patterns, etc. To often, traders look for the “Holy Grail”, whether it is an indicator or automated system or what have ya. Traders should learn the things above and know them like the back of their hand. The market is not going to hand everyone victory. We need to stay humble in our trading and keep learning. It is not easy, but for those dedicated and have the right direction it is possible.

I offer such direction for those seeking. Email me, with your questions and get the trading edge.

vinnie@sniperdaytrading.com

http://www.screencast.com/t/NjdiMTk3

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Fear & Day Trading – Free Advice for the Willing ! continued

Tuesday, January 19th, 2010

The markets are closed today, a legal holiday, so I will get right into where I left off yesterday.

Fear and “Day Trading” do not mix. The successful trader needs to find himself well before he sets out to trade the emini market, stock market or, forex markets. If you wait until you are trading against the professionals, you will wish you had not. The best way to get a handle on fear and trading, is to face it, head on. Write down, what it is that you are afraid of while trading. Lets give it a try.

Your list may include things like this; * I am afraid of getting stopped out * I am afraid of missing the big move * I am afraid of not hitting my daily goal * I am afraid of losing money * I am afraid of being wrong * I am afraid of being a failure before my friends * I am afraid of never making it as a successful day trader.

I could go on and I am sure you could find a bunch more. Those were a few off the top of my head. Write down, what your fears are as they relate to day trading and then you will be able to address each one of those and take concrete steps to overcome them.

I will break down the list above. I am afraid of getting stopped out. OK, first you need a plan, method or system of some kind to follow. I don’t recommend systems, because the markets are every changing and systems tend to fall in favor and out of favor, as many traders abandon them as soon as drawn downs hit, so a trading method is better. After you have that, learn it, get inside of it, take it apart and put it back together again to find out how best to make it work for you. When conditions call for a buy, place your order, set your stop and follow your method. Trade by exception as I have said, you should let the trades come to you. This is what you can do to overcome the fear of getting stopped out. Get educated, calculate your risk, see your reward and place the trade. You should have traded it successfully in practice sessions, which will give you confidence when you trade live. Let me say this, you should trade at least two weeks and make money each week. As a day trader, trading short-term swings, you should make money 8 or 9 days out of 10 before you trade live. If you can not do this, save your money. You are not ready. It takes time to get to this point and many are in too much of a hurry. Think about it. If you lose your trading capital, you die, just like blood to the body.

Fear; I am afraid of missing the big move. There will be others coming soon, don’t chase the markets and don’t be anxious. Let the conditions set up or forget it. Don’t feel you have to take a trade, there is no rule and if you have one like that, get rid of it. If price action says no, just wait. You need to know what it is that you are looking for. If you don’t, it will create fear and indecision. Don’t force the trade, it should come natural to you. If it doesn’t, do not trade it. You need to be relaxed, not tense with sweaty palms. If this is you, don’t trade, you are not ready. Practice taking trades where it seems natural to you. Recreate the environment that this is real, imagine, that you are trading real dollars and you are looking for a method setup. See yourself as it will be, when that time comes. This is like mirroring the environment before it actually happens. You will get a lot more out of these sessions like this. Also, do not take any trades for fun or just to see what will happen. That is useless behavior. Once you know how the trading platform works. respect it and take any practice trades as though they were real, period. When you book a few weeks of profit, you can ease into the market at the smallest contract size only and work up from there with market driven profits, even if you have a $25 or 50k account.

Fear; I am afraid of not hitting my daily goal. Don’t be afraid of something that has not happened yet, if you are not prepared, then you need to take that hesitation as a sign you need more time. Most traders believe they are ready well ahead of the actual fact. Don’t be one of them, keep your assets safe until you know what you are doing. If you go for the, “on the job training approach”, you will drain your account, for sure. The ratio of traders that are actually able to do this is very small, 5%. That is one in 20 traders. Some say that it is 10% but those are traders who may just be getting by with a slight profit, not exactly anything you could spend. Traders who make good money year after year are as small as, 1 in 20. What are you going to do different that puts you in that small minority. Be willing to work hard, practice and get to know how price action works. Reading the charts without indicators and understanding why they are making the moves they do. We need to have a respect for the markets, but not fear them. If you don’t respect it, it will strip you clean and you will only be left in confusion.

Fear; I am afraid of losing money. If that is the case, you are not ready, period. That kind of fear will make you do all kinds of strange things. You will get out, only to see the market rise, get frustrated and jump in at the top only to see the market fall before you eyes. You will then wait for what looks like a good counter trend trade and it will roll over on you continuing the downtrend, you will never get close to being successful if you have this emotion, for this reason. Don’t trade with scared money, get in a better financial position so that the loses do not affect you, free yourself from this and you will have a chance to unleash your new talent.

That has to it for now, I will continue tomorrow from here. I hope this is helping my readers, I welcome any feedback or questions.

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Identifying Fear Based Day Trading – and what can we do about it !

Monday, January 18th, 2010

This post is for Fridays session, where the Major Market Index’s closed on Key Market Support.

This is going to be a very important week to watch. We are currently resting on key market support that goes a long way back. This support has many times proven itself as a point of interest. Each time the price has moved higher, but will it happen again? That is the 64,000 dollar question that everyone wants to know. Well, anyone who trades for longer swing moves and those that may be trading stocks. The general market trend, accounts for the majority of a stocks overall movement. I don’t remember the actual percentage, but it is very high. So this kind of information is key, to those traders for sure.

Day trading the S&P E-Mini’s for daily income, is very different. We look for the short-term direction and move with it, at low risk entry points along the way. It is different for everyone, most traders trade differently. Almost like snow flakes, no two are the same. Well, maybe not that extreme, but you get the point.

It is vital to have a set strategy as you approach any market. Trading stocks is really no different from trading the Index Futures, because the index consists of stocks. Often, it is much easier to trade the emini index futures, because you do not have to look for what to trade. Each stock does have a certain personality to it and learning the many nuances of each, can be time-consuming. Trading the E-Mini’s you don’t have to hunt or look for what you are going to trade and you do have the leverage to go with it.

OK, I don’t want to get side-tracked and promised to talk about Fear and Greed and how it relates to trading in the way that I see it. Everyone has a perspective on this topic and many things have been said regaurding these two trading emotions. It effects everyone differently and many learn different lessons as they have dealt with this in there past and continue to deal with it at times in the future. It is not something that goes away. You have to manage it and put it in its place. By managing it, I mean, not letting it take root in you, effecting your trading results. It can destroy any trader and humble the most arrogant, very quickly.

Nothing good comes from Fear based day trading. We often react to our positions with this strong emotion. It can make us do things that we would not normally do, only to regret it all at the close of the trading day. We may often ask ourselves, why did I do this or that. It may be, that we pulled our stops and tried to give the trading position more room, only to find out that our first small loss would be the only acceptable loss for us.

Now we find ourselves, not willing to take a loss that large and give it more room, only to find that the more room you give it, it just never seems like its enough. During a time like this, you are not reacting rationally, but out of fear. That fear, can be coming from many directions. One is as simple as not wanting to accept you may be wrong. We may feel at times that our ego and trading confidence are tied to winning trades and when we are not posting them, the thought of losing, just does not match our ideal.

Trading from a fear base, is only going to bring you down any way you look at it. All traders need to accept the fact that you will have losing trades. If you can not handle that simple fact, you may not be ready to trade. I know that I reacted last week to fear, in one trading scenario. I don’t remember which day it was, but, I saw the bottom of the market and felt we were going to go higher, I jumped in to soon and did not follow my entry method and it cost. I was reacting out of fear, but this fear was a little different. It was the fear of missing a move, that caused me to take action to soon and not wait for my base method entry.

It happens to all of us, but the best thing you can do as a trader is go back and write it down. This will cause you to remember why you did that and understanding that, you will have the basis for making changes. People move whole markets based on fear. Trading stops are often triggered by this emotion.

Traders who trade without a trading stop often react to the whims of the market, by getting out at the bottom, only to find the market move up again, but without them. As the price drops against them, they convince themselves that it will come back, it has too, is how it usually goes. Traders often talk to the price as if it can hear them. Fear based trading will produce adrenaline, but that is not what you want. Get that at the gym or some other form of exercise.

You want to have as little emotion as possible and want to remain level and in control. That goes for large gains and your loses. If you feel that you made a mistake, your first loss it best. Never pull your stops, never. Close the trade out right where it is, no matter what and re-evaluate after you are flat. Often, you will be more objective when you are out of the trade and see it more clearly.

Try and trade with as little of a market bias as you can. The danger is in establishing a strong mental opinion, where prices could and should go, only then trying to confirm your predisposed position. We need to follow the market not the other way around.

These are some short answers to help defend against getting in that fear based trading mode in the first place. The opposite of fear, to me, is peace. You are content and at ease with where you are. That is what every trader needs to find. There are many ways to help you get in that state of mind and we can explore them in the coming posts this week. I have many suggestion that I use and will be willing to share them with you, so check back Monday afternoon or early evening and I will continue.  Until then, good trading.

Below is my trading from Fridays session.

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