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.

Related posts:

1. Controlling Day Trading Emotions, Fear

Tags: Day trading the S&P E-Mini's for daily income, Fear and Greed, Key Market Support, Major Market Index's, Trading Psychology, trading stops