Archive for March, 2010

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Trading Indicators – Part Two

Tuesday, March 16th, 2010

Today is Tuesday March 16th and S&P put in another good showing +10 points.

Well, traders and investors wanted to wait for today’s announcement before they were going to make any big decisions, partly the reason for yesterdays turn around I believe. Yesterday we closed at the highs of the day, which is always a good sign for the following days open.

Today was no exception and the market was moving very nicely with a few easy entry area’s for traders to move on. As I mentioned yesterday, the market after the first 90 minutes of the day started to slow and it went down to a crawl, as expected. The volume picked up after the announcement but it was and is nothing like it used to be in years past.

The Dow is lagging behind the the S&P and NASDAQ which are doing very well, that could be a good thing as investors are saying that a broader look at investing in the market may be better than a conservative high quality stance as with the Dow Jones 30. In any case rally’s are always welcome, “Come one Come all”.

I did not trade today as I got started late and as the market was grinding to a halt, I saw no reason to torture myself. Many traders take this day off, for various reason, so I joined them.

Yesterday, I was talking about “Trading Indicators” and how  it is always a good idea to learn what moves the indicator and what is it saying, then why is it saying buy or sell. It all comes back to “Price Action” and that is always the key component of moving any indicator. With that said, indicators are not bad, but we should always strive to understand price movement first because that is what drives the market. The indicators are a reflection of the price.

Many traders can not see and or understand the price movement as they should and that is where indicators can help. As time goes on, getting a better feel for why you see a buy or sell can be grasped. Every trader who takes this seriously should always be advancing there knowledge of price action. This will ensure that you are moving forward towards meeting your goals and attaining that financial freedom status that you may be seeking.

Yesterday I promised that I would show you a portion of my trading screen with two indicators on it, one above and one below. This is just showing you the indicators in there relation to each other. I use other tools above and below the screen to make the whole picture even that much clearer, which are not shown. In fact I don’t say what the indicators are or represent, I can only say or show so much, but wanted to show something along the indicator side of my method.

My trading objective for myself and my students is to trade for income and that can be best achieved by striving for small attainable goals, in this case, 2-4 S&P points. That is $100-200 per contract. Always starting with one contract and building up to a desired income goal. Trading 3 contracts won’t get you rich, but its a nice income $300-$600 per day. Getting that to 5 contracts is a little better at $500-$1,000 per day. The point is to achieve this modest goal, each day. The days you struggle, your loss is capped at -4 S&P points. There is no room for whip out days, “Not going to happen”. That is the attitude you need to have, stay in control and follow your trading method.

Trading indicators, are again a way to help you fly straight. When you feel tempted to do something contrary to what is on your screen, “just say no”. Having the ability to do that, will ensure that you will eventually make it. Having the right tools to use is also a must. If it is to complicated and or subjective, how can you use it.

That is why I have tried to make it simple in structuring my trading model in a way that most everyone can follow. In this 5 minute video I have posted, you can see and get a feel for what I am trying to accomplish. PROFIT $$$$

Again, this is the only part I can show, but I think it is enough to see a certain amount of consistency to the trading indicators. Having a high level of confidence in day trading is a must. If you don’t have it, you will trade from a fear base model and that has never proven successful.

I hope this helps my readers to see what is possible trading the E-Mini market. My trading method, does work on any trading instrument, if you were wonder and in any time frame. If you can trade for a modest point value each day and just increase your size as you feel comfortable, you never really have to trade for 10 points a day or anything even close to that. I do like to get one or two of those days now and then to offset any short falls in profit objective or a daily stop out, but the market will tell you what days those are, we just need to listen.

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Trading Indicators – Part one

Monday, March 15th, 2010

Today is Monday March 15th and the market pulled up in the last hour for a nice come back.

The S&P 500 futures rallied 10 points off the low of the day and closed basically flat on the session. That was a nice move and I am sure took the bears by surprise. It was a steady climb, which was backed up by a lot of short covering.

Tomorrow is the F.O.M.C meeting, which stands for federal open market committee, “the Fed”. They are going to make an announcement on interest rates tomorrow and that may be what the market is waiting for. The Index’s did not want to give up any ground until they know the outcome of tomorrows meeting. New positions will be placed and we should see a significant amount of volume just before 11:15 and certainly at and after 11:15 tomorrow.

I word of caution, be careful around these announcements, the price swings can get pretty wild. I would not take any trades 15 minutes before and 15 minutes after these announcements for sure. The volume will be OK in the very early morning, for say the first 60 to 90 minutes, but after that, it is going to grind to a snails pace, it always does, until after the fed announcement.

Today I took a few more trades than I usually do, but it all turned out pretty good. Only a few ticks of loss and plenty of gains to more than reach my daily goal. A chart below to show you the trades.

I have one trading indicator above the screen and one below the screen. I don’t explain what they are or much about them, other than that it helps to identify the momentum swings through out the day. This is in my “Scalp Trading Screen” T-1, which is different than my second trading screen. The first one, T-1 is set up to scalp 2,3,4 ticks at a minimum and often times 2 or 3 points from the trade and is what is shown below, although I have pulled other things out of the chart, you are seeing a striped down version, but one that can make sense.   Today’s trades are not earth shattering, they are just small scalp trades except one trade for 3 points. I did see the potential for a runner late in the day and could have easily sold most of my position at a point or so as I did, but elect to hold one contract back to let run. I decided not to and just closed it up. Tomorrow will present itself with new setups and opportunities.

I will show a screen shot of my T-2 screen with something similar for tomorrows session. The settings are different for this trade screen.  It is used for when we I see a trending market or the possibilities. It does not have to be trending all day, but an early morning move or any things in-between that has legs to it, (more than one move back to back) will work just fine. These move are generally for several points and usually start out at what I call my “Turning Points”.

Many traders follow indicators and for good reason. But trading indicators are a reflection of the price. Don’t lose sight of that. Traders need to be able to see and read good bull setups and good bearish setups. Many have a problem seeing the bearish setups. It just does not seem natural to sell something that you don’t have. In addition, it is more difficult to just see the patterns. Our brains do not make it easy to spot these setups at times, but the trading patterns are there and you can usually make more $ when prices go down. Sell-offs tend to move bigger and faster than a rising market, its just that way. So, if you have a constant bullish bent, try little by little to look at things in reverse as you interpret the price action.

There are two sides to every market and the traders we are trading against constantly work there influence to blind as many as they can to this fact, giving themselves the advantage.  This is one area where trading indicators can help. They can help you see what is already on the trading screen, but your eyes are not yet trained well enough to see it with confidence. You first need to know what you are looking for, the trading indicators will basically highlight those area’s of interest. Your job at that point is to see if that area it is highlighting constitutes as a method setup. If it does not, just let it go. Resist the temptation to take the trade anyway for fear of loss, as in opportunity. This happens every day and is a big problem for many traders. I have to remind myself of this fact as well. If you miss the bus, another one is coming in just a few minutes. The problem is, we don’t want to wait.

Do you remember back in the day, when you had to take the bus, well, for many it could be a long time ago, but the point is, we don’t like to wait. It is what our culture has grown accustom to and often stands as one of the reasons that many traders do not make it.

This is one reason why I have tailored my trading program “Sniper Day Trading” in such a way as I have. It is designed to provide enough trades in a fairly short amount of time to reach a preset daily goal 2 to 4 S&P points. That is $100 to $200 per contract traded. Trading a modest 3 contracts is $300 to $600 per day, while trading 5 contracts is $500 to $1,000 per day.

Day trading has its rewards, it may seem simple, but it is rarely easy. Having the right day trading indicators can help, but every trader should  ask the question, “why is the indicator giving a buy or sell, then and only then will we know,   what to do & when.

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S&P Futures Contract Roll Over Day

Sunday, March 14th, 2010

Today is Sunday, March 14th and this post is for Fridays market.

The market was very slow in trading volume, one reason was that it was roll over day. That is when most traders stop trading the past contract month, which was “H” and roll over to the new, “M”. So your new symbols should be ESM10.

Here is a way to get some of your data to flow, which can be a problem for some. With the new contract month, you don’t have very much past data to go by and it can make it a little hard to get a feel for the market rhythm this way.

Adjust your charts to @es and you will see continuous data. If you are using tick charts, range charts, volume charts or any other type of trading chart, it will bring back some of the data for you to trade off of. It is the same prices as the actual contract month, so you should not have any problems there.

Friday I had a small loss on the day. Trying to do to much and my head was not in the game. I was only down not even 1 point but commission make a little bigger. I will make up for any loss and then some this week. It is time to rack up a few points, I hope we have some volume to go with that order. We will see.

This week will be an important one. The market is basically at a double top with the S&P and Nasdaq markets and the Dow Jones is still lagging. The nasdaq has actually out performed pretty nicely and is up against some pretty definable resistance. A pullback would not be a surprise at these levels. I will put a chart of the S&P futures along with a cash chart of the Dow and NASDAQ markets all in a daily bar chart. You can see for yourself how things have fared over the last week. A pull back to support would not be abnormal from here as traders will be looking for any good reason to sell at this previous high. For prices to come down to the 1127 level would not be out of the question.

That is going to be it for tonight. I can see that the futures have what appears to be a head start on a retracement right now, but anything can change until tomorrows opening.

Stay alert and trade safe;

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Be Determined to Reach your Trading Goals this Year

Thursday, March 11th, 2010

Today is Thursday March 11th and the S&P’s are putting in a good late day rally.

It is nice to see the markets have some life left in them for the bulls sake. The Dow was up about 45 points but remains the lager of the bunch. It is still 110 points off its January high, while the S&P today is 4 points beyond its January high; (10 Dow points is equivalent to 1 S&P point). The NASDAQ is 48 points above it January high at 2368 and putting in a good showing.

Today I took a couple of small trades and was done. There definitely was more on the table and I am not crying about it one bit. I even had a second chance on my second trade to stretch it out but I just took what I had in mind for today. I only watched the market for a few minutes with the first trade lasting 5 minutes and the second trade lasting the same. I was doing things in between those trades and was not totally into it. I was sure that my timing was good and it was. I did see this move coming. I will put up a screen shot of what I saw just before my first little trade. As I said, I could have easily stayed with the trade and took it out of my T-2 Screen for multiple points, but again, its no big deal. Next week I will gear up mentally for some good gains if the market is cooperating. My two little scalp trades below, first for 1 S&P point and the second for .75 and 1.00 point.                                          

Here is a chart of the S&P futures mixed with the Cash Dow Index and the Cash NASDAQ Index. There is a nice strong pattern that was building for the bulk of the day. I have some notes on the chart so take a look. The expected target for something like this is the body of the consolidation, high to low. Measure the distance top to bottom, then project that out on top of the high to see the expected return of the move once it breaks. I played the trade for a 1 point move before it broke. I missed the actual breakout, but I was doing other things. This week has just been like that, but I have still been able to participate.

Yesterday, I was talking about trying to create new habits and replace the old ones. One of the key points was to balance your life with all of its duties and expectations. If not, pressure will build up in area’s that are left unattended to and that will eventually come back and bite you. It will have a drag to some degree on your trading performance. Since that is what we want to improve, it pays to be aware of this before the imbalance becomes to great. Taking action to improve, change, redirect and prioritize is going to be key.

Being consistent with your trading has a lot to do with keeping things balanced in your life and that is the bottom line. Paying the price to achieve this balance takes discipline and was another key point from yesterday. Are we willing to pay the price to achieve greatness. The possibilities for living a wealthy, healthy and fruitful life are all just before us, but again, are we willing to pay the price? I put myself in there too. I have my challenges and I know what they are specifically. Do you know yours? It is important that you do, so if and when you want to see lasting change, you know exactly what you have to do to achieve it. Not knowing, wastes time, energy and keeps you that much farther away from ever attaining it.

If you are willing to pay the price to attain financial independence, then you can not shrink back from making the hard choices in all area’s of your life. Trading can be addictive, I think everyone who trades knows that. If you don’t, you probably will pretty soon. You need to keep a handle on that, and not let it take control of you, and other obligations. Its more than just money, it is time. We often want to work hard to achieve, that is what we are always told. What we are not told, is that if we become unbalanced with our pursuits, we often times will fall. Remove a leg from a stool and see what happens. Straight down to the ground.

Some traders don’t like addressing things like this and see it as a waste of time. I hate to say it, but those are the ones who will never make it in my opinion.

Being willing to pay the price comes in many forms. Many traders do not want to admit that they could use help, but hold to the idea, “I can figure it out on my own”. I was one of those guys. I never took a course, had a trading mentor, or subscribed to anything stock market related. It took me a lot longer than it had to to figure things out. I guess I did have a bit of “PRIDE”, which was hard to see at that time.

Paying the price can take many forms:

*Not willing to learn from someone who know how to trade * Not willing to change destructive trading patterns * Not balancing other time obligations * Getting in a better financial position so that we are not risking money that we can not afford to lose * Putting our past failures behind us, but being determined to learn from our mistakes and on and on the list can go.

Are you willing to pay the price to be the trader that you aspire? Only you can answer that question. If you need someone to help you trough some of these tough issues, I am here. Don’t let PRIDE get in your way from reaching your goals and dreams this year.

Wishing all my readers the best, “Trade On”.

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Patterns of Change for the Day Trader

Wednesday, March 10th, 2010

Today is Wednesday, March 10th and the market was drawn to the double top like a magnet today.

The market was drawn to the exact top of its January high just like it had wings. As soon as it was hit, a reversal was in place with the S&P futures, falling 7 points over the next hour. The market swung back and forth for the rest of the session to close up on the day about 6 points.

The volume was little better today, I think I saw it was around 2 million contracts traded. The early session saw about 4 waves higher to the top. There was some nice trades to be had there.

I had limited time today, but found myself looking at the session around 8:30 am West Coast. I tried to see if I could pick up something before the market went to sleep and today it stayed awake, first day in a while. I saw the top in the market and first picked up a small scalp for .50 point. I was going to wait to see if it was going to turn, but thought it had a few ticks in the trade before the downturn, I was right. It had 3 ticks in the move, I got 2 and was ready for the drop. I picked up+ 1.25 points on the first half of my trade and +1.75 points on the second half as the market continued to fall.

Those two trade took me exactly 10 minutes and there was 2 points. I took the rest of the day off to help a friend with some work.  At the close, I saw a quick scalp trade, so took it for .50 point. I don’t like taking trades at the end of the day, because you have no time to come back, but I knew it was only a one shot deal and my size was a little smaller.

I feel if I was prepared, focused and ready to really trade, could do quite a lot more, but I am not sweating it. I do like the fact that I feel some form of control over my trading, like when you are driving. If you want to go faster, you just step on the gas and prepare for the increased speed. In this case number of trades.

Having control over your trading is very important. This is something you want to strive for and is a worthy cause. If you find that you have a lack of control you need to do something about that. Don’t just do, what ever. Taking that approach, will be a mistake. You want to do what you do with purpose and self control.

The market does not drive you, you drive it. Traders need to create new patterns to replace the ones that are not serving them well. Creating new trading patterns takes time and is best done by repeating the desired outcome again and again. When you condition yourself to do what it is that you want to do, in time, you will have just that which you envision. Not doing anything, is only leaving your trading results to chance and we all know how that usually turns out.

Conditioning creates new patterns and your state of mind summons those patterns any time you call on that state of mind. Now, that is taking control of your trading which will take control of your trading results.

Just knowing, what you need to do is not going to produce the change. It is more than that and will take more of you, to move into action so that you can form new habits and rehearse the changes you implement.

Often times starting to make changes, any constructive changes is easy, but sticking with it and seeing it through to actually produce not only change for changes sack, but results. That takes discipline and again a lot is required from the trader, often to much. Sacrifice that he or she is not yet willing to make.

You need to ask yourself, what are you willing to do to reach your trading goals. Are you willing to balance your life, with all of the other things that need your attention all while not taking your eye off the trading ball. Tending to other obligations and duties, is just as important as studying your trading method and what constitutes a trade signal. If you are out of balance, outside pressure will build up, and that is going to have an effect on your ability to concentrate, focus and exercise the patience needed to wait for the trades to come to you.

So, examine your self and be willing to balance your day with the right kind of focused attention, giving each area what it needs to get the job done and remain balanced. Having a passion for trading can work against you if you let it. So, “DON’T DO THAT”.

Identify, area’s of change and or improvement, rehearse it again and again. With time it will become a good trading habit and that is one worth keeping.

Good Trading ! Vince     Today’s Trades below

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Double Top Approaching in S&P 500 Index

Wednesday, March 10th, 2010

Today is Tuesday March 9th and the markets have moved higher over that last few sessions.

The S&P is currently within striking distance of its old high, creating a “Double Top”,  where the Dow Jones is still pretty far behind. The shining star is the Nasdaq as it has already surpassed its previous high from early January.

The market sentiment has increased only slightly this last week to 42% bulls, which is OK. When it gets to around 55%, that will be a sign that there is to much optimism and we could see serious selling pressure. Back in January just before the drop, we got to around 53% but the level of bearishness was at a 10 year low of 15%. That was a strong contrary position for the market to trade the other way. It was only when the bullishness increased into the 50% + area did the market take its cue and drop as both were at extremes by historical standards.

We currently have room to rally, but are coming up against previous highs and that double top in the index. I don’t have any predictions so to speak but currently I have noticed the volume weaker than I would have expected. That to me is not a good sign.

Currently the market has some very clear key spots on the charts that need to remain intact for the uptrend to continue. If we break them, you can bet that you will see the sellers. If there is little volume and conviction to buy, we just may see it on the other side, when that day comes.

I have been very busy this last week and have had little time to trade. I am not to worried about it, it is just temporary and will be back at it pretty soon. Any points I have missed out on, I will make them up. I did trade for a few moments on Friday and picked up 1 point, no trading Monday and only traded for about 10 minutes today and caught 1.25 points. I have been working on producing some new training video’s and updating other training material as well as re-working my website. Lots of work, but its still fun work. I love what I do and am very thankful for it all.

Here is a couple of screen shots of my tiny trades. No big deal, that is for sure, but it is better than a loss. When things settle down, I will focus more on my own trading and pick up more than enough to make up for my shortcomings.

I still hope to change my personal schedule around to trade the open. Somehow I need to do that. There have been days last week that the afternoon session is producing nothing like it used to. The morning session is the way to go, like the first 60-90 minutes. Trading during these hours will most often offer several points in the first 30 minutes. So that is where the opportunity lies.

I will have to personally challenge myself to get up at the 5 am time needed to prepare and settle in for the 6:30 am West Coast opening. It has not been easy, but I know what the rewards are.

That’s it for today,until tomorrow;

Good Trading

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Scalp Trading – A Different Way to Trade !

Monday, March 8th, 2010

Today we are going to discuss how to scalp trade your way to consistent profits.

Scalp Trading is one way for day traders to pick up small pieces of profit with high probabilities of success. While day trading, you do not always have the luxury of picking up large swing trade moves. You either take what the market gives you, or you wait for your conditions to be met, which for some can be quite a while.

With only having one tool in your bag, you could be at a disadvantage against other traders. When the market goes into a low volatility mode, many day traders can see there trading equity suffer. It does not have to be that way, if you know how to scalp trade.

You will get many opportunities during the session to find low risk area’s that can yield you 1 S&P emini point in a minutes or less. If you are trading the emini futures market, 1 S&P emini point represents $50 dollars and is broken up in 4 equal increments of $12.50 each tick, totaling $50. If you trade just 3 contracts, something you could do with a $5,000 account, that 1 S&P point now becomes $150 dollars. Trading for 2-4 S&P points per day, gives the trader a nice $300-$600 dollars profit on the session. The key to this is consistency, doing the same right thing, over and over again.

Scalp Trading, is said to be one of the hardest forms of trading, because you can not allow the trade to work against you very much, forcing you to take large stops and losses. Most day traders do not know how to do that, whether they are trading stocks, forex futures, commodities etc.

This form of trading focuses on looking for a small window of opportunity, where the odds are on your side, possessing the “Trading Advantage” necessary to exploit price action. In my opinion, “Trading Stops” rule the trading markets. Traders have been trained to always place protective stop orders when day trading and in-fact all forms of trading. That is good advice and do believe very necessary. With traders placing stop orders to protect there initial trading position, invariably they cannot all be right. It is in this form of POSITION CLUSTERING that gives the fuel to advance prices long and short.

A scalp trader is going to look for that position clustering as a potential sign of future movement. If prices can get to a trigger point, you will often see a sudden spike in prices long or short. It is in this knowledge which gives the trader the advantage over other traders. Traders most often use there protective stop to exit there initial position if there assessment on the trade proves them wrong. What successful traders do is, use that to there advantage and place there orders in the same location as those who want to exit. While the struggling day trader is exiting his trade at a loss, the successful  trader is entering at that same moment. One traders exit is another traders opening position.

A typical trader enters his trade long, he places a stop where he feels it is safe from not getting hit. Since most traders are wrong, what do think happens?  They get stopped out to the successful trader on the other side. A scalper is going to take that opposite position short, enter, and then be buying that position back locking in a quick point or two.

Traders are always talking about controlling risks and that is a real concern that needs to be addressed. Any time you are in the trading markets, you are at risk. Granted, when you have a trading stop, that risk is somewhat limited, but non the less, you are exposed to some degree. The longer you are in the trading markets, by definition, you have greater exposure, thus, greater risk. As a trader with the objective of taking 2 S&P points out of the trading market, your exposure, again by definition is limited based on the amount of time you are invested. A typical day if trading the early morning session on the S&P 500 emini futures, could see yourself invested for only a few minutes for the day. You are picking your spots, like a trained sniper, hitting a small window of opportunity and leaving for the rest of the day.

Scalp trading takes less time, giving you the ability to get in, get out, and be done.  Many traders can not afford to sit and watch the market for several hours, scalp trading offers them the ability to participate for 30 to 60 minutes in the morning and still go about there day. Many other trading methods and approaches demand that you monitor the entire session to take advantage of there opportunities as they are presented to you. This form of trading does not demand that from you.

What it does demand is that you are focused and disciplined. You cannot afford to be sloppy with your entries, but need to enter with purpose and the trading edge. Lose the trading edge, get out of the trade. Do not wait to be stopped out. A scalper is going to protect his capital and take only small loses. If you are targeting 1 S&P emini point or 10 Dow points, an equivalent, then you will not risk more than the amount of your expected profit, a one to one ratio.

One point plus on the S&P’s is a worthy target and 10 points+ on the Dow emini’s is about the same. Both are equal to $50 dollars profit per trading contract. With commission costs for this kind of transaction being about $4 dollars, you net $46 per contract traded for the complete transaction.

If a trader could learn how to trade this way when needed in general, he can take that same knowledge and expand it, to stretch out his profits by trading larger time frames. The frequency of the trades and setups forces a trader to learn that much faster, because he is being exposed to many more trading setups.

Learn to scalp trade and you can trade any liquid market for a profit. Increase your time frames for greater point returns as price action dictates. You are in the driver seat.

Are you ready for a Road Trip?

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Solutions For Poor Day Trading Performance

Friday, March 5th, 2010

Special Edition for Traders !

Many traders have the hope and dream of day trading for a living. That is a very worthy goal and represents an opportunity for being your own boss as well as being free from a 9 to 5 type job. With the economy the way it is, living this dream is something that is sought after by many and for good reason.

Having the vision is always the start, executing the vision is another story. Everyone starting out, always has the highest of expectations and why not. No one would want to go into a new venture thinking that they are going to fail, it is normal to hope for the best.

What happens next is often the unseen struggles that traders face. Most all, traders have some knowledge of how to put on a buy or sell order, place a stop and a target, move there stop up to lock in profit, etc. But being a successful trader, long term has a lot more to it than what first meets the eye. As the struggles begin for many traders, they can start to feel angry, frustrated, anxious, confused and at times depressed. Many sense a loss of control over there trading and it is this loss of control that can leave the would be trader feeling powerless.

Lets see if we can help. Most day traders, set out with very high expectations about becoming rich. These thoughts can at times cloud the vision of what it is really going to take to bring it all together. To begin the process of turning things around, “Set smaller achievable goals” for yourself. If you were to go back and check your account to see where it was that you went wrong, many times it is going to be a few bad days that really set you back and put you under water. If you could remove those really bad days and at worst replace them with only minor losses, that right there could make all the difference.

If you notice that you are making repetitively the same mistakes, DON’T DO THAT. It sounds like a no brainier, but you would be surprised by how many people do just that, or maybe you won’t. I am not throwing stones. I have made all the mistakes there are to make while trading, so I can speak from experience. Not exactly the kind of experience we like to talk about, but that is apart of learning. Take the struggles and mistakes, especially the ones that are repeated several times and put a stop to it. Find a way to overcome it. It may mean you need to take a small break and pull things together before re-entering the arena.

Never increase your trading size to try and make up for previous losses. That is pretty important, but it is done all the time. If you are not trading well, what would make you think that trading larger size is going to make you trade better. If you are not trading well, you have two choices.

1)   STOP  & WAIT – give yourself a cooling off period.

2)  Trade smaller size until you get your rhythm back, then as you are connecting with the market, increase your size then and only then.

By increasing your size while taking losses, you are being influence by the money. You want to get back what you feel the market took from you. First of all, that is the wrong mindset and that is the reason, you are increasing your size. You are being controlled by your emotions and are making a bad judgment, which will likely hurt you even greater.

If you take additional losses, with increased size, you can soon see the snow ball effect, well, that is what I call it. Things will only escalate into bigger and greater problems. This is where you could start to feel that “Loss of Control”.

These are where those big loosing days come from. It is days like this, that can mean all the difference in the world to being profitable.

There are many good traders out there, that just need a little adjustment here and there, to turn the corner. Holding onto bad patterns produce consistent results when executed, but these are not the results we are looking for. Separate yourself from your problem and examine exactly what is missing.

It may be that you pull your stops because you don’t want to be proven wrong yet again. That loss is going to to much to bear so, you pull your stop at times.  You may move it by a full S&P point or any unit of measure depending on what you are trading. Other times you leave yourself with No Stop at all, which is always a big mistake. This again is something that you did not plan to do before you entered the trade, but something that you just did. Often, you look back and wonder why did I do that in the first place. Only after all the dust settles can you see that you were not acting rational.

There is a root cause to all of these and many other trading problems that are faced day in and day out across the globe by those pursuing there dream of day trading for a living and experiencing the freedom and the lifestyle that comes with the territory. But what is it and how can I get it. There is no easy quick definite answer that fits for everyone, but I can give you a clue. It all starts in what is between your ears. “THE MIND”. The power of the mind is often overlooked in resolving traders problems. They just think that if I do this or make that change, things will be all better. It goes a little deeper than that.

A successful trader needs to have “Mind Power”. That is not some fancy new age mantra, but the reality that stands in the way for so many. The power of concentration and the ability to focus and only do those things that will produce the results you are looking for is where the base of the solution lie’s.

Take a step in the right direction, TAKE CONTROL, live and fulfill your dreams, I am here to help. Visit www.sniperdaytrading.com and request your free copy of my branded Book on “The Power of Concentration” and see what you can accomplish with your new powers.

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Trading Volume & Trading Volitility

Thursday, March 4th, 2010

Today is Thursday, March 4th and the markets were contained as they closed slightly higher +4 points on the S&P.

I had thought that we would see what I call a containment day or you can say, “an inside day“. What that means is, the market traded inside of yesterdays trading range. This is what I said was likely to happen for today and a general containment inside the Wedge Formation shown from yesterdays Dow chart.

One thing that I am not seeing right now is volume. That can be a little worrisome for the bulls out there. As we rally on light volume, it shows a lack of conviction to buy stock.

Trading volume for a day trader is very important, without it, you get little movement and limited opportunity. With it, and you have the market swings that can take your account equity up quickly. Often times, it takes a catalyst to drive the market, good news or bad. So, what is a trader to do as he looks for opportunities and how should he approach the day.

Let me give you one idea to think about, in trying to decide what kind of day we are going to have. If you take the average trading volume of contracts traded for the first 15 minutes on the S&P Emini futures over a set period of time, say one month or better and come up with a volume figure. Then going forward, compare that average opening volume to the past average volume and you will see it in one of three ways. It will be above the average, below the average, or the same as the average.

If it is above the average, most likely the days trading range will be greater than if it was not. The same is true in reverse. If the trading volume is lighter during the first 15 minutes of trading, it is likely that the trading range will be somewhat contained. You don’t have to make a science out of it, but if you can observe that the volume is very heavy on the open, it is likely you will see a lot of opportunities to trade for larger point returns going forward for the rest of the day.

If you take today as an example, you will see that the contract trading volume for the S&P 500 emini futures was very light during this first 15 minutes of the day. That helped then to set the precedent for the rest of the session. The trading opportunities were very limited and the range was very narrow. This is just something to keep in mind going forward, as it may give clues and bring perspective to your expectations of the day.

Trading volatility means opportunity, with low volatility, you get reduced opportunity. If you are approaching the market with high expectations of a big day and they don’t happen you are out of sync with the market. Day traders observe the price action, or that is what I feel they are supposed to do and trade accordingly.

If you are positioned to take 3 or 4 points out of the market, but you only see three or 4 ticks instead, you have only a few options.

1) Don’t trade at all and just wait. That used to be a good strategy, going into the afternoon session but the volume cannot be counted on to come back. We are to often seeing only modestly light volume increase after lunch period.

2) Bring your expectation down so that you can take advantage of what the market will safely give you. If it safely can give you 1 point, can you take it?

I know everyone has there own style to trade and that may not be your thing, but I have no problem with it, only because I can trade with a small stop and do it successfully. Many cannot do that so, they are left to be much more selective and wait a lot longer for the trades.

That is fine, if you can do that. Many traders can not and end up taking  non method trades for the sake of trading while they wait. This creates over-trading and can be defined as putting on a trade without having the trading edge. Taking 10 trades or more in a day is not a problem, if you have the trading edge present in those trades. When you lose the edge, Get Out. Don’t wait to be stopped out, protect yourself and your equity.

With all of that said, I hit my trading goal today fairly easily, but I did have challenges. The challenge was to start trading during the slow New York lunch period. I know this is not the best time to trade, but getting prepared for the market open is difficult as I live on the West Coast. To properly prepare, I would need to get up a 5 am. That has been my weak spot, because I am a night person, whats a trader to do? Well, I guess I am doing it.

There are dangers in trading during this slow period, but they can be overcome with precision entries and modest expectations. My first two trades had no follow through to them, so I quickly lowered my expectations and took the very modest moves the market gave me. You need good timing and you need to know how to trade in this environment. (Sniper Day Trading)

My first two trades were the only loses I had each for -1 tick. After that I had several small gains which added up nicely for the session.

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Day Trading with Support and Resistance

Thursday, March 4th, 2010

Today is Wednesday March 3rd and the S&P futures put in a small gain for the day.

The market was virtually flat today and off its highs, closing closer to its low for the session. The short term momentum has been lost with the hourly chart just about to turn down. The daily chart is still holding it momentum edge, but time will tell how it fares going forward.

You can see in the chart I have below, that there is containment taking place in the Dow and it is holding the other index’s back. We may see prices stay inside of the Dow formation until a clear break out is again present. That break out can come in bullish or bearish fashion and does represent a good longer term trading opportunity. For day traders, that may mean two to three days. So, the thing to do is watch how prices handle the edges of that formation. Until then, you could see some consolidation inside the range.

The Dow has shown resistance 9 days, as the red line across the top has proven itself to be clear “TRADING RESISTANCE” overhead. As the bottoms of the chart move up, you have what is called a “Rising Wedge” in a downtrend.

I would have to call the current position of the overall market in a downtrend. The weekly chart is clearly down, with the daily charts trading counter trend to that. Even if the current pattern were to move all the way back up to the old high, you would put in a classic double top, at which time would be met with selling. All the people who wish that they got out at the previous high, will not miss there second chance and have there finger on the trigger.

For those who follow daily charts in stocks and options, this is where you want to watch volume. If the volume is weak as prices rise, that is a pretty good indication that the market is rotating into weak hands and more susceptible to a drop. I just looked at some of the volume figures for the S&P and it at this point it does look like the big up days were on lighter volume and the larger volume days saw little directional movement. In addition, the four big sell off days, (2 & 2) came on very large volume. That is typical for this type of move. With that said, the market can still move higher, if it breaks out of the over head resistance area, but it is possible that it will only be short lived if it does.

All of these issues are taken into consideration when understanding support and resistance. Looking at price structure with support and resistance in mind, will bring a clearer picture for where we go from here.

We had a few nice days up and I would have to say the move that I was looking for is complete. We may move higher, but not until the Dow can break out over the resistance area mentioned.

On another note; I came back from the S.F Bay Area to Northern Cal (close to Oregon) last night. I got caught in a snow storm with “white out” conditions, wow, that was not fun. I was exhausted when I got home. No time to update my blog.

Yesterday I did trade for just a few minutes and took only one trade. I did something from the day before that I don’t usually do. I carried one of the three contracts over into yesterdays session and sold near the high of the day. I took one trade for one point and hit it. When I closed it out, it took the “first in – first out” approach, so the new position had one left over. My stop was hit before the market could turn the corner, which was fine for a 6.50 gain from yesterday.

Today, I had one of those off days. I think driving white knuckled for so long, must have had an impact on me. I just did not have good judgment today. My first trade was a small gain, but I had three losses in a row and stopped. I was down about 2.75 point and could have taken another trade or two to try and come back, but I could see I was not thinking clearly and packed it in. I did not even feel like trading, so I thought, why push it. That is a good lesson for me. If I don’t think I am firing on all eight cylinders, take a day off. There is no rule that says you have to trade.

Well, that is it for tonight, I will have more to say tomorrow as we get new developments.

Good Trading to all.

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