Archive for April, 2010

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Major Index’s Currently at 62% Retracement Levels

Thursday, April 29th, 2010

Today is Thursday, April 29th and today we saw a nice reaction rally to Tuesdays sell off.

A pretty good day on Wall Street with the Dow up over 100 points and the S&P up about 15. Most of the movement came in the night trading and the very early opening push. After that, it looked like the market went to sleep. We did see a close right at the days high on the S&P 500 futures and that is a good thing overall.

Tonight I will see the market sentiment numbers and any changes that might have happened from last weeks push higher. If I remember it ended up at around 53% bullish which is very close to the 55% signal. That is generally an area that you will see a reversal take place. With the big sell off that we had on Tuesday, that may have influenced the poll taken at the close of Tuesdays session, but can not be sure. If the numbers backed off, that is going to be a good sign, anything below 50 I will consider good for the bulls. If the numbers increased in the face of the sell off, that would not be good.These numbers are released from Investors Intelligence, which tracks Investment Newsletter Writers opinion of the Stock Market Direction. These numbers work in the opposite way that you might think. As they consensus gets more bullish, it acts as a contrarily indication that the market is ready to go against them. Since these writers send there advise to the general public at large, you can see how the people get feed the wrong information at critical times, just before a big shift in direction of the stock market. You may be wondering why people pay for such bad advise, I can’t figure it out but only come up with, “human nature”.  Wanting to believe in something which will take them to the other side to financial freedom.  I will comment on this in tomorrows posting.(Just saw the numbers come in a minute ago. They are currently at 54%. which is only one percentage point away from the 55% percent historical trigger point. If we get one more good week through Tuesdays close next week, that should put it over the top and signal a potential drop. It is possible the drop can come now, but the only way to work off the high level of built up optimism is a sell off, for the most part, so be careful going forward as far as the large major trend is concerned.

Below I have a chart of the major index’s with the S&P and Dow as the main point of topic. This is a monthly chart showing that we have come back up from the sell off of last year exactly 62% on these two major index’s. That is significant in that it is a nature target area that is followed by many. The two key area’s are 50% and 62% retracements. We hit the 50% retracement mark months back and it did result in a pretty sharp little pull back, but it was only seen as a buying opportunity by many and the market pushed its way back up and then some, which brings us to the 62% retracement area. This is not enough to say that one should sell, in and of itself, but it is just an important area of interest that is being looked at by many. That is the reason we too need to look at it and see if others things will confirm to us that this may be a top or least a temporary top. In my opinion it is too soon to tell, but tomorrows sentiment numbers will shed a little light. The technician part of the equation has changed a little negative, but there have not really been any concrete shifts in the balance of power as of yet.

When looking at these area’s of interest as I have called it, it is important to remember what others are looking at and focusing on. As day traders, this is also what we need to do in the daily struggle that takes place over key area’s of support and resistance. Many times hundreds of traders are looking at the same thing, trying to out flank thousands of other traders before the move becomes apparent. The masses are rarely right and if they are, it is usually not for long. We need to be thinking contrary to the masses for a trader to be consistently successful.

Many traders feel that the market seems to know where there stop is, like it just wants to take them out and continue on its way without them. In a way that is true, in that the market lives to stop traders out of there position and leave without them. Knowing that, what are you going to do about it?  Are you going to just take it, or are you going to fight back, not with force, but with strategy. We need to think but not act like the masses. You need to take the other side of the majority and you can only do that if you know what they are up to.

All of this happens at every level of the stock market. It first takes place on individual stock issues across the board and those stocks make up the index’s, which make up the Index futures market.

Below is a monthly chart of the major index’s with the retracement levels shown. Again, these are just common area’s of interest that are often times followed by turning points. The second chart is a screen shot of my T-2 trade screen showing the turning points for that time frame present.

On a different note, I have had some issues with my hosting company this last week and I know I have missed some emails messages from a few people who expressed interest in Sniper Day Trading. If you could please resend me any correspondence again, that would be appreciated. I have fixed the hosting of my website but working on restoring my email. A alternative temporary email is vinnietarantino@yahoo.com .  I am sure I will get all of this resolved shorting.

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Market Reacts to Bad News with Sell Off

Tuesday, April 27th, 2010

Today is Tuesday, April 27th and the market took a dive today.

What a ride on Wall Street. Apparently, the downgrade of Greece and Portugal’s debt caused the Street to get a little nervous. This is what happens when the market is ready to retrace. People will look for an excuse to sell, but to them its a good excuse, PROFIT.  The market has had an uninterrupted move for the most part since early last year, coming off the bottom.  I would call it close to a “V” bottom for the most part. With such a deep initial retracement from 18 month ago.

Today the market sentiment numbers are taken and will be released for tomorrow. With this sell off, it may have spooked some to back off on there exuberance, but I won’t know until Thursday evening. Market Harmonic’s will post the numbers for free each week on there website. I find it as a very good tool in picking market tops and bottoms on the daily charts for extended moves.

As a daytrader, it may help a little, but overall you need to have good timing with little tolerance for large losses to do well. In order to achieve that, you need to know what you are doing. You will not get consistent results by accident, but keep learning.

I am just getting my site back up and still have work to do, to reconstruct a few things I lost, so it may be a day or so before I get back into the swing of things. On that note, I wish everyone the best.

Vince

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Trading Exercise – Read the Price Charts

Tuesday, April 20th, 2010

Today is Tuesday April 20th and the market continued in its reaction rally up from Fridays sell-off.

I did not look at any news that may have drove the market today, but there seemed to be some good reason for the market to drive higher. The pure technical picture said to play the momentum as the market turned higher at 7:40 am West Coast. Just before that it had come under a little pressure as the night trading had follow through from yesterdays close. The move at 7:40 was a clear take off point. I was not trading at that time, but wish I was because the price action was dismal after 9 am (12 noon New York time). A slow grind for the next two hours as volume dried up and traders patience was tested. Unfortunately I was one of them. I did OK but it took forever. Why I say to myself do I even trade that stuff. I guess it is because I did not get prepared for the early open.

I came up a little short of my daily goal. I did basically have it, but gave it one last trade and that put me under. Only trading small but I have time and room to give myself a break after last weeks monster gains from Thursdays session.

To be successful, we most often have to be our own coaches and talk ourselves through difficult situations. All traders should analyze there “Self Talk” to see if it lines up with there trading plan and objectives. If you find yourself not sure what you are looking for, that is a sign that you need to practice more and become familiar with what is going to take you to your goals and objectives. You do not have the luxury to get it wrong. On the job training is very expensive. If you pay for a course or become self taught, it is still going to cost you. If you go the self taught way, it is going to take you a lot longer to learn what you will need to bring it all together. It is possible and it is a option. I am a product of being self taught. I never bought a program, course or any other trading vehicle to get me where I am today. I may have been able to speed that up if I had, but maybe not. All trading courses are not the same, and the ones that don’t teach you how to actually read price action, but be dependent on indicators or any other thing, is going to slow you down.

All traders need to learn how to read supply and demand just by looking at a chart and be crystal clear on what it is saying without any doubt.  A trading course that falls short of accomplishing that is not the best route. There are times the market is right in between making up its mind on which direction it wants to go and that is when you need to pay special attention and listen to it.

Being a good trader, is knowing in advance what makes up good price structure and what does not. The stuff that looks like market noise, is what you leave alone. You don’t have to trade every twist and turn. Let the market set itself up to give you the trading edge . If you don’t have it, don’t try and trade it. You need to be at least 80% sure that if you put a trade on, that it is likely to go your way. If you don’t feel that you have that kind of a trading edge, leave it alone until you do. It is not worth it, for those who are trying to figure all of this out.

Often, the market is going to suck you in long, just when you think you got it, only to take you down. At those times, you can not afford or allow yourself to give up a lot of room. You will need to learn where the market is breaking away from you so that you can cut your loses short. If you don’t, you will be looking at 2-3 point loses in moments, which will be the next guys gains. Don’t do that.

Look at a chart and if you are a day trader, I would say a tick chart or volume chart. You will have the benefit of hindsight here, but this is good exercise for those who want to get better at timing. Forget about indicators and just look at the price bars. Since you have the benefit of looking at the chart after the fact, where do you think would be a reasonable spot to go long and short based on what you see. You probably will not want to place your marks at the very highs for short or the very lows for long, but within a reasonable margin, where would you like to have placed your order to capture a piece of the move. Don’t be greedy with the exercise, but be reasonable. Tomorrow I will give you an example of what I mean on the charts.

Ask yourself, how can I know the next time I see this set of price conditions that the movement will be similar?  There is a way to do that. It can be done with stocks, for daily price bars, futures emini contract or any trading instrument in any time frame. This is one way of teaching yourself. It will take a lot of practice and you will have to invest a great deal of yourself to find the patterns that will bring it in.

If you can afford it and want to jump start your training, I have just the tools, framework and structure to point you in the right direction to speed up the process. If you want to continue to go it alone, I offer small tips and hint of what you can do here in my blog, but never really get into the technical nuts and bolt of my trading method. You will hear me talk a lot about market psychology and how to overcome one of our biggest obstacles, us. So stay tuned or drop me a line, I am hear to help for those who want it.

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Is the Stock Market pausing or ready for Sell Off ?

Monday, April 19th, 2010

Today is Monday April 19th and the market put in a reaction rally off of Fridays sell-off.

To me, it looks like we may see some sideways to down action coming this week. It is just a quick observation as it looks like the top side has hit a temporary cap to its upside momentum. The volume from Fridays session is what I was hoping to see a while back, very nice volume, more than double its recent average. That made for some great opportunities.

I had a big day on Friday, the best day trading for the year. I took advantage of the increase volume by hanging around a bit longer than normal. I was going to stop after better than double daily goal, but decided that this was a day that I should put the pedal to the metal. We have not seen days like Fridays session for some time, so I took advantage of the price action. I traded like I normally do, with tight stops, but was able to let some of my trades run and run they did.

Going by memory, I think it was Goldman Sacks was being sued by the Feds and that got things moving. I saw the volume instantly kick in with huge lot size behind it. I was in that move but I had only picked one point out of the trade. After the first consolidation, I jumped in and rode the move down for several points. It was like that for the rest of the session. I watched the market most of the day and took a few breaks in between. Below is my equity chart of my results for Fridays session.

I did trade today as well and it went fine. I only traded for 45 minutes and ended it. I have been making a solid effort to trade earlier in the session. There are much more opportunities and things don’t take as long to come together, overall much better. Below is are my equity chart results for today’s session.

Below I have one more chart for you to take a look at. It is a daily chart of the S&P futures continuous contract and the cash Dow and cash NASDAQ markets. Take a look at the resistance running across the top of the Dow. That is some pretty strong consistent blockage that it keeps running into. There are only two ways to resolve that, a drop or a breakout. Both options can be looked at, but, which one has the most likelihood for the next move. I will you make up your own mind on that. I see for the short term, sideways to down, but we will see in the days to come. The market can continue to go higher, but it needs to move sideways to digest its gains. By moving slightly down, that, also gives it additional time and room to move higher, but it is going to need to do at least one of those, time or a little backing off in price or both.

Well, that’s it for now. Lets see how things shape up. I will be sure to report the Investors Sentiment numbers that come out after tomorrows close on Thursday. I get a two day delay. For the link look in the resources section of my website. They update it for free and it posts usually late Thursday evening.

Until next time, good trading.

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Having Strong Directional Market Bias can hurt you

Thursday, April 15th, 2010

Today is Thursday, April 15th and the market has shown to be pretty resilient as it closed up another few points on the S&P and other index’s.

The Dow was up 21 points and the NASDAQ up about 11, putting back to back gainers together. As I had mentioned in Mondays post I believe, we needed to stay above some key spots on the charts and I clearly marked them. That was the maximum amount of room the market could move inside and still have the longer term momentum in tact. It bounced off some key support and has not yet stopped.

I did see a slight bearish pattern present late in the day today. That setup lead me to some pretty nice gains and reached my daily goal with ease and room to spare. I did not trade or post yesterday but am far ahead for the week so far with only Friday to go.

I have an equity chart of my results below. I took nine trades in total ( a few exits were scaled out) , a little more than I usually do, but that was fine, I took a few good breaks in between and traded about 90 minutes. I cut my trades off at very slight losses, -.25 and -.50 point, nothing big.

My method is very strict in order position placement. If you are placing your orders in the right place, you should get some movement right away, that movement is basically free cushion or extra room to help you insulate yourself. I very often will see one or two ticks movement right away which gives me an advantage. I take that movement and it helps insulate my position so that I don’t need to have a 6 tick stop. If I don’t get the results I am looking for and loose the edge, I don’t worry about getting out. I can always get back in, but I am only taking a one tick loss or maybe two. It is a whole lot better than my full stop of 4 ticks, which is still very small for most traders.

If a trader is taking a 6 tick stop, you have to make up a lot of ground just to break even, let alone then make a profit. If you take two of those, you are bleeding.  Trying to hard to come back from that will again only hurt you further. You need to let the trade come to you and it should be, feel and seem effortless.

So, the key is, don’t take large stops. Some will say, easier said than done and that may be true for them, but for those who know how to position the entry to get good movement right off the bat, it is not that hard. This is one of the keys to trading price action, order placement. I have talked about this before, but it bears repeating, since that is part of the topic. Order placement is grounded in understanding good price action structure as well as support and resistance.

I don’t often talk much about these things because this is all part of my trading method and course, with everything else. What I do talk about is everything else. All the other parts of trading are really just as important as knowing when to get in and out. There is a lot of good trading advise and know how buried in all the posts I have written, so, feel free to dig in a little to past posts, I believe it could help.

That is what I try to do each day, help.  If a topic or subject comes to me as I start writing, I throw it out there. In fact, before I run out of room, I have something else in mind that may help my readers.

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Traders, are faced with decisions all day, what to trade, when to trade, which direction to trade, etc. I have settled to trading the S&P emini’s so I don’t need to be concerned with what to trade. There is plenty of leverage and money to be made. When to trade is another subject, trading the early morning or late afternoon is usually best, first and last 90 minutes of the day usually provides plenty of opportunities. The direction to trade should be up to the markets to decide and not us, but that’s my opinion.

The last few days, I am sure there were many traders who just had in there mind that this market was going to go down. They have predetermined in there mind a directional market bias, that can really hurt them.

As the market makes an advance as it would have before in previous sessions, where a pull back is in order, the trader is going to look for shorting opportunities. If he does not see one clearly, he will start to make one up that matches his directional market bias. An order is placed short because that is the only trade that meets his disposition. As a bullish continuation pattern develops, he is blind to its setup and only see short opportunities. The market breaks out against him and he is in shock and he may get stopped out. With his market bias still in tact, he waits a few minutes and again does the same thing and gets stopped out again as the market is clearly in an uptrend. This leads to frustration and the next trade, he lets go by as it was good for a small gain short. This reinforces his short bias and after consolidating, he takes another short trade, only to see the market take off against him again in the direction of the dominant trend, up.  He feels now that the market is out to get him and his confidence is shot.

I know that scenario happens all the time, which is one of reasons for the rally, skepticism and doubt. That is fuel for the bull rally. When the doubters start to believe, it is time to sell.

The point to the story is, keep an open mind and read the price movements and try to keep directional opinions to a minimum. This will allow you to see both sides of the market and only then you will know what direction to trade.

I hope this helps my readers.

Good trading.

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Trader Coaching – Day Trading the “Easy & Obvious”

Tuesday, April 13th, 2010

Today is Tuesday, April 13th and volume picked up to move the market nicely today.

What a difference a day makes, a big difference from yesterday with the volume more than double what it was, with the volatility to go with it.

Today, the market started off lower as it was following through with the downside momentum started in late yesterdays session. At a touch past 7 am West Coast,  a very nice rally short took hold which I was in for about 6 S&P points with 7 contracts on board. I did not scale out as I usually do, but held on for the full move. I had been calling out 1186 as a target from the start. I had gotten in on this move at 1192, right at the top. I did have a bit of circumstances that lead me to place an order short at the high into resistance, which I don’t normally do. As it turned out, I was right on taking no heat and the market just dropped like a rock straight down.(you can see most of the trade in my U Tube  gallery) I covered right near the bottom at the 1186 area. It traded one point lower to 1185, but close enough. This was only the second trade of the day I took. The first trade, I did take the largest stop-out I have had on the year, two point loss on 5 contracts.  If I did not get my second trade right, I was going to call it a day. After I place my second order, I adjusted my stop to 3 ticks and it never came close.

I had to adjust a few things today, which is a little unconventional, but it worked out for me pretty nicely. If it didn’t, I was prepared to stop for the day. One thing I have found, if you make a mistake while trading, it is all to easy to make a second, third and forth. Pretty soon, your whole trading plan is out the window and you may find your self chasing your tail, just trying not to have a whip out day.

That is the ruin of so many traders. You can not have whip out days where you just get so frustrated, that you continue to make bad call after bad call. You are now thinking about the money and trying to get even. If the market price action is not co-operating, your frustration only builds and that brings on more mistakes and bad entries. Your confidence comes into question and you don’t want to be wrong again so you continue to move your stop and take even bigger losses.

This is no way to trade and if you even find a hint of this kind of behavior lurking around in your mind, stop it, say no to being impulsive, no to greed and no to fear and the fear of missing a big move, which can be just as bad. You need to maintain control, if you find that you are loosing control while trading, you need to stop for the day. Forget about trying to get it back today, cut your losses, which will still be small, and come back when you are focused and level headed. If you don’t you only risk making things worst and we all know where that can lead, a big hole in your trading account.

Being satisfied with modest gains, day after day is really fine, because you will have days, like today for me, that I was able to see clearly a strong move, where I held it for the full move. This adds nicely to any monthly return and makes up for days that you may quit early or come up short from hitting your daily goal. This is a marathon not a sprint. You always have to protect your capital, your life blood. Keep it in your account until the setups are strong. You don’t have to trade 5 or 10 times a day to make a nice income, 1,2 or 3 trades in the course of a morning session could be plenty. I at times do trade more than that but I have been at this for a long time and often times only take small scalp trades for 3-4 ticks.

With that being said, I only have 2-4 point daily goals on the S&P emini’s and it is really not to hard to hit, if you take your time and wait for what looks like the easy and obvious. If traders did that, it often times would be like walking over to the corner of the room and picking up money off the floor, not to hard.

It is kind of funny that way, what seems easy on the surface, is not really so. The way to make it so, is to wait for the “easy and obvious”. I think I am going to coin that term and even make it into a trading mantra. “Easy and Obvious”, I like it. I have been using this for at least 6 months hear and there, but if traders want to see immediate improvement in there results, fulfill this call, – Trade, the “Easy and Obvious” and you will be picking up money off the floor, with ease.

When you rush the trades because of fear and this is the fear of missing a move, that is what will cost you dearly. If fact, I will confess, I make this mistake today myself in my first loss and tried to cover my tracks, but could not conceive taking  more than a two point loss.

So, the point is, don’t be afraid of missing the move, if the setup is not right, don’t do it, just wait it out until it is clear, crystal clear and then jump on it and don’t worry. If you get stopped out, that is how it goes. Just have in your trading plan an exit strategy, at where you will stop trading if you are not doing well. For me it is 4 S&P points maximum. I have stopped trading at lesser points, but stick to this and it will reduce stress allowing you to better concentrate on good trades.

I hope this helps those following me and wish you all the very best. Feel free to request my Free Book on Concentration. I will send it to anyone interested and I won’t be pounding you to sign up for course to get it, so,  “No Fear”, just ask.

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The Closing Price of the Day

Monday, April 12th, 2010

Today is April 12th and the market went to sleep today, literally.

What a slow boring day on wall street as far as the major index’s are concerned. From the opening bell the market traded roughly 2 points higher and 2 points lower until the last few minutes of the day and ended up closing at the low for the day. That is not usually a good sign. The position of the close is very important each day, with the last few minutes of the day key. The reason is, it shows what the current true value is for the index at that given moment and it is the end of the day that sets up so many trade positions for the next day. If the market would not have sold off just those few points at the end of the day, it would have changed literally hundreds, even thousands of trade positions for the first 30 minutes of tomorrows open.

The close shows the end result of the whole days struggle, long and short. Who won? I would call it a draw, with a slight edge to the bulls today. The S&P futures were flat, no gain, or loss. The cash dow was up 8 points and the Nasdaq was up 3 points. That may not say a lot for some, but seeing the last move of the day was coming off and we closed at the low as I mentioned, it will have an impact on the open and it could be to the downside at least for the open, we will see. The after market is currently off as I speak about 3 points as it is anticipating tomorrows lower opening just as I was mentioning. A lot can happen between now and tomorrows open, but the pressure is to the short side currently.

I did some trading today, took 7 trades and with the last couple was able to pull out into positive territory, picking up more than my daily goal. I did take a position into the after market as the momentum was to the downside and seeing I was a little short for even a single daily goal, I elected to hold it over. It worked out for me but I don’t like to do that. There is the 15 minutes after the close at 1:15 West Coast to 1:30 where you are unprotected if you elect to hold an position over. If you have a stop in place and go into the close after 1:15, your stop will be dropped and you are exposed for that 15 minutes until the market re-opens. Usually nothing earth shattering happens, but at times you will see gap re-openings working in your favor and possibly against you. Today’s re-opening was uneventful at first, giving me a chance to reset my stops and see if the momentum continues, it did.

I see some key area’s I have marked on a chart from the link below. Selling will start coming in with a greater velocity at around 1176 and it should really pick up at a break of 1171. This market has been all one way for some time now, and I would like to see it continue, but if we hover above those numbers and break them, I am pretty sure the selling is going to pick up for at least a spell. We may see a reaction rally back up if it in-fact it breaks down, but be careful here. The market does have some room to breath, but it is on thin ice. Current price -4 points at 1188 from the close of 1192. So, again, the market does have a little room here, but it will need to prove itself once again, very soon. Trade safe.

(Daily Chart S&P futures, Dow ,  Nasdaq)

www.screencast.com/t/Y2ZlOWNkOTQt         (Today’s Equity Chart)

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Market Sentiment

Thursday, April 8th, 2010

Today is Thursday, April 8th and the market is showing some nice resilience in maintaining its  composure.

Well, I will get right into it with the market sentiment from Investors Intelligence. We saw basically no change, actually up .05 %. A slight move, but I would call it flat and an amazing development for the bulls. Getting this info hot off the press two days ago, could have given additional insight. That is how I would see it.

With the numbers, approaching extremes, but still far enough away to allow a significant amount of movement on the upside,  are leaving room for additional advances if the market co-operates.

A reading of 55% + is considered a market extreme and very often signifies market tops. Currently we are at 48.9%, with the last three weeks stuck in the 48% area.

This is not the point where we usually will see a significant market top. There is still enough skepticism alive for additional movement at this point. I will keep my eyes open for the possibilities, its up to you if you decide the same.

I always look both ways, but all I am saying for the daily and weekly movement, it appears the upside may still be alive.

Today’s action was very nice.  A good trending day with limited volatility and plenty of low risk  buying opportunities along the way.

No trading for me today and its unlikely I will trade tomorrow. That’s not a problem, I had a pretty good day yesterday. Its not really enough to cover my goals for the week, but I need the time off and I am traveling with my wife this week.

Short post today, but we will be picking it back up with new insight and trading idea’s for my loyal readers, so hope to see everyone back soon.

Good Trading, Vince

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Shorting the Market with Confidence

Thursday, April 8th, 2010

Today is Wednesday, April 7th and the market finally got going today.

It was nice to see a bit of movement in the market today, signs of life, but to the downside. Many traders have a bias to the long side. It seems more natural to trade that way for many, but what do you do when you have days of downside action. In a bear market, you will only get occasional upside movement and possibly enough to get a modest goal, but the natural rhythm at those times are to the downside, short. Do you just stay out, because you have not trained your mind to handle the inverse relationship of going short?  It is true, most traders do find it easier to trade the  long side of the market, but are you willing to settle for a huge segment of the market to be taken away from you, because you have not found out a way to adjust yourself.

I think not. If you feel more comfortable trading long positions, that is fine, but I say, start to work on yourself to change that, even if you currently don’t trade it right now. It is all about getting comfortable with the process. If you start looking and thinking as you will need to, in order to see the setups and pick your entries, you can learn to trade short just the same as long.

If you decide to go short for fear of missing a big move and have not trained for it, you could be at a big disadvantage. Why would you want to do that. If it takes 6 months or even one year, before you put on a short position, you can little by little look for the opposite of what makes up your buy signals and orders.

This might go along with yesterdays tips on trading but in a different area. Its just what came to mind after seeing today’s drop.

I did trade the late afternoon session. I had my first trade short as a loss for 3 ticks as I was just coming in for the  session. I took a break right there and then, I missed the next leg down, but did happen to catch the last part of it, about 35 minutes later, +1.50 and +1.75 on larger size. In fact I doubled up for a big gain, no scaling. I got filled exactly on the bottom. A few minutes later I did go long for .75 point and then again had a few more winning trades. It was a good day for really only trading less than one hour. Today made up for no trading on Monday and Tuesday. I did post a U Tube video of the trades. You could see it through the video section of my website, top right hand corner if you want to or not.

I am taking a trip with my wife for the rest of the week. I don’t know that I will be trading, but I will play it by ear. I will probably post some comments in the evening about the day, so stay tuned. Tomorrow I will report on the Investor Intelligence Market Sentiment numbers. They were going up steadily over the last month and I would bet there was a good chance that it hit a bullish extreme on Tuesday. That is the day they take the weekly poll. I get the data two days late for free. Anyone interested in the checking for themselves can go to the resource page on my website and get the direct  link.  Non the less, I will report what it is in tomorrows post and give comments.

I don’t have my charts up right now, as I am writing this, but I remember, we were sitting on some key support, even though we were just at the years highs. The market would not be out of step if it pulled back from here. I will do a little more work on it for tomorrow and show what is going on in the daily charts, so we can get a sense of what to expect for the next week or two.  Do not let your guard down, you don’t want to get popped. Just a word of caution.

I will be back tomorrow, until then good trading.

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A Few Pieces of Trading Wisdom

Tuesday, April 6th, 2010

This post is for Tuesday April 6th and the market is still trading at 10:30 am very slowly.

With Fridays market closed, the unemployment number were out and many took the news as a sign of hope, where we had two months back to back showing jobs being added. I remember seeing, that there were parts to the job report that showed a very negative side to the numbers, but you had to dig just a little to see it. I guess everyone is just looking on the surface and saw a reason to celebrate. Lets all hope for the best, but I am suspect that all is well.

No trading for me right now, the market is trending the last few days, but moving slowly on light volume. Its been a good break for me and am going to just play it by ear. If I can trade the early morning, I will see if I can make up a little ground one or two days this week?

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That being said, while trading, we are all best served to trade what we see and not what we think. I can go back and look at times when I had hung myself up in my own personal trading and saw that when I formed a very strong opinion about market direction, I lost the objectivity I needed to see the price without bias. I know for a fact that I am not alone. I am aware of my faults and always try and read the market as it is, not how I want to see it. Doing this has always served me well. I can still take a loss, no problem, but I will not take repeated full stop outs back to back. If I feel the urge to be right at what ever the cost, I will just walk away and take a walk. Our ego’s to often get in the way and can become difficult to take a lose, we don’t like being wrong. If that is YOU, take steps today to trade only what you know and if you don’t see it clearly, don’t trade it. There are so many good trades to take in the course of a week that we should not feel compelled to trade  anything less than what is crystal clear.

I am going to start applying this more directly to my own trading. At times I do exercise a bit of overconfidence, because I am most often able to capture my trading goal for the day and come back from previous losses if I have them. I at times make it more difficult than it has to be for myself, because I to often trade the slow time of the day, but that is something I am going to change. If traders are trading this slow time of day and looking for extended runs, it will not likely happen but on rare occasion. If you are trading that time of day, I feel, exercising trading wisdom, will say that you have to set very small targets and very small stops. If you can’t do that, do not trade this time of day. It is not worth it, not to mention it takes 3 to 4 times longer to get the same thing if you were to trade the early or after noon sessions.

Trading wisdom point number two; try and be profitable every day if you are a very short term trader and certainly at the end of the week. This will depend on your trading style, because if you are a scalp trader trading stocks or emini futures, you will have multiple opportunities in the course of a morning or afternoon session to pick up a few points, but if your trade targets are larger, you will have limited trades and opportunities to come back if you are wrong and so, being profitable every day is unrealistic.  That is where weekly profitability comes into play, your gains will be larger and over the course of time, moving towards your goals.

The way to ensure this type of goal, is to keep your losses small. That can not be overstated. If you allow yourself to take large draw-downs, you only dig a large hole for yourself and many times it becomes to hard to crawl out. One exercise to help with this is find what ever is within your trading method or system and start out practicing to take small profit target objectives. Everyone wants to go for the monster run and those will and can come, but it is still your timing on those trades and the small ones where it all starts out. If you work on your entries and get it so that you can take 2,3,4 ticks for the S&P emin, 6,8 or 10 points on the Dow and or .06, 08 or .10 cents on a stock and do it often and with confidence all while not risking more than your gains, you will be making progress.

Every 4 point S&P run starts out at being profitable with the first point. Every stock move of $1.00 starts out with a .10 cents move and so, if you can get your timing down to catch those small moves you will then be able to screen out some of the small moves when the time is right and turn those into the big moves everyone likes to talk about. The point is, going for the singles will train you to be able to eventually hit the home runs. You will be cutting your losses quickly if the trade does not work in your favor right away, a good habit.  This is just an exercise to help you work on better timing and get you to cut your losses if you start to loose the trading edge.

Trading wisdom point number three; take what the market gives you. This will work right in line with what I have already mentioned, in that as you get better in your timing and your ability to cut your losses quickly, you will soon  be better able to screen out what trades are likely to have more under the hood and those are the trades you want to ride out. It is a lot easier to ride out a trade once you have locked in some profit and moved up your stop. This gets into trade and money management and a topic for another day, but a successful trader, never lets a good trade go from green to red.

More on the topic tomorrow, but in the mean time, I hope this gives you some idea’s.

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