Archive for May, 2010

« Older Entries

Stock Market Call

Monday, May 31st, 2010

Today is Monday May 31st and Memorial Day a legal Holiday and an early introduction to Summer.

The markets are closed today, but the futures market traded early on and then re-opened here sometime this afternoon.

In my previous market call, we saw 46 of 49 S&P points in exactly the time allotted and in my last post I commented that the market will naturally gravitate to the 1075-1080 S&P futures area. Well after running into resistance around the 1090 area in the early part of Sunday nights trading, the market ran into a brick wall and moved to the numbers I had called for. We hit 1079.25 this evening and bounced up 5 points. As far as the move is concerned the market has satisfied this minimum pull back and could mount an attack on two area’s.  Those numbers are 1096 and 1099, both of those are the previous old short term highs. If the market can clear those numbers we will see more, a minimum of 20-25 S&P points is possible.

Tomorrow is a pretty important trading day, in that it will help shape the opinion of overall market sentiment as a new poll will be taken after the close tomorrow and released on Wednesday morning. If we get one more bearish day, it could trip the numbers down yet again and get the bears to bit on another sell-off coming. If that does happen, I do think overall it will be bullish for the rest of the coming week and possibly a lot more. So, the weekly trend of market sentiment has been dropping off for the last several weeks and one more could give us a surprise rally.

I hear some chatter about Oil Stock ready to rally big. If that happens it is actually good for the Stock Market and economy in that if people will pay up for oil at these prices, demand must be there. In a retracting depressed economy, oil consumption goes down, because activity across the board is pulling back.

So, this is only a contrary possibility to help us all see what could happen. If you, me or any trader and or investors only see what is programed in our minds ahead of time, we will not be able to react to the changing events and will be taken by surprise. This really applies to us as day traders in much smaller time segments. You have to see both sides of the market. If you don’t only one view will dominate your decision making process and it could ruin you.

You may find yourself forcing trades to match your preconceived opinions. You will not see a reversal and you will not be able to trade it no mater what. You will never willingly trade against yourself, but that is because you do not see the market changing. You may only be looking for long trades when the market is saying I am ready to go down. You cant take the down trades because it would be going against the strong position you established in your mind.

Does any of that make sense. I hope it does, because I know traders do that all the time and it messes them up to no end. You have to keep an open mind. You can have an opinion about the direction but let it be based on what you see and have reasons to back that up. Once you see the likely directional move, look the other way, just to be sure you are not seeing what you want to see. If you balance yourself this way, you will not be forcing trades against the grain and expecting things to go your way. They won’t if your assessment is flawed. If you see both sides, and go with the evidence you have before you, strong evidence, that is the direction you trade. Try and get your entries down to a set area and know why you are going long or short in that area. What reasons do you have for doing so and is it something that can be duplicated in future setups.

Well, that is it for now. I am going to take my own advise on the big picture right now. I want to see how Tuesdays session closes before I make a better call on the next big move. The numbers above are still valid, but I would like to see a down day to set up for a bigger better rally going forward.

Those are just my thoughts, and hoped some of it helps.       Good Luck and Good Trading.

Tags:
Posted in Market Call | No Comments »

Price Action Trading & Trading Indicators

Sunday, May 30th, 2010

Today is Sunday, May 30th and I missed a couple of posts last week, but I am back.

In my last post on Wednesday, I said that the market was ready to push much higher as the market closed around 1056. The target area I called for was 1110 on the S&P and it was likely to take a couple of days. Well, on the second day, we came up to 1106.75, call it 1107 and within 3 points of the target area before it started to back off. On Fridays session after hitting the high mentioned, the market sold off towards the low of the day around 1087. Currently the S&P futures are up about 3 point at 1091 but it is very possible we will see lower numbers before we attempt to go higher, but not by much and for very long. I am looking at 1075 to 1080 as a possible turning point area. We will likely see some buying come in around those numbers. How the market reacts will be important as it trades into those area’s. I could see a good rally coming off of that area if hit and it is possible it could take us up to S&P 1130 this time over a short time span, about 2 days. That is where we will see stiff resistance, from there?  This is just what I see as a possible market move and it would be within the realm of a natural rhythmic market.

The sentiment numbers were out on Thursday evening for me, but released on Wednesday morning and they were lower yet again, a good sign for the bulls as it gets now within striking distance of yet again another sentiment reversal. The bullish sentiment of stock market newsletter writers for the past four weeks starts out at a bullish extreme figure of 56%, followed by the massive sell-off we had right on cue. A figure of 55% or greater is usually a strong tipping point. The next three weeks we had all lower figures of 47%, 43.8% and last weeks 39.3%.

This latest figure is now very interesting as the market sentiment extreme is now closer again to a bullish tipping point of 35%. The way the market reacts on Monday and Tuesday will set the tone for the new weekly numbers that are released on Wednesday morning and if we rally big, that could send the sentiment back to neutral, 45%. Professional market newsletter writers are really no different or better at picking the markets major turning points than the public. They are all trend followers and always have been. The thing is, when the market makes its intentions obvious to the public, it is about to turn and go in the opposite direction. A simple and yet effective tool for trading against the public. All of this is not so critical as short term day traders, but its a good exercise for all followers of the market to look at weekly, daily and hourly charts to see and gain insight into where the markets next large moves will come from.

Below is a video I posted last week on U-Tube and am posting it here. I have been showing one of the timing tools I have available at Sniper Day Trading. I do not say what it is, but want to post this video, to show traders that it is possible to time the market and be successful at it, using the right tools. I have a few other things up on my personal screen, not shown here, which makes for a complete view of how I can handle the market. This is in my Trending T-2 model and works well, when the market is moving. When we are range bound and the moves are small, I just trade out of a different screen with a different set of objectives and goals. If the market is likely to make a move and reverse, it is best to take a all in and all out approach. If the market is trending I often times like to scale out of the trade and average the position out. The market always gets to decide. Either way, hitting a daily goal of 2-4 points per day is not that hard and can usually come rather quickly.

Trading is knowing when you go long and when not too. When to go short and when not to. As I have mentioned before, knowing when not to trade is just as important as knowing when too. If your timing is off, you loose. If your timing is good, “Bingo”, you got it. So, being able to say no to a trade that you may want to enter if vital to your success. Do you have a map or guild to tell you with some degree of consistency that you are making the right decision or are you going by just a gut feel. The later, will play games and tricks on your decision and you will often question yourself if you don’t have clear rules for entry.

With all that said about trading indicators, I feel, every trader should learn to read the price as it moves, thus the term “Price Action Trading”. If you know how to read the price of anything, you will more closely know why you entering long or short. Learning to read the price takes time, and often traders are not willing to put the time in to educated and expose themselves to all the different reads, tricks, fake outs and natural rhythmic moves the market can throw at them and that is where trading indicators can help, initially. As time goes by you will get the exposure you need to be well grounded and thus a profitable consistent trader.

The video’s are only to show you what is possible. You only need one or two of these trades per day to make very good money, not thirty. So, again, many systems or trading methods don’t show you how or even a part of how this can work for them. I am glad that I am able to show you something to help you better see, again, just what is possible.

Above,  is another video of a stock and I cover three days of typical movement here. I basically mark up the screen of every trade signal through out the three days and again shows you what is possible. This is in my T-1 Trade screen and is geared more for short term swings with an occasional runner. You only need two or three of these trades a day to make a good living not all the ones as shown.

Tags: , ,
Posted in Price Action | No Comments »

Day Trading Indicators – See the Difference

Thursday, May 27th, 2010

Today is Wednesday May 26th and the market had follow through from yesterdays close only to give it up into the close.

We saw a good follow through move from yesterdays strong close, but as things started to settle down later in the session, the market sold off. I did hear of some good news on the economic front, housing starts, PPI Index and a couple other good bits of glitter, but it was not enough for the general market to hold on to there gains.

Currently the after market is pushing up nicely as the S&P is up 15 points as I write this late Wednesday evening. Looking at the daily charts, we just stayed above key support I pointed out last week on a closing basis and that was good to see. I do also see a continuation of this night trading move into tomorrows early session and expect the market to hold on to those gains and even add to them over the next few days. That is what it looks like to me. This is that bounce that I figured would come as I see the S&P futures moving up to 1110 area or so before it takes a break for the next move. That could take a few days, but we are just taking back some of what was lost over the last week.

Tomorrow, the sentiment numbers come out and it would be interesting to see how the public now see’s the current environment in the face of this sell off. We did come off a lot in the past two weeks and it is possible the trading public got very bearish this last week, which could have pushed us into the opposite scenario very quickly. We were at 43   %bullish and 35 is a bullish trigger point for the market to rally. The numbers were out this morning and most have seen and reacted off that reading already, but I will not be able to see them until tomorrow evening. You can get the link in the resources section of my website if you want to keep up to date with it yourself in the future.

In my last post, I put up a video of the S&P turning points for Mondays session. For those who trade the S&P emini market you are familiar with how it is works. We trade futures contracts to buy or sell, which gives us the right to buy in the future the basket of stocks at a specific price. Most people who trade the the S&P never really hold until the end of the contract and take delivery as you could do with a commodity, but it is traded more like a hedge against a portfolio or as a speculation instrument. That is what we do, as we trade contracts at specific prices. The smallest measure of movement is $12.50 and that is considered a tick and 4 ticks make a 1 point which then is $50 dollars. If you day trade 3 contracts, which you could do with a margin or deposit of roughly $3,000, each 1 point is worth $150 dollars. Having a daily goal of 2-4 points per day is the minimum daily goal I like to set and there are days it is 8-10 points or more.

Picking up this daily goal is not really that hard if you know when to buy and when to sell, to start. Then it is learning how to manage the trade and lock in profit and book your gains for the day and do it again tomorrow. The first key is knowing when to buy and when to sell. If you can not get that part down, you will never make it. If you don’t have a game plan on when to buy and when also not to buy, which is just as important, you will struggle.

I teach traders at Sniper Day Trading to read the price action and trade off of that. I have a few simple ways to make it easy to learn, but it does take time to build a data base of various market reads that can and will be shown to you. That part takes time to build, but in the mean time, while you build this knowledge of learning price action trading, I have a set of indicators of which I have one of them shown in today’s video to help you with timing of when to go long and when to go short. My trading method is based off of something different then what is in the video, but it compliments what we do very nicely.

To many traders are trying to learn how to trade just by following the indicators and not by learning what drives the indicators and that is, “the price”. In addition the indicators that they follow, usually are lagging and not that efficient. That is not the case with what we offer. You will never have to look for another trading program or method again as long as you live on this earth and trade the stock market.  That is how I truly feel. This can be set up in any time frame to give you the trading edge you need to beat Wall Street. The Stock market is fractal in nature and any good trading method will and can be applied to all time frames and styles of charts.

When you combine this method with at least two time frame charts, the smaller chart is shown in the video you will get a crystal clear picture of what you need to do and when. The video shows clear entry area’s both long and short, exactly what you need to profit. When you consider, this trading method can be run with only a tiny 4 tick stop, (5 is OK) that is hard to believe, but the proof is in the video. The turning points happen like this every day the market is moving.  When it is a choppy session, I have another screen set up just for that, with the results no different.

Traders need precision timing  to be successful, bottom line. If you don’t have it, do what it takes to find it, email me for more details. This works on individual stocks just the same. Turn your trading around, protect your trading capital and live the dream.

Tags: , , , ,
Posted in Day Trading Indicators | No Comments »

Controlling Day Trading Emotions, Fear

Monday, May 24th, 2010

Today is Monday May 24th and the market is selling off big time in the night trading after a down day on the street.

Currently the S&P futures are off 18.50 points, 1.73% at 10:35 in the evening West Coast time Monday. After trying to make a go of it, the market went south near the end of the day to close down for the session. Right now the S&P futures are one tick off the low set a couple of weeks ago 1051.50. We are in dangerous waters, let me tell you. Hopefully investors have battened down the hatches. This market could bounce up off this low and buy a little time, but you have to leave the door open for a complete blow out through this previous low.

A couple of days ago, I heard of a poll taken on CNBC that over 50 % of the viewers said that the market was a good buy in this territory. That is scary, because if you know anything about the masses, they are usually wrong and betting against the public is usually a winner. Don’t be apart of the public yourself, or you could get fleeced. Just be careful. Investors with long term money, you are swimming with sharks right now and they smell blood.

I read a few things over the weekend and the situation in Europe does not look good. My hope is people will have a little more time before the hammer drops and it will, it may be tomorrow or after this possible bounce up, but it is coming.

If you see storm clouds coming and they are big and very dark, you don’t have to be a genius to know that it is going to rain and if you don’t have something to protect you from the elements, you are going to get wet. That is what is coming. I hope its not right now, but there is nothing any of us can do to stop it. The only thing you can do is prepare to profit from it or step aside and keep your assets safe until you are ready to exploit price advantages. You have to be in control to pull this off. Do not let your action be controlled by your fears and or any other emotion. When it is your time, see yourself following through with the trade and managing your stops. Taking a defensive approach is really alright most of the time, until and unless you safely have the advantage for the big moves.

Those  moves are here and more is coming, so be prepared to move on what you know. If you don’t know and or feel the setup, don’t do it. Wait. That is a hard thing to do for many traders but it is in your best interest to only trade what you know. Don’t take a trade because you feel the market is going to leave you behind. That is trading out of fear.

You are trading out of a different kind of fear. There is fear of loss, but there is a fear of lost trading opportunity that can be just as bad as the first. Many traders are not aware of this one, but let me tell you, it is just as dangerous as the first one. By entering late, you have to widen your stop many times to allow for your aggressive entry and as the market loves to do, pull back to get your stops and leave without you, which creates only more emotions but of a different sort.

Traders can not afford to be controlled by emotions and it does not matter which ones they are. You need to follow a plan that can take you to where you want to go safely. If its not safe, wait until something comes along.

————————————————————————————————————————————————

OK, enough preaching.  In today’s trading I only took one little trade for .75 points and had to go. I got a call to help a friend and left for the rest of the day. It’s not a problem and I don’t feel like I missed much. Helping others rates pretty high, even when it compares to money. Money can had, but saying no to a friend can not be replaced. It sounds like I am still preaching, O Well, what can I say.

I have a video of today’s action in one chart from my T-2 Trending Screen. I have a couple of indicators on the video, only one at first and then the second one later in the video. I marked up the screen with virtually all of the signals it generated today to show you even if you virtually took all of the signals it gave with no discretion, you would have done very well. That is an understatement, because you will see a lot of trades for a ton of S&P points. Grant it, you only need one or two of those small trades and not even the big ones to make a great day. Using good money management that is apart of Sniper Day Trading, you will be keeping your losses very small, scaling out of your trades and covering your position at all times to make a consistent daily profit.

As I mention in the video, I get the trades from a completely different way than what you see on the screen, but it comes out to be in the exact same area on most all the trades. The indicators can help you see what you can not yet see with your eyes, but will be working towards. Being able to trade without any indicators at all and get the same or better results. That is what I teach and what I encourage my students to learn. The price always comes first and the indicators are a reflection of the price. Not all indicators are the same as you can see on the screen and this is only a portion of what I use. Together it makes it a complete package to easily follow, getting your timing down and not getting ahead of the market.

If you are going long or short at the right moment and you can do it again and again with a high degree of confidence, isn’t that what trading is all about. Then returning tomorrow and doing it again. I think it is OK to rely on the indicators in the beginning, as long as you know what you are supposed to be seeing with your eyes as things develop.

That’s it for now,  good trading to all.

Tags: , , , ,
Posted in Trading Psychology | No Comments »

Reduce Stress Associated with Trading Gains & Losses, Part 2

Saturday, May 22nd, 2010

This post is for Fridays market May 21st where the selling continued, but reversed at days end to close much higher.

The selling continued in the night trading Thursday evening and carried over into Fridays session where it started to pick up steam to the downside.  Buyers did come in before it got out of hand and salvaged the day for the bulls.

My last post I put up a single screen shot showing the support that was coming in from a couple of angles. That support if broken on a closing basis with conviction will likely kick in the next wave of selling to the area’s marked on the screen, 864 is the lower number. I do not rule out the possibility that it will keep going at some point, but one thing at a time. There will have to be some economic or world crisis to trip it into gear, but its to much to think about right now.

In my trading Friday I had a great day hitting another one of those mega days. I have a screen shot of my last trades of the day here. In this shot, I have only a striped down view of my screen only showing one chart of my main screen with only one indicator below.

By following the complete trading method, the timing of the buy and sell signals are really generated by something completely different, but the indicators do line up with trading method.  By learning how I trade, you will know why and when to go long or short, not only because an indicator says so. I use different models with different time frames for each model depending on the trading movement. With just a hint of a trending market, I will and can trade out out my T-2 screen of which I have a tiny portion shown above. If in a choppy market my T-1 screen works like a charm. You still need to know how to handle yourself on the board. You can have the best tools and still mess it up, if you act irrationally and become overly emotional.

One more point that I have been wanting to show for some time now, is how my trading method will work with stock trading. The only thing that you need in any trading instrument is movement. If it moves, it will work. It works in any time frame, as well as with tick charts,volume charts, range charts, minute charts, hourly charts, daily charts, weekly and monthly charts. There, I covered all of them. Not all traders are alike and each trader needs to find what time frame is best for there personality. For the trader who feels good about holding a position for several hours and even days at a time, may not be best suited for scalp trading where you may be in the move for only minutes. I have tried them all over the years and it took me a long time to find where I am best suited and that is scalp trading with my own version of trend trading tied to it.

The video below is on a stock, symbol FAZ in a 150 tick chart. This is fast especially on the open where the market gaps higher by a lot. You can always slow it down by just increasing the time frame to say 250 tick chart or higher.  It is a financial bear index and works in the opposite direction as the general market. This stock tracks the financial and banking stocks but will go up as the financial stocks go down. As a day trader, it really does not matter, as long as it moves and this one sure does. The point is, I am just showing one timing tool tied to this and how if you knew the complete trading method, you would be certainly be able to get in at or near these turning points and have a very small stop, .10 to .15 cents.

Continuing with Thursdays lesson: “Reduce Stress Associated with Trading Gains & Losses”

Continuing where I left off, I discussed reducing stress associated with trading gains and gave a few idea’s on how to bring that about. Most traders struggle with this one, “the losses”. There is usually an increased amount of stress as losses start to mount. To often, traders are thinking about the money and not trading there plan and trading method.

Try not to think about the money. I know that is easier said than done, but if you resolve in your mind the worst thing that is going to happen to me today is a loss of 3 S&P points and if you are trading stocks, say 30 cents. If you are trading one contract on the S&P’s, that is a $150 dollar total loss for the day and with stocks, trading 500 shares -.30 cents you are looking at about the same, -$150 dollars.  The idea is, you are not planing on losing for the day, but the stress associated with trading loses only add to the pressure you are under, so focus on following your plan of action. Expect and see yourself doing the right thing as called for and see the trade moving in your favor just after you enter. Don’t wish it or hope it moves, but let the stock do all the work. You are not going to help it along with your added emotions.

Ever heard the adage, less is more and more is less. That would apply here. Day trading is a mind strategy that gets played out on your trading screen. Do the right thing at the right time and you won’t have to try and help it along. It will  already know where to go, right to your target area or running as though it were in a marathon. Go along for the ride as a passenger but be sure you get off before it stops and goes the other way.

You will be reducing stress if you can accept your daily loss limit for which you should have. A maximum amount you will risk in any one trading day, (mine is 4 S&P points).  Then, don’t think or worry about the money and just trade with the rhythm of the market and let it tell you if you should be long or short.

Your feedback and comments are welcomed and appreciated. Enjoy the rest of the weekend, Vince.

Tags: , , , ,
Posted in Trader Coaching, Trading Lesson | No Comments »

Sell off on Wall Street, Market sitting on Major Support

Thursday, May 20th, 2010

Today is Thursday May 21st and we got a sell off to test the lows.

Well, I thought we might have had at least one more minor move to the upside before we dropped but all I can say is that I was wrong. It dropped like a rock starting in the night trading. The one thing I did say and get right was, that a move down to the 1105-1106 area first and then a move up to 1128 before the next move. Half of it happened the other half did not.

We had closed yesterday at 1109 and had a move up after yesterdays close of about 7 point on the S&P to 1116. The market quickly came down to 1105.25 and bounced off that for a 10 point S&P move. That is what I initially saw happen and so far so good, but the rally failed. I said the market was going to have to stay above the 1105-1106 area and a break of that will send price lower possibly to retest the intra-day low of a couple of weeks ago. That was the other part that happened.

So, we are sitting on now another major support as I see it and will include a weekly chart here for you to take a look at. Just click on the chart, you may have to click on it two times to get it to blow up. There, in the chart is a yellow line and red line right where prices are currently at. I feel, if those lines are broken, you will see a move down to the other lines I have marked. It is a long way, but the market will not really have choice as the panic will set in and the stops will be triggered like a set of domino’s all lined up.

When you see price bars like we saw two weeks ago take place, that is a sure sign that you will see more bars like it in the very near future That was one of the reason’s why I had called for a huge increase in volatility and movement and its not done yet. The best case scenario that we can hope for is a nice bounce up off today’s drop. If it goes down through the marked support area’s on the charts, we will see another large wave of selling and there will be a bit of panic to this one. So all I can say is hope for bounce to help you lighten up on long term positions, if you so choose. That is what I would do and I am sure it is what a lot of other people are going to be doing as we go forward.

In the market sentiment area, the new numbers from yesterdays release are down another 4% from last week at 43.8%, a neutral reading. That does not mean that the market is going to stop, we will have to let it make its own mind up on that for the short term, (bounce or no bounce).

I feel exactly the same as I have all along, about this market selling off. I had called for the rise and have been calling for the drop overall in the long term picture. This is not a surprise in the slightest. I feel the market will find its way down to the mid way point of this last multi month advance at its very best which stands at 928 to 865. Again, that is the best case scenario that I have been calling for from the beginning.

Taking it one day at a time, today I took a few good trades and ended up with solid gains. I have a video of my first trades of the day in the video below. My first trade was -7 ticks as I came in late for the move. I did increase my stop size because of the volatility and next trade was for 3, 4 and 5 S&P points.

I promised to continue with the trading lesson I started in yesterdays blog but will have to pick up in tomorrow edition. Good trading and be safe.

Tags: ,
Posted in Bear Market | No Comments »

Reduce Stress Associated with Trading Gains and Losses

Wednesday, May 19th, 2010

Today is Wednesday May 19th, with the S&P futures were off 9 point and the Dow off -66.

Yesterday, at the close, the market was building a little trading opportunity that I mentioned. I did think that the break may come to the upside for the after market trading, but I left the call open for the market to decide. It broke down for an initial drop of 11 S&P points just after the session close, a clear break.

I never trade the after market but since I was writing at the end of yesterdays market I just thought I would point it out.

I did mention that if the market took out the lows from two days previous that we would see some pretty good selling. That number was 1112 on the S&P and today we traded down to 1098 before buyers came back in.

If the market was going to make a stand, tomorrow is going to have to be the day. There is a chance that we will see 1128 in tomorrow session. Today the S&P closed at 1109.75, just shy of its daily mid point trading range. The S&P emini futures traded 13 points off the high and 11 points off the low, a 62% daily retracement of its range.

Tomorrow the market could trade down to 1103-1106, but that level will need to hold if we are going to attempt a run to 1128. If I had to choose, is tomorrow an up or down day overall, I would have to say its an up-day. Will the rally follow through if it comes, that I don’t know and is to far out. I think that if the market was going to crack and really break down, I don’t seeing it being easy for the bears to get in early and get it right. Usually at key turning points, the market is tricky in revealing its true intentions. Its main goal is to get you to bit, in what seems like the obvious direction, only to stop you out and leave you behind.

Today I had only a three trades and picked up my daily goal. The first trade +1.25 , -1.25 on 2 contracts with the last trade scaling out on 3 contracts, +2.50 points, +4.25 points and  +3 points. It was an easy day and just left it at that. I had traded a lot more the two previous days and I was worn out. Yesterday I got up early for the open and traded the better part of the day. It takes a lot out of me and I am sure anyone who trades all or even most of the day. You need to have a very high level of concentration to stay sharp. If you get tired, you will make mistakes. That is why I was trading small.

The video above, shows part of the last trade and I go back over the day to show the turning points in my T-2 trending model. I am only showing a small portion of the screen and cover everything accept two timing indicators, one above and one below. There is a lot more to it as I have two trading manuals totaling over 150 pages that cover my method in detail as well many hours of DVD training material and several video’s of live trading each day that I send out explaining how to trade with “Price Action” while still using trading tools and indicators as a guide. With that said, the method is easy to understand and grasp but it does take time to get familiar with everything. Anything that is of value, will take work and dedication to master, no doubt, but what I have is real and can be duplicated for those who see its possibilities.

—————————-

“Reduce Stress Associated with Trading Gains and Losses”

Many times, a traders biggest losses will come just after he has had his best gains. That is why you will hear how traders make it and lose it right back. Being mentally stretched will not help but hurt your efforts. That is why it is a good idea to take the easy gains the market gives and walk away on most days. All of this said, leads me into the topic I mentioned I would cover yesterday.

All traders have expectations, with most of them very high. We all know that trading is a zero sum game. For every winner there is a looser. As traders and investors provide liquidity to the markets, there expectation is to come out ahead of other traders by positioning themselves properly to take advantage of price movement. Every trader can not come out on top and it is proven that most traders and investors loose money. They loose it to the those who better position themselves to capture a piece of the movement.

Notice how I said a piece of the movement. You can not have it all, but that is where part of the problem lies. Most traders are not able to walk away with several points of profit, whether it is in stocks or emini futures. Why is that true?

It has to do with “Greed” and not being satisfied with the easy and obvious trades the market gives you. So, you will be reducing trading stress on yourself when you have modest gains and walk away for the day. There is no more struggle, no more anxiety, no more wondering how you will end the day, its done, period. You booked your gains and you will come back tomorrow and do it again. As the opportunities show themselves to you, there are special days you can capture more, but that is not every day, 2-4 times a month. If you try and go for the fences every day, you create all to many problems for yourself and make the whole venture that much harder.

So far, I am talking about dealing with and booking your gains. Dealing with your losses is another area of stress where most of the focus is usually on. But before I do on to that, which will probably be a follow up in tomorrows post, accepting the gains that the market gives easily is what it is all about. Most traders dream of the day when they can put on a few trades, make money and then go do other things with the free time and now money that they have.

If you want that dream to come true, maintaining control over your emotions and taming your expectations of making a killing every day needs adjustment. I will continue in tomorrow’s posting………….  Until then, Good Trading.

Tags: , ,
Posted in Trading Lesson | No Comments »

The Stock Markets next likely Move

Tuesday, May 18th, 2010

Today is Tuesday May 18th and the markets moved out to the upside on the open +14 points on the S&P and about 100 points on the Dow.

We did see the push up that I thought would come as a follow through to yesterdays run up. The S&P traded more in line with the move up than the Dow. Each 1 point on the S&P is equal to about 10 Dow points. So as the S&P was up 14 points that would translate into 140 Dow points. I believe that is what I thought we see in this extension move up. Since we trade the S&P’s I should have mentioned it as opposed to the Dow. I guess I didn’t think the Dow would under-perform by so much today. Its not a big deal, it pretty much went down like I figured. We would hit resistance at that level and likely back off.

We hit those levels at the open as the final push up in the futures helped propel the cash index’s up to that resistance area. Since there was no where else to go, they sold it off and as I write we are off 13.50 S&P points on the futures and -96 in the cash Dow Index. It looks like it is trying to make a reversal run with just a few minutes to go before the close.

There is a nice consolidation taking place at the close and a break of that will push us up big or down big. S&P futures  currently at 1118. By the time I post this, the market will be closed but the move may carry over into the night trading.

Where do we go from here?  The market is getting squeezed between two points and the gap is narrowing. If you thought you saw volatility before, we are not done yet. I can only imagine how things are going to play out over the next week or two, but it is going to be wild. I would say that if you have a trending trading model, this is the time to bring it out. The market is not likely to be slow and quite, but the opposite. Fast and trending. The moves with the right setups, will go and last longer than most people expect, so get ready. If the volatility is to great, don’t feel like you have to participate. If you day trade better in a slower environment, wait it out. It is a good idea to be very selective in the trades you take. If you see the volatility moving your trading instrument all over the place, just wait. You will likely get stopped out, if you force a trade with a small stop. That will produce frustration and may cause you to force the issue. Be patient and selective. For others who can handle the swings, try and ride out the moves as you will be rewarded to for sticking with trending environment.

Tomorrow the new Investor Intelligence Market Survey will be taken and I won’t see it until Thursday evening. This will tell us if the drop off in sentiment is continuing or not. Last week we dropped off about 10 %, which is real big. If I remember we are at 47%, very close to a neutral reading.

In general, a move above 1160 will give the S&P futures a chance to retest the highs at over 1200. This is not the most likely, but leave it as an outside possibility. A break of yesterdays lows of 1112.75 will likely send us much lower and the possibility exists that we could take out the S&P lows of 1056 and or test them in some fashion. Don’t say it is not possible because that is what trading is. If the majority say that is not possible, it is not only possible, but probable. I am not committed one way or the other right now, but the pressure is to the downside and the bulls will have to shore things up quick and prove there strength, not just project it.

Last year, this is what I thought and said would happen. Back when the market was at the bottom, called for the market to retrace its losses and move up somewhere in the 50% to 62% retracement area(1110 to 1220). We did just that at 62% and rolled over to start the process of working off this move up, retracing back again at best to the middle of this move up, putting us at S&P 930 to 863. That is pretty much what I still think, but I am open to a false rally or a possible retest one more time? I have to leave that open and not force my opinion on the market. If I was so sure that the market was going to drop from here, I would not see or be prepared for the shake out move back up, if it happens.

This is all in the daily and weekly charts, just discovering the next big move of the market. It does not have a huge roll in day trading the swings, but it helps a little to see what could be coming.

* In today’s trading, I had another good day, but was only trading with 2-3 contracts. It still added up nicely and will post an equity chart and video of some of the action for those who care to see. Tomorrow I will give a trading lesson on “Reducing Stress associated with trading gains and losses”, so come back for that.

*Yesterday took about 12 or 13 trades, often scale out of my trades.

Tags: , ,
Posted in Bear Market | No Comments »

Reversing Bad Trading Habits

Monday, May 17th, 2010

Today is Monday May 17th and the S&P hit the 1120 target exactly at  1120.25 in the pre-market.

I called for a reversal of the up-move last week as the market would hit the 1177 area and reverse for a minimum move down of 55 S&P points to 1120. We hit that in today’s pre-market action and reversed off of that number for a 20 S&P point move. The high was hit just after the open 1140 and then it was down from there yet again to new session lows at 1114.

I could see the 1120 area support for at least an initial bounce and safe target area to cover. The market really did what I thought it would. I did see the possibility for lower prices than the 1120 but not after a sizable bounce came in first. The 1120 was a conservative target area.

Today after the open, there were three good area’s to go short and they were at 7:41 am , 7:57 am and  8:47 am all West Coast time. After that, there were three good area’s to go long and they were at 10:15 am, 10:55 am and 11:40 am.

The market is making a good case for yet again another reversal back up with the current price at 12:50 p.m of 1135 and rising. This basically is what I expected and is what I pointed out last week, so far so good. I do see some follow through to today’s move, but it looks like it will be contained. It looks like 150 points or so on the Dow in the next day or two.

The market is in a very vulnerable position in general. We can not overall rule out that the previous lows of S&P 1055 will be taken out. I am bearish on the big picture right now and this move back up will only be setting the market up yet again for another drop. We will have to take it a day at a time, but caution is definitely in order. People should be looking at capital preservation at this point in the game.

As far as day trading is concerned I had a good day  today. I took 13 trades with 9 profitable and 4 not. The losses were very small  at -.50 -1.00 -.50 -.50. I had a 5.75 to one profit ratio. Anything at or above 2.00 to one is considered good.

The video is from the first two trades of the day. I had enough to get my daily goal with just those two small trades but while doing some training video’s I seen some good opportunities and kept trading. I don’t always trade this much as I mentioned, but today could be one of those real good days for me that I like to have to stay well ahead of myself.

——————————–

Reversing bad trading habits: Bad habits are one thing that plagues traders. I know that there are many who vow to change there ways but seem to repeat the same bad trading habits again and again. Is there hope for the struggling?

I say “Yes”. What do you say? That is where the question lies and where it needs to be answered. Each trader is different in that we are who we are as traders based on our past. This is also true when it comes to life in general as well. Our past directly effects the present and is a compilation of all our experiences good and bad. the good news is, that we do not have to stay in a condition that we no longer accept.

There is a comfort in repeating patterns, even if they are not to our benefit. The benefit is, that we are doing the same thing over and over again. The repeating of the pattern brings comfort and that is one reason why we do it. Fear of the unknown I believe is part of the reason for this. We are not use to doing things different and when we do them the same way, it is easy for our subconscious mind to accept it, even if it is wrong.

This is one of the reason’s why I think traders are making the same mistakes repeatedly. We need to ask ourselves, are we willing to change and do different, even if it means taking us into uncharted waters?  The answer is usually yes, but in reality it is only in our actions that we can see if this is true.

In order to reverse bad trading habits, we need to see what it is that is expected of us. Traders need to make a profit and if you are a day trader of stocks and or emini futures, your goal is to make a profit each day. A traders timing is key to his success, if your timing is wrong, early or late, you will suffer. If you wait to long because you want confirmation, then you will be entering as other traders are exiting. If you are in to early, you are vulnerable to getting stopped out as well because you may be afraid of missing the move.

Understanding what is expected of us is the first place to start. Is your plan to extract a profit from the markets sound? Do you know exactly what you are looking for without question and do you hesitate when faced with that decision? If you answer yes to first and yes to second you do not have enough confidence in your trading method to enter when you should and it is causing you problems. If you answer no to the first question (knowing exactly what you are looking for) and yes to second, (no hesitation pulling the trigger), than you are going to have problems as well. You can not pull the trading trigger on something that you do not have complete confidence in.

You need to be able to get both right and until that happens, it is going to be difficult to reverse bad trading habits.You have to know where to go and what to do in order to change something. Just knowing there is a problem is not going to make things better.  That is a start, but it requires an action trading plan with a solid footing. If you in need of such an action plan and trading method, I have answers and can help for stock and futures trading.  If you already have something that works, then strive on being disciplined not to go beyond it.

Tags: , ,
Posted in Trader Coaching | No Comments »

Strength to take your Losses

Friday, May 14th, 2010

Today is Friday May 14th and what a sell off from the top as called.

We moved up to the 1177 area (1175) as called in the night trading two days ago and sold off yesterday with follow through to the downside today.  At 12:19 Friday West Coast time as I write this we are currently at 1127 with 1124 the low for the day That would make a 50 S&P point drop in two days since the call as of now.

As I mentioned I knew there was traders who hold positions overnight just waiting to catch the S&P short at the top. They even did not have to wait up, depending on the time zone as a strategy for those who make such moves is to sell short at a price, say 1174 and put a price in to cover, say 1178. What happens here is if any time during the night the price trades to 1174 or better, they get filled and then there buy stop gets activated at 1178. This is a little risky because you should always watch your positions before entry, but I know it is done all the time for those who can take on the risk.

If that was to much risk, there were low risk area’s to get short in yesterday’s market, especially late in the session at 11:25 (West Coast) as the market dropped nicely. I don’t play the long term swings but I like to follow it, to better stay in touch with the general flow or rhythm of the market. This way, when I come into the market, when ever that is, the open or more likely mid day, I am not having to do as much analysis to get up to speed on the big picture.

In today trading I have a u-tube video of the trade working. I only took three trades today and picked up my minimum daily goal. I don’t always try and make the huge days every day. I find it easier to just trade to a modest target and stop, but that is not every day. Some times when the market is moving nicely, I will take advantage of the movement and go for much more. Traders, I feel need to keep a handle on always wanting more. If you struggle with this, to often you will not only lose what you had and more, as you find yourself saying, “should of, would of, could of”.

If you don’t what to find yourself in that situation, then you need to pick a modest daily goal and stick with that. On days when you see the trades easily and the market is just giving you the move, take those and add to your day for extra returns. I feel we need days like that a few times per month (3-4 minimum ) to help out with any bad or struggling days you may have previously had.

———————————

Strength to take your losses: Every trader is going to have losing days, that is just the way it is, but you can keep it to a minimum by having a daily stop out point for yourself. Sticking to a daily stop point is just as important as not pulling your stops and accepting that you were wrong on that trade. We can not let our ego’s get in the way of attaining our trading goals. Those that do, will struggle more than they need to.

You need to come to the conclusion that you will not get all your trades right and you need to stick to your pre-defined stops. When you pull your stops, you are telling yourself that you are not ready to trade. You can not handle a losing position properly. That is only going to make it worst the next time you put on a trade as well. If you substantially moved your stop or pulled your stop and the market were to recover, you may think that you did the right thing, but you will loose what ever you recovered on this trade and then some on future trades, because you just programed yourself, for when you get in trouble, move your stop or cancel it and give the position more room to come back.That is going to set you up for only bigger losses in the future at a time when you least expect it.

With this kind of trading behavior, you are unstable. You will never come to find the consistent market gains that you so want. The harder you try to cover your losses the more you end up calling them to you.

What is a trader to do? The first thing is to accept that you will have losses and resolve that you will not pull your stops or move them except in the direction of your trade position (locking in profit). This is a mental decision that needs to be resolved before you put on another trade. Next, in order to attain the goals that you set, you will never achieve them by widening your stop, so don’t do it, ever. If you are not sure of the trade and feel uneasy about it, hit the close button and you will go flat and all stops will be canceled. It is better to do that than see your trade go against you when you know something is wrong and try and make up for a bad decision by doing what will never help.

If you are always getting stopped out, that is a sign that your timing is off. Trading is about timing, pure and simple. When to enter and when to exit. If you are getting stopped out, you need to look at your trading model. What ever you do, you need to be consistent in it, that way, once you find where your entries need to be, you will be able to repeat, again and again.

Below I have a screen shot of my T-2 trending model with only one indicator at the bottom. I have many more things to build on the charts to make it complete but only showing this part. This day up until 12 pm West Coast had 18 trades (23 whole day) of at least one S&P point profit in it and carrying only a 1 point stop. I see virtually all winning trades for the day. This is just to give you an idea that timing is the key and it is possible to find if you understand how to trade price action with some help from the indicators to start. As a note, I would not be trading all of these turns and teach how to screen out the best trades in my mentoring program, again, just showing what could be possible.

Have a great weekend to all !   If you need or want help, email me at vinnie@sniperdaytrading.com

Tags: , , ,
Posted in Risk Management | No Comments »

« Older Entries