Archive for the ‘Day Trading Indicators’ Category

Tick Chart Trading the S&P Emini Futures

Wednesday, July 7th, 2010

Today is Wednesday and the market took off higher to close up +275 on the Dow and +35 on the S&P futures.

We saw a very nice day today to the upside. I said yesterday that I was a bit undecided but wanted to see a break of two numbers, one down or one up. Which ever one breaks, that is where the move is going to come in at. We got the up move and the number I gave yesterday was 1030. That was right in line with a nice break to the upside at 6:55 am West Coast. There was only one other trade after the open before this main break out that could have been traded, so you did not miss much of the move after the market opened.  The market did not look back and we moved up +29 points after that 1030 number to close at 1059.25.  A nice call.

I did not come into today’s market until later on in the session and did pick up my daily goal. I had two 1 point losses and 1 tick loss with 8 gains that were scaled out of. Today was not a big day but still a nice daily goal. My losses were 100% my fault and could have had all winners again today. Bad timing and not doing things right will most often not give you the results you want. Just the opposite is true. If you do the right things at the right time, you will be rewarded, plain and simple.

There were so many good trading signals today and yesterday, it is not even funny. I love my trading method because it will work in any market condition. I can always scalp a point or two out of the market even in low volatility days. A few points and I am done. When the markets are moving, you have the benefit of catching a lot more if you want to. I have two main models to trade out of ,my T-1 screen (scalp screen setup)  and T-2 screen. I mainly use tick chart in my trading, but time, volume or range charts can be used just the same.

The second screen, of which only a fraction of the whole screen is shown, is my T-2 screen and is mainly for trending markets. I have other things built into the all the screens, but can only show you a limited amount. (Something is better than nothing). You certainly can scalp a point or two out of this as well and I often do just that. I have become a bit partial these days to the T-2 screen, as I am trying not to take counter trend trades and this screen does help me see that better.

We look at different time frames as well, with the one I most often show, being the smallest tick chart of the three. Two charts are internally designed to work together on the front screen and gives you the zoomed in view for best entries (as shown) and a zoomed out view for the bigger picture. My custom trading indicators are intertwined together inside these two charts which gives the same signals on both screens, creating a synergistic effect.

I have a U-Tube Video of today’s trades, showing the smallest tick charts of the three and yesterdays trades, as well as all the trading signals generated by my indicators. Just following the indicators will generate consistent profits, but we teach how to read and trade the price by itself. The two are a powerful combination. Take a look in the video and see what you think. A trader only needs a couple of these trades to do very well each day.

Enough said about that. The sentiment numbers came out today and it was down 4% to 37% bullish. Very close to a big buy signal, but no cigar. We needed to see that 35% to get confirmation that this move will have legs.

Right now, the market looks good and there is likely more to go. I do see likely initial resistance at 1066 S&P futures, but may likely trade to 1080 after. The daily charts are still pointing down as are the weekly even with today’s move. We would need to finish this move up, then retest somewhere in the middle of this range to see if it is going to hold. So more work to be done by the markets to see if we can turn the corner in the daily charts. In the retesting between now and next week it could be enough to get the market to bit on the last 2 % needed in the sentiment index to give this market a real boost, we shall see?

If you have questions or want more information, drop me a line at vinnie@sniperdaytrading.com

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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.

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Market Sentiment as a Trading Indicator

Thursday, March 18th, 2010

Today is Thursday March 18th and the S&P futures ended the day flat, but the Dow outperforms for a change.

That is exactly what happened in today’s session the Dow was up 45 points, the S&P flat and the NASDAQ +2 points. The new numbers are out today on the Investors Intelligence market survey of newsletter writers and another week of increased sentiment by 1.2% to 46.1%. At the start of this rally it was in the mid 30’s area and a typical trigger point for a rally. The market has made it back up to its January highs and then some. At that time, the market sentiment for this timing tool was hitting close to the mid 50’s. A reading in this area, typically forecasts a market sell off and it did, just after the high in those numbers were posted. The point is, we are at a slightly higher high in price and the indicator is still 9% away from getting into the danger zone.

This indicator works in the opposite direction, as more professional newsletter writers become bullish, this will signal a top. I have been following this barometer or indicator since the mid 1980’s, a long time and I have seen it work what seems like magic over and over again at market extremes.

This is fitting since I have been talking about trading indicators the last few days. This is a different kind of overall market direction indicator for me anyway.

Back to the point at hand, if the market were to increase over the coming weeks this reading will then likely get to that over exuberance level of bullishness. The question is, how high will it go, before all of this happens. The possibility exists that the market sells off a little to let out a little of the mounting optimism. As day traders, we will just read the market for now.

The reason, stock market newsletter writers are really no better by and large than any one else when calling the market. The are overly bullish at market tops and extremely bearish at market bottoms. It is at those times that market goes the other way. Funny how that works.

Don’t be caught up in the emotion like most. It usually pays to think contrary to the conventional wisdom on the street.

I have a few charts below of yesterdays equity chart and today’s trades. I will have more to say tomorrow and will show today’s turning points in a Saturday post. Until then, “Trade on and be safe”.


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Trading Indicators – Part Three

Wednesday, March 17th, 2010

Today is Wednesday and the S&P 500 had some legs to yesterdays run up.

The Dow Jones finally caught up to the other index’s today. Initially it saw resistance, which can be expected, but it came back and moved up 25 points over its January highs, 10,767 and then sold off. This is so very typical.  Now that the Dow reached what the other index’s did a week ago, it is going to be pretty interesting how it reacts from here.

Last weeks sentiment number were up a bit +3% to 45% bullish. That is pretty much what one can expect after coming off an extreme reading like we had a couple of weeks ago and currently is a neutral reading.  Once it reaches an extreme on the bullish side, you can look to lighten the load as more significant selling will come in. The thing is, we at this time don’t know how far it is going to advance.

With oil prices increasing that is sending a message to America that the economy is strengthening, at least from where it was before. I have been hearing things on the street about commodity prices in general. It is very possible that we will see large run ups in commodity prices in the coming months.  That is not usually how it goes for a struggling economy. My hope is that everything keeps moving along and any significant drop is put off until a later time, like next year or after, would be nice. Lets give America a break, not “break them”.

This patch work is only going to be temporary, but I guess I welcome it, for everyone’s sake. If you want to see the real state of the economy, go to my website front page and I have a link on the right side which shows an ongoing tally of the National Debt, but under that is a warning. “Expanded View” – “Click here at your own risk”.  I give the warning for real, its not a joke, because if you look at all the spinning numbers and totals associated with the items just on that one page, you will be filled with many emotions, I will just leave it at that. The bottom line is the real shocker, well, all of it really is, but if you would rather not know, “Don’t look under that Link“.

The last couple of days I have been showing a limited view of one of the trading screens I use during the day. I call this my T-2 Trading Screen. This screen is showing just one chart of two that I have up and is designed to find the turning points of the day, but give you a zoomed in view of it, so a trader is able to zero in on the exact point the balance of power has shifted.

The trading indicators I use help to show just that, as you have seen over the last two days. I will show yet another day today for those who think it is luck, that the turns are shown with such precision, almost magical. When the market is on the move, this is so very typical. When it is not (on the move) and we seem to be range bound, up and down, small or choppy moves with no follow through, all one has to do is just trade out of my T-1 trade screen for scalp trades of 1 point or more at a time. This part is just that simple. The market is moving, trade the T-2 for larger trending moves, with the possibility of pyramiding your position for maximum gain. When it seems range bound, trade out of the T-1 screen and take what the market gives you. If you get it wrong and are trading out of the T-2 screen and the market is not trending, you can still make a nice return trading the turning points, its just that they do not have extended moves to them, which will limit your total point return on that one trade. If you scale out of some of your position, you will always make a profit even if the market comes back against you. At some point, you will see that taking trades out of the other screen may be better and a “All in All out approach” would be best. Either way, it comes out in your favor.

Take another look below at the short video and see for yourself if you think you can place an order in the circled area’s I call turning points. I have placed a number above those turning point area’s which represents the amount of time you have once a turning point area takes hold, to when it moves out of the circle in the desired direction. The circle represents your window of opportunity and the amount of time you have to make a decision. You will see 3, 2, 5, 1, and so on. Again, ask yourself, do you think you can place an order to buy or sell inside of that window and take advantage of the trend. Your exit can come from several different way, with a couple of them shown. The first way could be a price bar color change and the next could be a reverse signal as indicated on the screen. There are a three other ways which are not shown, all similar in results, but non related, still all very visual and easy to interpret.

With all of that said, trading takes practice and your confidence needs to be high. If you give yourself the tools it takes to build that confidence, you can put it together. If your tools are shaky and inconsistent, you really don’t have much.

Just think what you could do in $ returns if you can buy and sell in the circled turning points area as  indicated in the video’s. This will always work because this is a reflection of price action trading. I teach how to get the exact same turning points without the trading indicators and it matches perfectly. If you have questions, email me, I will be happy to answer them.

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Trading Indicators – Part Two

Tuesday, March 16th, 2010

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

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

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

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

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

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

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

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

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

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

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

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

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

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Trading Indicators – Part one

Monday, March 15th, 2010

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

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

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

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

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

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

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

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

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

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

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

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

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Trading with Time, Tick, Volume or Range Charts, which is better!

Monday, February 8th, 2010

Today is Sunday February 7th and as mentioned in yesterday’s post,  I will discuss the differences of time charts vs tick charts and a couple of other kinds of charts most people are not even aware of, volume charts and range charts.

Time charts are what most traders are used to using, although tick charts have gained in popularity in recent years. Day Traders mostly use time charts and I would have to say the 80-20 rule here would apply. I can’t back that up with any stats, but that is what I believe it is.

Recently back in October last year, the (CME) Chicago mercantile Exchange, changed the way that they report tick data. It has caused a lot of confusion for traders as many did not know of the change and just started seeing the bar activity increasing on the chart. Depending on the trading method that they use, it could have caused problems. It could be hard to identify what you are looking for with all the activity on the screen. I am sure it even caused many to go back to time based charts.

I noticed it right away and took action to recreate the data after a little research. What ever the tick count you used to use, you should multiple that by 2.3 times the original is our best estimate to get things back to what it was before the change. I realize that this is old news, but I have more to say on the matter, so hang in there.

The other difference is that when the volume really picks up, like on Friday, where we had around 4 million contracts traded, you have to do some adjusting. The charts will be moving a lot faster than you are used to and that is the main reason I am talking about the subject. In November and December, we were barely hitting 1.5 million contracts per day. Friday was the highest that I have seen in a long time. The reversal probably had something to do with it. So the point is, don’t be afraid to adjust your chart settings to compensate, but do it proportionately to any of the higher time frame charts that are using.

The benefits of using Tick charts still out weigh any negatives. Tick charts give you a much more detailed view of the days price action and allows you to narrow down your entry price much better.

Let me give two other kinds of day trading charts that have gotten much more popular recently. In fact, some think this is  the new thing, giving some the edge and that is the use of Range Charts and Volume charts. Some people do not know a thing about it and that is another reason for the post. I am still researching it for myself, but I looked at the two kinds of charts and I would have to say, I do like them. Volume charts are very similar to tick charts, but the bars are placed by volume, just like the description says.

In my brief analysis of the two, a 10,000 contract chart is equal to about 2100 tick chart, about 5 times greater. That would suggest that the average trade on the S&P eminis is 5 contracts per trade or tick. The contract chart is going to add up all the volume based on total contracts bought and sold and the tick charts are going to count the actual trades that have gone off and when 2100 is reached, it will post a bar. I have noticed slight differences, like more big volume from large institutional traders at certain area’s and less bars posted at reversal tops, suggesting that the small traders are getting sucked in before the reversal. It is not a very large difference, but I can see it. Prices are posted the same as far as that goes.

The last type of data  charts is called, Range Charts and this is what I hear is the next big thing. I did look at these, but I have yet to make a conclusion. The basic idea is, if you put as an input say 6 tick range on the S&P. A bar will post when the range is 6 ticks from high to low and not before. It does not matter how long it takes, but when that condition is met, a bar is posted. The movement is calculated and then plotted. Trade Station is what I use and they have this in their platform. I am not sure about other vendors, but if it interests you, I am sure you can find out.

Now you know the different types of charts that are available. . If their is interest, I can help those who have more questions in this area. I can help give you the corresponding tick chart settings to match the time charts you are using and if you have any other trading questions I would happy to answer them too, so please feel free to ask.

Below is a 500 tick chart of the S&P 500 eminis and a 1 minute chart.

Good Trading, Vince

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