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A Few Day Trading Things to Remember

Sunday, June 12th, 2011

Friday’s market we saw more selling, taking those who established longs out as the market closed at its lows for the session and the past several weeks.

The market sentiment is building now to the negative side aggressively. It may be too early just yet to point to an extreme, but a little more time may be all the market needs. The put/call ratio is suggesting retail investors are building up short positions for they believe will be a significant market drop. Investors intellegence is currently with a bullish reading of 41%, close but not the reading needed to spark a large rally just yet. We should see something closer to 35 or less.

The cash positions held by insititutions is at one of its highest readings in recent memory. At the market low in March 09, and one other time has it been this low, both instances, we saw powerful rallies to follow.

Small investors in general are feeling very bearish towards the market and many are out completely with no interest on returning. This all does make for a good case that we will not see the crash that many are calling for. To this point we have seen a fairly orderly pull back. In looking at the daily and weekly charts of the S&P, a pull back to 1176 would not be out of the question, but when I see the sentiment views shifting so strongly, it may be more than the market is willing to give up.

In Friday’s trading I was able to squeeze in an hour of trading and glad to pick up a few points. I have the turning points identified also pointing out those turns. Some entries are better than others, but have them marked as such. We are now in the new contract month September, on the S&P, esu11.  Everyone should now be on the new contract month as this is the new front month. The volume will be the highest here as the previous contract will expire by this coming Friday. I had a long term position in the previous contract month that got stopped out with a gain of just two points. There was a lot more, but could not whether the pull back, but that is fine.

I don’t really care which way the market moves but just that it does. With that, we can read it and trade it.

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A few points for traders to remember;  *Don’t have an agenda on direction while day trading. If your market opinion on direction is to strong, you will blind yourself from the easy and obvious trades the market is willing to give you.

*Respect the markets and never let you guard down. *Commit to yourself that you will use good trade management decisions and not become greedy so as to loose built up equity. *Commit to yourself that you will not hunt for a trade, but let it come to you, there is less effort expelled and you can use that energy towards trade management.

*Commit to yourself that you will exercise patients while waiting for the trade and if within the trade and your method for that trade that you will give it time to work for you.

*Don’t try and pick tops and or bottoms, it will leave you frustrated and with losses most often and lastly, *commit to you yourself that you will be disiplined in your trading as you read what you see and trade what you know, leaving the rest.

Those are some quick points that could be turned into real points for your bottom line. Give it some thought, you will be glad you did.

Good Trading to all.

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Trader Coaching

Saturday, May 7th, 2011

This post is for Friday’s session where we saw just the opposite of what I thought might happen for the session, with the results in reverse. This is not uncommon, but it can happen and is somewhat predictable based upon the first move. Since the market did not go down first in the night session and follow through higher into the regular session open, I would be looking for just the opposite as stated. The move was strong on the upside into the open and remained that way for a few hours until the reverse happened and a move lower took hold.

If the market had moved lower into the first hour, then the scenario I laid out would have taken hold. Some over night developments could have influence the outcome, I really don’t know, but the key is the first move here. When it is all said and done, I did get that move wrong, but the play after that was just the same but in reverse based upon the first move.

I adjusted my game plane accordingly as I really only play short term swings within the market anyway. It does not matter which way the market moves as long as it moves and Friday’s session was a double play from Thursday’s market with over 2.5 million contracts traded for the session, very nice increase. My trades for the session below.

I hit better than double daily goal for two days in a row and had very little downside. I did trade longer than I usually do, but the increased volume lured me in. I had intentions to stop trading just before 10 a.m. West Coast, but in the New York after noon session, I did get called back.

A little after 10 a.m. I made a nice call in a video training session I was doing for a solid 4 points to a trade to target, but one I did not trade. Still it was nice to be able to see and call out the markets next move with only a 4 tick (1 S&P point) stop.

In all the analysis I was doing, I could not help but see that another move was building for the final low of the session and a completion of the wave down. That is one I came back for and it was for 4 and 5 points in the S&P emini futures catching the exact low withing one tick. There were other trades withing the session, early and later on, but I can hardly trade for the full day. The longer I trade the possibility does exist to make mistakes. That is why it is very important to take breaks along the way, even if it means missing opportunities. When one trade opportunity passes you by, another one comes behind it. No need to stress over it or bring anxiety into the arena, as that will only trip you up on your next trade.

All traders need to keep this in mind, that you are the one who is in control. No one is going to pull the trigger for you except for you. You have total freedom to do as you see fit. With that said, you have the total freedom to mess it up as well. Who is going to control you?  There is no one except you and we all need to remember that.

We need to exercise self control in only taking those trades that meet our criteria and remember not to risk any more than what we have planed on. We all need to have a point for each individual trade, as far as loss, but that limit needs to be extended into the session as well. Who or what is going to stop you from taking your account down farther than you planned on. Again, it is no one else but you.

We are all human, and we to often don’t like to be wrong, but when that time comes, you will hear voices. They may say things like this; “you can come back, you know you can, just get in there and do it, you can’t be wrong again”.  Or it may sound something like this. ” The market has fallen so far so fast, it can’t fall any more than this, hang on, it will come back”.

We have all heard these voices coming from within ourselves, but what are those voices really saying? Are they the voice of reason or is it coming from somewhere else?  Again, we likely know the answer, but are we big enough to slow down and face the facts?  Not many traders are willing and or even able to go this far, as it would mean that they would have to be wrong and that just can’t be.

Well, we had all better get over ourselves early on, because we will be wrong at times and we should not struggle with accepting that fact. Doing anything else will only set us up for future troubles as our ego’s will get in the way.

We all have trading ego’s, that is the plan simple truth. I have a trading ego and it does not like to be wrong. The truth is, I have come to accept the fact that I will be wrong at times and that is OK. It has to be OK, because if it is not, I only will create more troubles for myself down the line. I could end up with a huge loss one day, all because I did not want to be wrong. Is it worth it?  We all have to ask ourselves that question, but the easy and obvious answer is, no it is not.

We as traders have to accept that we will at times be wrong, but lets be wrong small. We don’t have to be wrong big and when we are, it can be devastating to our trading self confidence. Accept the fact now that you at times be wrong.  Be willing to admit it and be OK with that. Don’t make excuses for it and try and explain it away. You can identify what happened, but realize that it always stops with us as traders. We are responcible for our trades and what we do as traders. Lets make ourselves proud and do the right thing, even when it seems hard. You and I can do it, if we continue to act on what we know to be true about the markets and leave the rest behind.

Just a little trader coaching to help us spot what we need to see and do. Open your eyes and see things as the are and then we can set out to change what it is, to what it will be.

Good trading to all, Vince !

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Trading Discipline and Self Control- do you have it?

Saturday, April 16th, 2011

4-15-11;  Friday’s trading, was met with little struggle and little draw down after the entries. I only took three trades all gains and plenty for meeting my daily trading goal. I know I always repeat this, but it bears repeating. The trading indicators are not the trading method. There is a complete trading method built around price structure, a unique form of support and resistance and the use of momentum as it all relates to keeping draw downs small and getting the price to move out in my favor right after entry. The trading indicators I show here do very closely mimic or copy my trading method and I do find it very helpful at times to confirm what I am doing with the trading method.

It is still amazing to me that it all comes together the way it does and all I can say is that I am very thankful that I have come to learn all of this over my long trading career since the early 1980’s. I have seen a lot and have make every mistake know to man as it relates to trading, so I write and speak from experience and all I can say is that this stuff works, straight up. We are the ones at times that don’t work and that is where trading discipline and the controlling of our emotions is vital to our success. I will pick this up down below, so keep reading.

Friday’s trades below, which marks two weeks of daily gains in a row, and all of which is posted here daily for all to see.

Friday’s market was filled with good trading opportunities as we saw mostly upside buying pressure, to close on a positive note. We are likely to see a little more follow through come Monday’s market, but do believe that later in the week, we could see selling pressure come back in and take the market down to very key support at 1290 in the cash S&P. That is going to be a very important area. We may see one more bounce up off that area and that will tell us more of what the next move will be. Going forward just another move, if a bounce then comes back in off the 1290 area and then we break that, to the downside, that is going to be the turning point for a big sell off.

There is a lot of forward projecting here, but we first have to see how it shapes up. Recap; Monday’s early morning move to 1325-26 area, then bigger move back down during the week to 1290 area, then bounce up slightly off that and then we will see. A break of the 1290 area on a closing basis, is going to send the S&P into a sell off of a minimum of 100 S&P points or more in pretty quick fashion, 1290 to 1190 at a minimum with 1155 very reasonable as a destination area for that drop.

If the market holds the 1290 area and try’s to mount a continuation rally, we will just have to wait and see for that. With a massive shift in market sentiment, I am lead to believe that the break is going to take place and we are now only getting into position for a drop but I will update this as we go forward to confirm.  This is all my own opinion and not considered investment advise. Consult your own financial people before you make any trading decisions.

I look at market structure and that pretty much tells me, what is coming next. I have been doing this in small times frames with a great deal of accuracy and it is no different with large time frames. The stock market is fractal in nature and what that means is, that the same types of formations exist at all levels, whether it be in weekly charts, daily charts, hourly charts, minute charts or tick charts. Fractal, the same at all levels. The exact market flow exists at all these levels and is a reflection of the masses that drive them. Since people are basically the same in their make up, emotions of fear, greed, self-control and the lack of it, you can come to expect the same type of market behavior at every level.

Day Trading is achievable for those who want it, but there is a price to pay and that price is dedication, trading discipline and self control. If you don’t have those qualities, you can acquire them. I believe everyone has the ability to change. If you don’t see those qualities in your daily life in general, you won’t all of the sudden be able to muster them up when wanting to trade the markets, you will loose. On the other hand, if you have the dedication to learn a solid trading method and the discipline to stay close to it, followed by the self control to wait when you need to wait and pull the trigger when you are supposed to pull the trigger, you could do it.

Following our dreams is a great thing and I encourage everyone to do that, where ever they are at, but you need to be realistic and have a plan on how you are going to change and do what is expected of you to make any of this a reality.

Every trader starts out with the best intentions, but it is what we actually do that will make the difference, not what we want. You need a solid trading method to start. Then, you can start changing yourself and your attitudes to line up with success.

If you trade from a fear based approach, you won’t make it. You will sabotage yourself and your efforts for what seems like no apparent reason. Getting control of your emotions and removing trading fear to be replaced with confidence will take time. It is not going to happen overnight. If you expect that, you again will be disappointed. That is where dedication comes back in, trading dedication to the trading method that you are learning. Your confidence will grow as you see and experience market reactions being played out again and again. It is like exercising a muscle. The more you train, the bigger and more confident you become.

Give it some thought, if have a good trading method that works, then the only thing holding you back is yourself. Change that and you will change your trading destiny. Good Trading to all. Vince

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Winning Day Traders Mindset

Thursday, March 17th, 2011

3-17-11;  Today we saw the market start the day off with a large gap opening across the board. The Dow was up +161 and the S&P +14 points. There was good trades on both sides of the market through out the day, though after the open the range was a bit narrow.

In today’s trading, I made a few good trades and a few not so good. I took 8 trades in total with 5 profitable and three losses. My first and third trades were less than desirable, especially the third trade of the day. You can see from the screen shot below that according to the trade indicators, which are only a reflection of the method, I wasn’t even close. I can’t tell you what I was thinking, but it was just a “Bad Trade” with the timing way off. The other trades were OK and what I somewhat expected. My trading grade today, between a C+ and B-, probably closer to the C+.

The end result, I came up a little shy of my daily goal for one last reason. I forgot to change my contract size on my last trade and that made the difference. I left it alone with that and still have tomorrow.

So far, with tomorrow, being a positive day, I will have 5 weeks in a row of daily gains (all trades posted) and for that, I would have to give myself a solid “A”.  Today’s trades below.

I will start today with a little continuation of where I left off.  The winning day trader’s mindset. That term just came and jumped out at me right now, as it is the first thing I thought of when seeing what is it that traders need to bring themselves around to profitability, a winning mindset.

I actually don’t really like the term “winning”, because it equates itself with win/loose, and thus a possible gamble. For many, day trading is a form of gambling. I don’t like to even think or say that, but it is true no matter how hard some try and work around that, but let me explain first before you jump to conclusions.

If a trader is unprepared with no solid written trading plan, and no solid mental foundation to execute that plan, that is going to have to fall in the field of gambling. The reason is, you have not spent the time or energy needed to turn the odds in your favor and thus, you are left to chance for your results.

On the other hand, for the trader who does his due diligence and has a written plan that has been tested and has shown itself to be profitable, that is the trader who has the odds tilted in his favor. You can not expect to go up against professional traders and beat them out with little preparation and no trading plan.

I never feel like that, as I know I have the trading odds in my favor and thus it is no gamble, not up for chance overall.

Back to the point.  A winning day trader’s mindset is all about being confident first in your ability to execute the trades and expect the right outcome. If you have uncertainty, or doubt, that is not going to work. You need to see and feel comfortable with what you are doing.

Trading is a very conditional effort. You will only take action when certain events or strong conclusions take place. Before that, you wait and wait, until it is time to strike, just like a “Sniper”.  A trader working in the emini market does not have to hit home runs every trading session. You can hit singles and doubles (one or two points) and come out just fine, you just need to know what you are doing. If you are guessing, you are going to have troubles. No guessing. Get the right thinking working for you as well and practice.

You need to see a picture of the trade coming together and wait for it. Don’t be married to your idea’s of exactly which direction the move will go, because things change and you need to change with it. If you get stubborn and or your ego gets in the way, watch out. It is said, “Pride” comes before the fall, and that is not short, it means you are out of balance with the markets.

You need to approach the trading day, with little overall opinion and need to just interpret what you see. If you see a long trade coming together, get ready to take action, but don’t do it to soon, or to late. How do you do that?  You need to have rules and a written plan to follow that will and or can give you the similar consistent results when you do the same things over and over again.

Without a clear picture, you won’t know what trade or setup is better than another or how much risk this trade has in it verse another. You need to see and know what you are going to trade ahead of time and then wait for it to come you, which could be long or short. Don’t go looking for it like a dear in hunting season. Often, if you let the dear come to you, you are going to spend less energy on the hunt and likely find the dear (trade) effortlessly.

Just try and relax and let the trades come to you and you will see the opportunities and make the trades. I would say, don’t even think about taking any trade is best. Saying to yourself, I will not take a trade today unless it is clear and what I am looking for in a good trade setup. If you can say that and wait, you will be making progress.

By waiting you are making a trade.  Let me say that again, as many traders don’t really think about it that way. By waiting, you are making a trade. You can only do three things, “Long, Short, or Wait”.

You just took the pressure off of yourself to perform. Without that trading pressure, you will do better and again put the odds more favorably on your side. Trading can be simple, but it is rarely easy.

Much more to say and cover. I will likely continue with this in my next post. Good Trading to all.

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Live Day Trading, Are You Ready?

Wednesday, March 16th, 2011

3-16-11;  Before I get started, I will post my trades here for today in a U-tube video. I traded a lot longer than I usually do for any one session, but the movement and volume warranted it today. I was trading only 2-3 contract mostly and managed to rack up 1K of gains for the session. In the video, I did not really get through the full day but the last trade you see in it, was the last trade of the day. I tried to squeeze it all in but that is how it ended up.

Overall, I had a very good day for trading mostly small size. A bunch of scalp trades in during the early morning open and a few more during the N.Y. lunch period, followed up with a nice 10 point trade to target that I clearly seen and covered very close to the bottom. In my training video’s for my group, I show all of how and why I traded to this target and it is clear to see. So let me post my trades in the video below as a screen shot is not going to contain the whole day of trading.

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I promised yesterday that I would continue with where I left off in my blog from yesterday and I want make good on that now. I left off with many traders trying to become day traders getting into this thinking that they don’t need help or advise, as they know better. It really could be that they don’t want to spend the money, with limited funds I could understand.

Many trading programs are several thousand dollars and you are not sure if it is really going to help you. All very legitimate concerns. But the cost of not doing anything and going on your own, can become just as costly and many times much more so. As things don’t turn out the way you thought they would, you suddenly find yourself wondering if you made a mistake and should have gotten some form of training.

The answer is not in the training, but more so being honest with yourself in accessing the truth about if you are ready to trade the live markets and compete with professionals across the globe. As I mentioned yesterday, we don’t have anyone to grade our performance and we are all to quick to grade ourselves and give ourselves a passing grade, so we could move on to the live trading. If you can not make a consistent profit in a simulator, do you believe you will do better in a live account. It is really the same, but the mental side of trading is something that gets overlooked.

The first key is, knowing how to trade and having a clearly defined trading strategy that works for you. I would say, that not all trading methods are the same for every individual, because trading is an individual venture. You need to tailor that method to your unique personality and take advantage of all that it has to offer, but as it relates to you, the trader.

After you know what to do and how to do it, you need to work on you, as I mentioned in yesterdays blog post. If you have not read it, go back and read it to get a perspective on where I am coming from in today’s post.

Working on your trading style, is important, but overlooking the mental side of trading is all to often overlooked and the reason why traders don’t perform to their expectations. You need both. If you try and trade without either one, you are a disaster waiting to happen. I don’t say that to be discouraging, but truthful.

Every trader needs to know why they are going long or short and where their stop is in advance of the order. If you can live with that, that is good. If you have doubts, you should not place the trade. Wait for something you understand and be patient. When you really believe that the market is  going to move out and come back very little if any, that is when you need to enter and not before. Go back over the session and pretend, if you could within reason get in here and or there, where would you do that and try and find a reason to support your conclusion. If and when you find one, it could turn into a trading method that you can trade.

If you don’t find anything that is consistent in nature, then maybe you need to look to the outside. I say that, as a possible solution to those who are seeking. If you have some market experience and are looking to bring it all together in a way that you can understand and that has rules for entry and supporting reasons for those entries, then you can duplicate those enteries again and again as you make your way to becoming a profitable day trader.

I have the potential to provide that to those who are looking. For those who have that, that is great. You then need to look within yourself and learn what it is that you do and why you do it, when conditions warrant you to react to your trading method. If you find yourself not following through with what you know to be true, you have a problem and need to address it before you risk any more money in the markets. You need to get tough with yourself and take control. Don’t become a victim to your own lack of follow through. This part of trading is so very deep and will take a lot more than one blog post to cover. It could cover weeks of writings for some and it may only be a little jarring for others.

So, you see, successful trading is a great goal to strive for, but you need to be honest with yourself. The moment you do that, is the moment you will give yourself the greatest chance of reaching the trading and life goals of your dreams.

I wish you all the very best !

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Day Trading from a Position of Strength

Thursday, February 17th, 2011

2-17-11;

Let me post my results for today before I get going into some important insight for my readers. I took 7 trades with one flat one loss for only 2 ticks and 5 gains for a nice day. I am grading my performance now, and would have to give today an (A-).

Today we saw another up day in the market as we seem to defying gravity with each new high in the market. Lets all just be thankful that we are seeing an up market and not  pounding selling pressure. Take it a day at a time as we don’t have any control over what the market or economy does, but only what we do within the market and the results of our own personal economy.

We all need to take responsibility for our own world. If we are not where we want to be, we have choices. Some of them could be, “keep doing what we are doing”, as another could be, “wanting things to be different, but not doing anything about it” and still another choice to make a decision to take what ever action is necessary to make progress towards our goals. That can be with anything in life that we may not be satisfied with, “Choices”.  We all have the ability to make those.

The question comes down to which ones make the most sense for us and our situation. Not everyone is born to be a day trader. Some may find it best to just invest in stocks for 1-6 month stretches and leave it at that, no everyday decisions to make.  Others may find that they really do not have the risk capital to invest or day trade for that matter. Out of desperation, traders may be reaching for the “Gold”, even though they are not yet ready to receive it. Risk capital a key.

I do think unless you are ready to receive the returns that we traders aspire, we will not see it. What do I mean by “ready for it”?  Exactly that, ready in all ways.  If you are trading from a position of weakness, it will be very difficult to overcome your personal shortfalls. Not having enough of a capital base behind you can pose a bigger problem than most would want to admit. Traders are to often thinking about the money that they don’t have and that right their could be enough to set you up, so you will be sure not to receive it.

So how do we get the right mind set and become ready? There is a long answer to that question but I could touch on a couple of points.

First, you need to not need the money in your trading account. No one likes to think that they are going to loose it, but if the money means to much for you to take a loss, you will always second guess yourself and be trading from a position of weakness. If you set for yourself a daily loss limit, a point where you will not allow your  equity to drop below in any one session, you will be better able to relax as you already know the worst case scenario for that day.

Traders who do not have this set in there minds ahead of time, will get the feeling that it is all on the line as they try and come back from losses only to keep making it worst and worst, turning into a blow out day. That is very hard on your confidence and the reason why you can never let that happen. You will never be a professional if you don’t have a loss limit. All the big trading firms have them set for their day trading division and a trader who goes past that point, will be met with disciplinary action. Think about that one a bit. You need that in your trading plan. No trading blow out days.

So, not living and dieing on your trading funds is first. Next, get your personal life in order. You might wonder what that has to do with trading?  Well, it has a lot to do with it. If your personal life is a mess, you will be sure that it will get expressed onto the trading screen, and that means looses. You will soon find yourself in what seems like a fight for your life, but your enemies are getting the best of you as every attempt to recover, just gets met with more looses, digging you deeper and deeper. At this point you may find yourself in a bout of “Revenge Trading”.  This is when you find yourself  taking out all your frustrations for all the other area’s in your life that just seem to be falling apart, or struggling at a minimum, revenge trading, don’t do it.

Next, get – be – and have, as positive an outlook on life as you can. Instead of seeing something as broken, view it as a way to rebuild it the way your want and make it grand. I know many of you have heard and seen those that have money do not seem to struggle for it, as it just seems to come to them. Why is that so?  It has a lot to do with there outlook on life and positive mental attitude. Don’t see the glass as half empty, but half full.

Money seems to attract money and for good cause. If we are doing the right things in life and have the right perspectives on things, and for me, being spiritually grounded is to be included, we will have a lot easier time reaching our goals and living our dreams.

As I started out, we all need to be ready in all area’s as we are going up against professionals. I just heard that JPMorgan’s trading division had only 8 loosing days last year, down from 42 the previous year and they have not had a loosing day in the last three quarters. Wow, that is impressive. How is that possible. A solid trading method, and the discipline to follow and trade it. They are cleaning up on all the traders who want to be traders. Are we going to let them pick us off at will. If we are serious about trading and have the risk capital to compete, we should do it from a position of trading strength, not weakness as I started out. Get mentally fit, exercise for physical strength, look above for spiritual strength if it applies, and have a solid trading plan or method. I will try and continue from here tomorrow, lots more I can say to build you all up, so stay tuned.

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Key points for Successful Day Trading

Monday, February 7th, 2011

2-7-11;

Day trading is a very sought after profession. Many try, but few last. Why is that and what can be done for those who really want to overcome the barriers? There is no substitute for experience and being exposed to the daily market fluctuations that take place every day. Short cuts, to help speed up the process can be to find a sound trading method to build upon. This can cut down some of the learning curve for those who pursue this, but it is not the final answer. The individual trader is where the responsibility lies for success.

Every traders comes with different baggage from his past and many of those can be very negative and hidden deep within the subconscious. It is essential to know who you are and what limitations you may have from your past. Uncovering some of this first, will go a long way to overcoming your personal trading barriers.

Every trader needs to know what kind of trader they really are. If you try and trade a style that is not part of your stronger inner traits, you are not in sync with yourself and the markets. So, take time to examine that.

Me personally, I don’t like staying in a trade very long and look to exit on strength rather than on weakness. Knowing that ahead of time even as a scalp trader, I am lining up with my strength’s and the results are improved.

Being successful once you have a good idea of what to do and what you are looking for, is money management. Without this, you are going to suffer. I always try and measure how much is in the move, or where it is naturally and likely to move to. Then I try and underestimate that a bit to be sure I will get there.

The first part of the equation happens before you get into the trade, that would be trade selection. Knowing which trades to take and which ones to pass on is very important. This part is called discretionary trading and when combined with rules and principals to follow, is the best kind of trading with the best results. This would separate what is called a trading system from a trading method. Discretionary trading is putting everything you know about the market and its character to your advantage with a buy or sell signal.

Trading systems are not discriminatory, as they take signals from a predefined set of conditions automatically, putting you in the trade as those conditions are met. The problem is, if and when you hit a draw down, you are either going to keep trading it or stop. When you stop, that is the likely time that it will turn around and start to recover from its earlier losses, but without you. As you re-enter, thinking it is back on track, it then again starts to suffer draw downs and you are again underwater. This is frustrating for many traders I am sure. I never traded that way with a mechanical system but I do know the scenario’s that it plays out.

A trading method, is going to have discretionary trades to take and pass on. You need to interpret the current market conditions and see if they are favorable per your trading method conditions. If parts are missing, you are better off to pass. If the ingredients are all their, proceed and do not hesitate. This is the biggest difference between the two approaches.

To trade a method successfully, you really need to get comfortable with it and that is going to take time. To many traders rush into the trading pit and want to see what they can do. That is fine, but when the time is right. If you are going to go college for a degree, they don’t hand one out in 3 months and say thanks for coming. It is a long term venture of commitment, passion and desire what will take them to their goals. Becoming any professional is no minor operation, just the same as becoming a successful trader. It takes time to know how price reacts to different market conditions. You can jump start that, but their is no substitute for this. Those traders that have a years mindset, as a opposed to a weeks and months mindset, know that it is the truly committed who will persevere and overcome.

The other thing is having realistic weekly and monthly goals. As daytraders we strive to be profitable every day, but that is not always going to happen for sure. Shooting for a weekly and monthly profitability goal is more realistic. If you apply to much preasure on yourself in any one day that you are off, you will force trades and make mistakes trying to come back. If you have a daily loss limit, you always know ahead of time what is the worst thing that is going to happen this day. You don’t have to wait until your losses mount either, as if you are off, you can always stop before that threshold is reached. Having a weekly and monthly goal helps to release some of that market performance pressure. You always have tomorrow when market conditions are likely more favorable.

To recap; A trading method is better than a trading system, but it can be harder and take longer to master. The end results are improved performance and you maintaining control. Money management, a key to success. Without it, you will not make money. Take what the market gives easily and freely, and exit what becomes a struggle. Protecting profits and moving up your stops are a key part of that management.

Every trade starts out as a scalp for me, until the market proves itself. Scaling out is another key part of that trade management. Taking a small piece of that easy trade can allow you to stick around for the rest of the trade to develop into more without the fear of quickly giving it all back and the trade becoming a looser. All apart of trade and money management.

All of this comes with time and experience as you follow the markets. A few more things,  price always comes first. Be a student of “price” and see how indicators reflect that, not the other way around. Lastly, do not forget how time plays a very important role in all of this. “Time and Price go together”.

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No trading on Friday and today. There is something wrong with the price data at Trade Station. The tick charts are way off, posting like 5 times as many bars as normal. I don’t want to try and trade what I don’t understand, not worth it. It started from the afternoon session on Friday and has continued into today. Lets hope they fix it soon. Any comments from traders on this welcomed.

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Market Needs More Time to Get Into Position

Monday, November 15th, 2010

Today is Monday November 15th and we saw the market trying to stabilize itself with modest gains in the Dow +9 points and flat on the S&P.

Today we saw basically a flat market as a late sell off took the wind out of the markets sails. I can pretty much see where this market is now likely to go and when it is likely to move out on the daily charts. I can share the numbers with you but I can’t really show you or give you my reasoning behind it as it has to do with revealing part of my trade method.

The numbers and even more importantly the time is essential as we will likely see more of the same slow pull back over the next week or so. I know there are many who are now expecting a continuation of the move and it is likely to come, but their is more time that needs to pass. The chart needs to get into a better position by moving over and or moving down. The likely-hood is that we will see both. This is exactly what I was talking about last week when I was talking about trading as it relates to “time, space, and energy”.

There is support in this market and it is just above 11,000 on the Dow and 1175/80 in the S&P. That would give 15 to 20 S&P points more to go.  This is and will break rank in the accent of the uptrend and many will think that the move will be over, but I don’t think so. We don’t have to go all the way down to the numbers above, because if time takes us sideways, it may end up being a higher number once we turn the corner. Anything can happen and we will know pretty soon, but lets just give this market a little more trading time and see what it has in store for us.

In the intra day market, I am finding that paying attention to where the gap openings are and where they are closed is important. In addition, remembering where the past gaps are and which ones are still open. That can come into play and it is important to write it down in your journal so a quick reference can be noted.

Their is a balance that one needs when looking and playing gaps. Traders need to let the market tell them if a gap is going to get filled or not. Often times it does not come when we think it will or should. That is when you don’t want to argue with the market.

I remember looking back at the data for the open and saw that we had a reversal before the gap was closed and the market did move significantly higher. The gap did get filled but very late in the session. Understanding how and when the gaps will be closed is a function of understanding how to read the price. You will likely need to look at more than one time frame and I suggest to have at least one time chart up for determining where the gap for the day is, by using the symbol @es.d for the S&P emini in Trade Station.  That symbol takes the Globex night trading out of the data and shows you where the market opens minus that night session. You can see exactly where everything is that way. I don’t really trade off of minute charts but I like to have at least one up in the background, to see what others may be looking at and use this one as a dual purpose for determining the opening gap. Its easy to loose track of this without it and is why I point out how this may help.

I did not post over the weekend as I had company visiting for several days and still do. I do have my trades for Fridays market as they are next to today’s trades. Today’s trading started with my timing being off. I was distracted as company was still here and it totally through me off. I was forcing trades and trying to make something happen when I should not have. That is the long and short of it. I wanted to pick up a few points quickly but I was not willing to wait for the right trade time. That is one thing that will never change in what ever time frame you trade in. If I did not have, or was not willing to allocate the enough time to trade properly, then I should have not traded today all-together.

I look to have better timing in tomorrows session as making mistakes as the ones I have shown are a result of human weakness, my weakness and not my method. That part is comforting in that I always know that over future sessions, if I do the right thing more often than not, I will pick up the points I need for the session before I hit my daily stop loss point, -4 S&P points.  In the above last two sessions, you can see their are other potential trades marked as per my indicator and that just shows when and where a possible trade could have been taken. I don’t need much or many points to hit a nice daily trading goal. Some of the above trading possibilities are better than others but just have a few of them marked. Just remember, indicators are only a reflection of what the price is doing and that is what we trade.

Much success to my readers,

Vince

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Steps For Establishing your Trading Goals

Sunday, July 4th, 2010

This post is for Friday’s market as the Index’s pulled off Thursdays intra-day low of 1006.

The market had a negative bias to it on Friday after the open which lasted for several hours. We started to flatten out around mid session and then made a run for it. The market did a pretty good job, but just before the close, no one wanted to hold over the long weekend and things sold off quickly. Modest losses for the Dow and NASDAQ as well.

Where do we go from here? Well, everything is down except for the monthly charts right now. It is hard to say, but I would like this market to hold up for while before any major cracks take place, but the market is not going to listen to me. As the days go by, we will afford more of a move down, so as for the Dow to get to the 9500 area or so. The index’s are not exactly in sync and some backing and filling may have to be done to get things lined up with each other. The number S&P 1006 was significant last week, but as time passes, if will allow for the market to come down a little more.  We had a 20 S&P point advance off of the 1006 number but I do see that there could be more room for things to settle in here. It is all pretty close. There is a chance that we could hold on to the lows set on Thursday and by Wednesday move out higher. I will just have to see how things shape up on Tuesday first.

There is a lot of room for the market to drop if it wants to, but if we can contain any new selling to afford the Dow to get to 9500 + or -, we could see a good move off of that number.  The new sentiment numbers will come out on Wednesday morning and there could be new developments there. We were holding at 41% bullish and a reading of 35% or less should trigger a counter move up.  Since the markets will be closed on Monday, that gives us only one day to see what it will do. A 6% drop is kind of a lot to drop in one week, but I have seen it happen plenty of times before.

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Friday’s trading was bit tough for me. It all turned out OK in the end, but I came up to my daily loss limit (4 S&P points) and could have went slightly over it if my last trade did not work out. My judgment was off and it caused me to struggle. I saw something, a big move coming and was acting ahead of the move so as not to miss it. I had built a position with three entries just before my last trade and it did not work out. Only a small loss around 4-5 ticks but I really needed to wait on that move for a better entry. The move was just brewing in the hopper, waiting to jump out, but I needed more patients. The last trade made up for all the mistakes and I hit better than my daily goal. I have similar notes on my screen below if you click on it, once and then again to blow it up if you care to see.  Video of the last trade in U-Tube video gallery posted on Friday too.

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Steps for establishing your goals:

1) Start by doing what you know works, then experiment with new applications. When in doubt, try to do more of what your already doing that is already delivering the results you want.

2) Build the right back up scenario’s into your plan. What might go wrong? Anticipate the unexpected at every level of achievement and don’t let concern about your own status as others perceive it, keep you from making the right choices in the right situations.

3) Get feedback from the right people on the pros and cons of your trading plan. People who give constructive feedback want to see you grow and people who offer only negative thoughts want to see you stay the same. Don’t waste your time talking to people who want to make you feel bad about yourself or question your dream altogether.

4) Keep your eye on the goal, but don’t get tunnel vision as it relates to other obligations. You have to balance your goals as it relates to the big picture. Do something each day that takes you closer to reaching your trading goals and is a reminder to yourself that you are going forward and making progress. The key is balance all other things of importance so other things do not suffer at the expense of reaching your goal.

5) Keep learning and growing and remember no one does it all alone. If the problems down the road look too large to you while you are setting up your plan, remember, you will be a big person by the time you need to solve them. To often we hold off on growth because we worry, “How would I handle all these problems”. We assume that we will never be smarter than we are right now and that we will never run into anyone else who offers skills and experiences that complement your own.

If you are a struggling trader and want to bounce an idea or two off of me, feel free to send me an email and I will give you my constructive thoughts on it. Many times traders do not have anyone to talk to about what they are trying to accomplish and it can be frustrating, because they may be going in the wrong direction. I won’t be trying to get you signed up with my trading course unless you want to, but if you ask a legitimate trading question or questions, I will give you a professional answer, no more. It is up to you to ask. If you struggle with concentration and focus, ask me for a free copy of my E-Book on “The Power of Concentration”.  Again, no strings attached and I will not be hounding you with this or that. Just ask for it and its yours, that is it, and again, if you have questions, I will be happy to answer. So, think it through and send me any email. We are half way through the year, make the second half count in reaching your trading goals.

Good Trading,

Vince

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