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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 !

Tags: live markets, live trading, mental side of trading, trading strategy, trading style
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Addressing the Mental Side of Trading

Saturday, February 26th, 2011

2-25-11;

Friday’s market we saw a continuation move back up from last weeks sell off. The moves on Friday were consistent with its previous price movements as the S&P and Dow came back up off Thursdays low. The Dow Jones Index is under-performing the S&P 500 Index which could be saying a few things. If the Dow were to come back up to its normal retracement level, we would be looking at another 90 points or so on that index. If that does happen, the S&P is very likely to follow, since it is already outperforming. That could bring in another nice move for the S&P futures for those looking for a nice measured move.

Fridays rally was expected, as the premarket gave us a clue that the move was on. Looking for long trades would have been a good strategy for at least the early part of the day. The afternoon session looked like it just died at the top of the range. Maybe the market was saying, “I need more data to go further and or more info to sell off”, so it did nothing.

That’s just a guess on that, but it sure did slow for the last 2.5 hours. It was a good thing I was done early, as I really don’t like trading in a slow market. I have been trying to start earlier over the last few weeks and it has made it easier for me to get a few points quickly and move on.

I have been grading my performance lately with a grade, just like back in the day at school, which was a long time ago, 30 years ago for the last grade I received. So, I thought it would be a good idea to grade myself as I am my own trading coach. Writing in my blog is a way for me to post my results, give market commentary, and give trading lessons which are often related to the mental side of trading.

Once a trader know the mechanic’s of what to do on the screen, he just needs to wait for those conditions to be met and execute as ordered, but the mental side of trading holds so many traders back from reach there full potential.

We can mess up a trade faster than a blink of an eye, by listening to voices that we have no business listening to. The voice in your head that says, “hey, you are going to miss this big move, you better get it now before its to late”, or “I better wait, just to make sure it is really going to go up”, or a hundred other scenario’s that could be heard.

Here’s a few more; “I need to get those losses back, I can’t stand losing two in a row”, or how about this one, “I know this is going to go higher, I just need to wait it out”.

Like I mentioned, we have a hundred of them just for starters. These are the voices you need to control. If you are not grounded in a solid trading model, you will get tossed around like cannon fodder.

So how do we get the right messages into our heads while we are trading. Its just like anything else, practice and focus with purpose, on those things that will keep you on the straight and narrow. If you just leave the mental side of trading up for chance, I can assure you, you will not like your results. Address the mental side of trading and see your trading results improve.

This again is the unseen dangers we all face, but most traders are not even aware of it until it starts biting you. When you feel the pain, you would think we would change, but almost every trader has to go through some form of this to learn. The pain all to often only makes the matter all the worst as you start to feel the uptick in your emotions and it all just gets magnified for the worst. These are where blow out days are given birth.

We all know about blow out days, although we never like to talk about it. It is in talking about it that you can get and or feel a release from its secretive dangers. It is in uncovering our weaknesses that we are able to find our strengths and from that position we can start to build our empire. This is facing your biggest trading fears and knowing that you will meet it, deal with it and overcome it. It’s not by brute force or will power either. There are many who have tried this and only find themselves further down the road they don’t want to be.

This is the road where many begin to give up. It does not have to been that way. Face your trading fears, and take action. There are things you can do to slow it all down and regroup, but it takes insight and often times support. There is no shame in needing and asking for support when you are dealing with something as grand as “trading for a living” in the futures market.

We are not born knowing how to trade and left to our own instincts, we will invariably do the wrong thing at the wrong time. That is why the professionals prey off of the public the way that they do. For the profession trader, we can become there breakfast if we let them. For to many, it is breakfast, lunch and dinner and that has to stop. So where or what to d0?

If you have three loosing days in a row, stop trading for at least a week with live data. Go to Sim trading and build back your confidence. When you have 5 days of profits in a row, you are allowed to start trading live again.

Set a daily loss limit, for me, it is 4 S&P of the normal contract size I trade. Some may make that three points, but that depends on your ability to keep your draw downs and losses small. My average trading loss is 4 ticks or less in the S&P Emini, with an occasional 5-6 ticks. Find a way to get better entries and you won’t be taking big draw downs.

If you have no profit, or are just flat for two weeks, go back to the Sim account and trade there until you can get 5 days in a row of gains. If that is too stiff, you can elect to make it 4 out of 5 winning days. But this is important. You protect your account until you are performing, no performance, no live trading. If you want to get back in the game, get the ball of consistency and confidence up in your method before risking your capital. Your trading capital is your life blood, loose it and you die.

Set for your self a daily profit range to where you will stop. For me, with the current trading environment it is 2-4 points with many days being about 3 right now. Reach that point and stop. Go to Sim trading if you need screen time or close it up and go do something else.

On days when the market rhythm is really moving, and the swings are happening, ride out some of those trades for more gains. You will have about 2-3 days per month when you can take advantage of the trading environment and rack up 6-10 points for the session but don’t look for those days, they will just be there for the taking. The market will let you know when those days are. These days will make up for days you took daily stop outs and you could still be averaging your daily trading goal at the end of the month.

These are specific steps traders can do to take control of their trading, but you need mental focus, clarity, determination and the right mindset and attitude to go along with all of this.

Trading for a living can be simple but it is never easy. If you need help, email me with questions. You don’t have to be a member for me to help a bit where I can. I like to see traders break the barriers that hold them back and overcome, which is often coming from ourselves.

A long post today, but for those who read this far, you are ones who could have the focus and drive to make your day trading dreams a reality. The very best to you all, Vince. Fridays trades below.

Tags: daily stop out, daily trading goal, day trading dreams, draw downs, face your trading fears, mental side of trading, professional trader, Sim account, trading for a living
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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.

Tags: day trading division, day trading from strength, revenge trading, risk capital, trading blow out day, trading from weakness
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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.

Tags: discretionary trading, money management, trade management, trade selection, trading method, trading system
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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

Tags: daily trading goal, Globex, night trading, opening gap, trading time
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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

Tags: daily loss limit, trading goals, trading plan
Posted in Trader Coaching | 1 Comment »

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: Scalp Trading, stock trading, tick charts, time frame charts, trend trading
Posted in Trader Coaching, Trading Lesson | 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: repeating patterns, reversing bad trading habits, trader timing
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Trader Coaching – Day Trading the “Easy & Obvious”

Tuesday, April 13th, 2010

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

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

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

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

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

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

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

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

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

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

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

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

Tags: fear, hitting your daily goal, loosing control while trading, trading easy & obvious
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Improving Day Trading Performance

Thursday, April 1st, 2010

Today is Thursday April 1st, and the market moved out of the consolidation zone today as mentioned in Tuesdays post.

We moved out side the inside range in the pre-market and continued that on the open for a couple of hours, only later to fall back inside the trading range. We had a gap on the major index’s as they jumped instantly up to the futures. Often times, we see the gap being filled and it happened today as well, but took a little while to come together. Around 10:45 am West Coast or 1:45 pm East Coast, the market came alive, with a move down for several points bringing the gap to a close. We did see a nice rally at the end of the day bringing things back up to close positive on the session. The Dow was up 70 points + the S&P 7 points and the NASDAQ up only 4 points, clearly the laggard.

I have a video of the market action below. It is taken in my T-2 Trade Screen and shows the major turning points and add on trades for the day. I did the video before the market had closed and was just getting the last long signal which did end up much higher if you road it out. I took a few small losses inside the slow time of the day, kind of a bummer, but I knew what I was getting into. If I did not see or get what I was looking for, I got out. I could have waited for the afternoon session and would have made it easier for me, but it was still OK. I had a one point S&P loss, but did it on three trades. Then I came back with a three point gain on 1 additional contract.

I really liked the last trade. I thought it was coming earlier, but just as the market is about to make a big move, it usually gets a little tricky. That is a good point to remember because I see it happen all the time. It does not want to give you easy access to the big moves and will do what it has to in order to make you miss it. That is just how it is all to often. But if you know that ahead of time, you can keep an open mind as to what its intentions really are and be ready to take the appropriate action.

Today I am going to offer a way for traders to help there trading performance. That is by giving you something to first think about. Traders, especially scalp traders, need to have clear pictures of the trade setups in there minds. You need to know what makes up a good trade from a bad trade. What are the likely results of this setup vs another and which one is likely to outperform. The trade that you take will have an impact on your trading results. So, trade selection is going to be a very important part of being successful. How does a trader know which trade is better than others and what makes up a good trade? That is the 64,000 dollars question as it has been called. I won’t go into the details of that here, but will recommend that every trader clearly define what he is looking for and then to wait for just that. If you do, you will be rewarded.

One way to better help you train yourself is to get a clear picture of what you are looking for and try to identify it, again and again. I would say the more familiar you get with what a winning trade looks like, the easier it is going to be for you to identify it, when you are scalp trading the market. Seems simple enough, but that is not what usually happens.

Example: Fighter Pilots when engaged in battle do not have to think very much about what to do. It has become instinct for them to react as conditions change. A traders inability to change direction quickly enough will hold them back, because of fear and uncertainty. Those emotions only exist because the trader has not exposed himself to enough of those same conditions over time. If he has not seen that read before, how is he supposed to know how to handle the new developments. The result, under-performance. A fighter pilot has spend hundreds and hundreds, of hours in a simulator before he is taken up in the air for a real flight. Should learning traders to the same, that is for you to decide. If you have the risk capital, real money trading is the best. If you have a limited amount of resources, simulator trading is best until you have been exposed to the elements.

The same is true for a boxer. He does not have to think about how he is going to react when he is in ring. He knows, because of all the training, sparring and conditioning he has done to help get himself ready to fight. A professional boxer spends hundreds of hours in these various preparations to help him not have to waist time and think about what to do. He just knows. How is it that he just knows? Through the training.

Know we come to scalpers who day trade the market looking for price discrepancies where they can position themselves for profit. We need to have the same dedication to the cause. By first knowing what you are supposed to look for and how to position yourself so your risk is very limited and being able to do this hundreds of times, even thousands. That is a tall order, but ask yourself, how many successful day traders are able to take money out of the market virtually every day? Your answer, not many. It is the losses of the other 90% of traders that make up the profit for the 10% who can. How are you going to get on the side of the 10%. It is not easy, but is possible.

There are many factors, but getting to know for sure what you need to be looking for is the start and how to position yourself to take advantage of that is the key. I will continue with this line of reasoning in tomorrows post.

Tags: inside trading range, scalp traders, trading performance
Posted in Trader Coaching | No Comments »