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Over Trading, an overlooked issue

Friday, July 15th, 2011

7-15-11; The last few sessions the market has been marking time, as it tries to decide what its next move will be. It has pulled back from recent market highs into the middle of its trading range as recent events unfold. The debt ceiling is a big one and it is not going away as well as so many other issues. Gold is coming back as all the uncertainty is making the metal shine as it moves to all-time highs.

There is a lot one could take in, but one thing remains as day traders, the markets will continue to move and with that movement are opportunities.  Below I will post my trades for the last two sessions as I did not post yesterday. The posting will continued below.

Friday’s Trades / Just one!

 Thursday’s Trades

As you can see from these and the hundreds of other daily trade postings that there is something to this. The trade indicators are only a reflection of the trading method and not the other way around. You don’t have to get them all right to come out on top for the day. You only need a few trades and often only one to pick up good daily gains for the session. Two times this week I picked up much more than the minimum daily goal I set for myself, which is between 2-4 S&P points. Those days can make up for previous losses and or days where one did not trade. This week, I did not trade on Monday and Tuesday’s session make up nicely for that. Wednesday’s session I did a little better on my timing and also picked up much more than the minimum, so Thursday and Friday I just coasted. I would rather take the easy road than to slug it out trading the whole session. If you can get ahold of your emotions and “at times” be satisfied with a modest gain, you will give yourself a greater sense of self control and that can help your confidence a lot.

Day Trading is about picking up consistent gains. You don’t have to hit home runs to make this work for you. Being patient, using a few of the tools for confirmation to pick up a few points each session is the way to go. There will be days you have losses, but they should be small, no more than 4 S&P points for any one session. If you don’t have a point that you stop, you can find yourself down 10 points and that will hurt your confidence and make matters only worst.

Being able to put the brakes on during a bad trading session is another sign of good trading discipline and though a losing session, you can make that work for you in the fact that you stopped trading when you should have.

Overtrading can be a big problem for many traders. You have to be able to follow through on making the tough decisions and saying “no”, “stop” or “wait”,can make a world of difference on how things turn out.  Overtrading can be a reflection of what is going on inside, but all without your knowledge. Examine yourself and see if you are overtrading. You can be better served by waiting for the better trades most of the time.

Many traders beat themselves at this, knowing and feeling that they can overcome, only to fall victim to the lack of will power to maintain control. You have to exercise your mind just like you do your body for other tasks. The battle is in the mind, so why not exercise the mind as we should?  There are lots of reasons, none that we often like to consider. Let’s try laziness for starters. O’ we will work hard on other areas, but when it comes to facing the difficult part which might be more mentally challenging than we are willing to commit to, be bail and find many reasons why we don’t.

These are just some of the deciding moments that will make a great trader or not. I know, it is hard to change parts of ourselves that get comfortable in bad habits. It is those bad habits in various areas’ that lend to a weak mind and thus a lack of will power to follow through with what we know we should while trading.

Are you starting to see how things can be different if you really want them to be? Those who need or want a fresh start and get some renewed insight into finding the mental strength to follow through may want to download the free E-Book on my website. Don’t worry, I won’t be trying to sell you anything after that point and up till now have not contacted anyone who has signed up for the book in any way.

I always meant to write a newsletter but never have as so many of my posting are of newsletter quality, at least I think so?  There have been a few hundred downloads for the book and that is great. I am sure it has helped many. My intentions were not to use it to contact traders to sign up for Sniper Day Trading, but to be a help in their mental trading challenges. For those that it may have helped, I am always open to hear what you think.

For those who have questions about your own trading and want some objective advice, you can contact me for that too. Again, I keep it to what you are asking about and don’t use those times for any other reason. I love to get positive reports back and have been getting a lot of them from members, but occasionally I do get some good feedback from a few who I have helped who are not members.

If my blog postings have been a help, don’t hesitate to let me know. That is what drives me to keep them interesting. I admit, occasionally I don’t put in as much as I could, but a fresh batch of encouragement will always help. OK, that’s it for today. I wish all my readers the very best.  Vince

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Exercising Self Control while Trading

Friday, July 16th, 2010

Today is Friday, July 16th and we saw the first signs of that expected temporary pullback.

I mentioned on Tuesday that we could very well pull back for a few days before we see the expected bull surprise move to the upside. As we move down, I see us getting to 1050 minimum and possibly 1040 on the S&P. I can see possible weakness on Monday as a follow through maybe after an initial bounce up, but we came this far, so getting to 1050 minimum and maybe 1040 is very likely. As the market comes down, it is only going to add to the bearish stand that the market has set in motion. This looks like the perfect storm brewing. The extra time the market is taking, is a gift for those who want to prepare for something bigger. Well, that is how I see it all happening. If you disagree, that is OK with me.

I will point out the numbers I will be watching to confirm the move is underway. When I see a break of 1090 S&P futures, that should do it. The next important number to take out is just above that at 1096. When we see those two numbers broken to the upside, you are going to see the mother of short squeezes and general buying. I don’t know what the trigger will be but, I really believe it is going to take out that last high like no body’s business. Again, this is my own opinion on the matter and is not investment advise. I am just one guy with an opinion of where the market is going to go over the next several weeks. This is a very unpopular belief right now and I know that.

Last year I could see the market making this advance to where we are today and thought then, that this would be where the next big drop would come in at. That was then, March and April of 2009. Now that we have pushed the upper limits of this rally retracement, 1550 to 666 and back to upper middle range 1060 currently, but things have changed. If to many people take a one sided position, the market never likes to accommodate them so easily.

So, lets just let this market settle into this pullback, gain its footing, and see what it can do. The prove is always in the pudding and I like pudding.

Took today off, since yesterday was such a good day and have relatives visiting from out of town. We live in the a small mountain community in Northern California. The Marble Mountain Wilderness is basically in my back yard. Lots to do for the adventurous. Summer is going by so fast, hardly keep up with it.

We all need to rest and take breaks from trading, to help gain and keep perspective on everything. It is easy to get out of balance, especially when we are on a quest for greatness. The thing is, you can at times achieve more by stepping away from the ring, to get and keep a healthy perspective on your short term and long term goals.

I think it is healthy to be able to not trade at times and be OK with that. This business does have the ability to burn traders out, by over-trading and reaching for the upper limits of each possible day.

Self control is more than some nice word that sounds good when spoken here or there. Self control will make all the difference in the world to how long you stay alive to meet and reach your goals.

Most traders have desire and that is a good quality which can drive us to take action for the “pursuit of happiness”. Desire is good, but you will need more. For traders, self control while trading, will hold you back from jumping in to soon, before things come together. Self control while trading, will also help you from getting out to soon, when you have the perfect trending trade setup and move under way. Self control, is so important, it can not be overstated, or understated for that matter.

Over trading is another problem traders face when they loose control. Trading is something that we do and no one else can take the credit or blame for our success or defeat. The word “Self” says that this is in-fact true and the word control, would imply that you can handle it.

Is this the case for most day traders entering the market place each day?  I don’t think so.  For those who want to be apart of the very small percentage of profitable traders, you will need to have and find this control over your trading or you will just not last long in this venture.

We can exercise and find this control, by starting with our lives first. Some may not understand this, but every weakness we have as human beings will be exploited by the markets. The markets will ferrite out your personal weaknesses and try and bring you down. I am not making that up, its just the way it is. I have been at this a long time and know that to be true for me. I know I am not the only one, for sure. Human nature is such that this applies to everyone who enters the trading game.

This is where taking time off occasionally, especially in summer, to do those things that can help bring balance and perspective to the whole operation.

Being able to not trade, when you want too, is a way for me to exercise self control over my trading, especially when you did well for the week already. There are a lot of ways for me to do this as well and I am going to explore one more of them. Trading the early morning market open. That is a hard one for me. I usually stay up late and the open here come at 6:30 am. We will see how I do this coming week ?

Below, are a few stock charts showing there respective turning points in different time frames.  Anyone with question or inquiries, don’t hesitate to email me, I am here for those who need it.

Have a good weekend. Vince.

P.S. Click on the chart to open, click again to enlarge. If you click one more time, you will  get clearer view of the chart.

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Monster Move Up On Wall Street, will it last ?

Monday, May 10th, 2010

Today is Monday May 10th and the market took investors for a ride back up.

That’s right, in a blog that I wrote but never got uploaded, (glitch), I said in that post that we had a very good chance to go yet higher as the retracement back up closed near the high of the day. That is always a good little clue as to the next move. Fridays market action settled us back into the range where today we took off. The actual number I saw us getting to initially was 1145.

Today we saw the market trade past my number by a little, which was good. As things have settled from today’s session with the S&P up close to 50 points and the Dow up over 400 points, where do we go from here?

This is only an observation as the market has with today’s run settled into a 62% retracement from top, bottom and now back to the middle at 62%.  High 1217 low of this move 1056, 62% at current price)  At 50 -62 %, a common retracement point for all trading instruments in all fractal time frames, but in the daily chart the S&P is now again looking at 62% retracement from the top.

It seems the market got excited about the prospects for a European bail out of 1 Trillion dollars. That is a lot of money. It may help in the short run, but I can’t see exactly how this is going to make all the problems in Europe go away. Many countries are in bad shape and this may just push off the “Day of Reckoning”.  I do think that day is coming when the market won’t come back but just keep going in the direction of last Thursdays market. That day may be pushed off in the future for now.

It is a good thing that as a day trader, you start each day new, with no concerns or worry’s of previous positions. I could see the market pull back off of its run up initially in tomorrows session, but we will have to see how things turn out. I would not rule out a move all the way back up to the previous high, it is possible. At that point, I think you would have to be open minded about the possibility of a new downturn? I think the market sentiment will give us a very good clue as to what is the next move. I will be looking at the new numbers coming out this week to see how much market euphoria we were able to release. It is really hard to tell right now. One thing is for sure, if you know how to day trade, you can do very well. The opposite is true just the same. Here are some things to remember.

Don’t get greedy, and don’t be controlled by fear. Both of those emotions will cause you to place trades that you wish you could take back. Place trades only if they meet your criteria. You will stand to loose a lot more than trading capital if you allow yourself to be gripped by these two emotions. Be sure to never pull your stops, ever, for any reason. If you did not enter right, don’t try and compensate your position for a wider stop. you will often times only be making a bad thing worst. If you do this and it works out, it will only cause you to do it again thinking too that this time it will work out and you will loose more than than you bargained for. Your first loss is your best. If the markets are showing a much wider trading range, you may have to move your stop to a larger position, but this will all be done ahead of time, not as the trade is getting under way. I did this last week. I usually have only a 4 tick stop while trading the S&P and with the increased volatility I moved it up to 6 ticks. That was a preset position that gets entered every time I put on a position. I feel all traders should have the same. Don’t put on a position and then go and place your stop after that. Things move to fast at times and it only takes one time for a position to move against you by several points in a blink of eye, at which time you may be shocked. That shock can cause you to freeze and before you know it, you are reeling with a huge loss.

Lastly don’t trade in fear. Fear of lose and fear of missing a big move. Both can cause you to enter the market at times that do not reflect your trading plan. It is not worth it, you need to tell yourself that now. Be disciplined. If I can’t get filled in the area that my method or plan tells me to, then I need to let it go. Don’t look at all the money you could have had. That will only cause you to enter at the top or bottom only to be stopped out. You need the trading edge, if you don’t have it over other traders, they will have it over you. Which do you want to be? If you don’t have the edge or advantage, don’t put on the position. Much of this has to do with seeing the trade ahead of time. Do not get confused with seeing what you want to see. That will hurt you as well. Being and staying objective is the name of the game. Don’t make up your mind and say that you are sure this or that is going to happen. If conditions change and you do not stay open minded, you will become blind and start forcing trades where you have no business to do so.

Be humble and trade with confidence and exercise trading discipline. If you don’t have confidence, build on it, then it will come.

Below is a video of some of today’s trades, I called the last trade pretty nicely but I did not trade it. Overall a rough start with three small losses then some nice trades to end the day in the green.

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Be Determined to Reach your Trading Goals this Year

Thursday, March 11th, 2010

Today is Thursday March 11th and the S&P’s are putting in a good late day rally.

It is nice to see the markets have some life left in them for the bulls sake. The Dow was up about 45 points but remains the lager of the bunch. It is still 110 points off its January high, while the S&P today is 4 points beyond its January high; (10 Dow points is equivalent to 1 S&P point). The NASDAQ is 48 points above it January high at 2368 and putting in a good showing.

Today I took a couple of small trades and was done. There definitely was more on the table and I am not crying about it one bit. I even had a second chance on my second trade to stretch it out but I just took what I had in mind for today. I only watched the market for a few minutes with the first trade lasting 5 minutes and the second trade lasting the same. I was doing things in between those trades and was not totally into it. I was sure that my timing was good and it was. I did see this move coming. I will put up a screen shot of what I saw just before my first little trade. As I said, I could have easily stayed with the trade and took it out of my T-2 Screen for multiple points, but again, its no big deal. Next week I will gear up mentally for some good gains if the market is cooperating. My two little scalp trades below, first for 1 S&P point and the second for .75 and 1.00 point.                                          

Here is a chart of the S&P futures mixed with the Cash Dow Index and the Cash NASDAQ Index. There is a nice strong pattern that was building for the bulk of the day. I have some notes on the chart so take a look. The expected target for something like this is the body of the consolidation, high to low. Measure the distance top to bottom, then project that out on top of the high to see the expected return of the move once it breaks. I played the trade for a 1 point move before it broke. I missed the actual breakout, but I was doing other things. This week has just been like that, but I have still been able to participate.

Yesterday, I was talking about trying to create new habits and replace the old ones. One of the key points was to balance your life with all of its duties and expectations. If not, pressure will build up in area’s that are left unattended to and that will eventually come back and bite you. It will have a drag to some degree on your trading performance. Since that is what we want to improve, it pays to be aware of this before the imbalance becomes to great. Taking action to improve, change, redirect and prioritize is going to be key.

Being consistent with your trading has a lot to do with keeping things balanced in your life and that is the bottom line. Paying the price to achieve this balance takes discipline and was another key point from yesterday. Are we willing to pay the price to achieve greatness. The possibilities for living a wealthy, healthy and fruitful life are all just before us, but again, are we willing to pay the price? I put myself in there too. I have my challenges and I know what they are specifically. Do you know yours? It is important that you do, so if and when you want to see lasting change, you know exactly what you have to do to achieve it. Not knowing, wastes time, energy and keeps you that much farther away from ever attaining it.

If you are willing to pay the price to attain financial independence, then you can not shrink back from making the hard choices in all area’s of your life. Trading can be addictive, I think everyone who trades knows that. If you don’t, you probably will pretty soon. You need to keep a handle on that, and not let it take control of you, and other obligations. Its more than just money, it is time. We often want to work hard to achieve, that is what we are always told. What we are not told, is that if we become unbalanced with our pursuits, we often times will fall. Remove a leg from a stool and see what happens. Straight down to the ground.

Some traders don’t like addressing things like this and see it as a waste of time. I hate to say it, but those are the ones who will never make it in my opinion.

Being willing to pay the price comes in many forms. Many traders do not want to admit that they could use help, but hold to the idea, “I can figure it out on my own”. I was one of those guys. I never took a course, had a trading mentor, or subscribed to anything stock market related. It took me a lot longer than it had to to figure things out. I guess I did have a bit of “PRIDE”, which was hard to see at that time.

Paying the price can take many forms:

*Not willing to learn from someone who know how to trade * Not willing to change destructive trading patterns * Not balancing other time obligations * Getting in a better financial position so that we are not risking money that we can not afford to lose * Putting our past failures behind us, but being determined to learn from our mistakes and on and on the list can go.

Are you willing to pay the price to be the trader that you aspire? Only you can answer that question. If you need someone to help you trough some of these tough issues, I am here. Don’t let PRIDE get in your way from reaching your goals and dreams this year.

Wishing all my readers the best, “Trade On”.

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Day Traders Self Evaluation – Can You Do It ?

Tuesday, February 16th, 2010

Today is Monday February 15th,  and the markets were closed today .

We are half way through the month of February and hopefully many readers of my daily trading blog are off to a good start.

I have just a few questions for everyone to think about.  How are you approaching your trading?  If you take the time and energy to answer you will have the opportunity to do something about changing it. You can do many of these things yourself, so think about some of them and write out anything that you may want to give more time to reflect on.

What is the quality of your “self talk” while trading? Is it angry, frustrated, negative, filled with feeling of defeat? How much of what runs through your mind is market focused or self focused?  Are you calling out what you see, are you going through some of the key components of your trading method to see if you have low risk trades coming together?

Do you have the patience necessary to wait for the trade to come to you or are you seeking it out, looking under every rock.

What work do you do on yourself and your trading when markets are closed?

These are just some self evaluations that we should all being thinking about. We should be giving ourselves every opportunity to hit the trades as they come to us and do it with some formof confidence. We need to believe that we can do what it takes to put all of this together, but not letting that belief turn us blind to our shortcomings and end up only with wishful thinking.

Our trading should never be filled with negative energy. That will 100% get transferred to the markets and our trading performance. If you feel like any of the emotions I mentioned above, don’t trade. Keep your equity safe until you can get a better handle on those emotions. Just because you have funds in a trading account does not mean that you need to trade it every moment. Don’t be compulsive. If you see that trait in you, you need to find a way to purge that from your system. It will only hunt you down and bury you, ALIVE,  if you let it. So, don’t let it. Take control.

Why do we trade? For the money, right. Well, a lot of people trade for trading sake. A form of entertainment or rush. That is really not go to take you where you ultimately want to go. We should, in my estimation, trade for income. That is a whole different mind-set. You need to think differently and do different things than you used to in order to make that work.

That alone, could make a big difference. Your approach to the markets is very important in how it all turns out. The battle is won and lost most often in your mind. That is the truth. If you know how to trade, this is the final thing that may be holding you back.

In my last post, I mentioned not beating yourself at this venture. The way most people allow themselves to be beat is by letting negative energy into their trading office / room / or where ever they trade. The first step in fixing those problems is identifying that there is a problem. There is no room for not facing our weaknesses. Just do it. Trading is a very personal thing, no one is going to know, only you, so write out what is your biggest struggles. Find solutions to them. With every problem there is a solution. You may not have looked hard enough. Don’t give up.

You need to be exceptional in every area of your life. That may sound like a tall order and we all know how human we are. We are filled with dysfunction, some more than others. That may be true, but that does not give us a license to just do what ever. There are always consequences to every action that we take, whether we believe in it or not. The more positive things that you bring into your life and the more you do for others, in general, the more in control, fulfilled, positive, optimistic and complete you will feel. That energy will give you what you lack to change any trading flaw that you may be facing. You will bring all of the positive energy with you to your trading room and that will get transfered back onto the markets, it can only help.

This may sound like a whole lot of goop to some, but I feel what I am saying has merit, well it does, because I lived it and experienced it. No one can deny that. That is why I can share it with you today. We all have struggled with various problems, those determined to overcome there shortcomings will prevail.

My hope is that this may help some to reflect on many of these points and some will take the time to identify where they need to improve.

Our words have so much power in them, we do not realize it. If we did, we would talk different, think different and then do different. Very few traders make money consistently, but if more of them did some of the things I wrote here today, many would soon close the gap, “How About You” !

Good Trading

Potential Target Area, Short Term

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Time Management – Enhances Day Trading Goals

Saturday, December 26th, 2009

Today is Friday, Christmas Day and this post is for Thursdays session December 24th where we had a shortened trading day.

No personal trading for me, but the market did have a good day, posting some gains against some pretty stiff resistance.

If the market was going to go up, it now has a green light to do so. The momentum on the 120 minutes chart is still up, but more important, the daily has turned up for the first time since December 2nd. That is pretty important for the bulls.

The numbers on market sentiment came out yesterday and I would say it is good news for the bulls. With the market showing strength all week it could have influenced the bulls to get a bit excited, but it did not move. The current numbers are still 52% bullish and bearish at a 5+ year record low of 16.7% for now several weeks.

The bullish number is the more important number and at 52%, says that there is still room for a rally. With the daily just turning up, it is very possible that we could see a spike in prices. If it happens, I would say to be cautious into the rally. The bullish percent is going to give you a clue if we are going to run out of gas, so look for it.

Taking the two together, posted as bull/bear ratio, today we are matching a 5 year high as of today. Below is the link that I use to see the numbers that I am talking about. As mentioned it is two days delayed but it is still good information. If you subscribe I am sure on time delivery would be yours on Tuesday. The delayed is OK for me, I just use it as a reference to give me some insight as to the, “Pulse On Wall Street”. So here is the link, and by the way, I have no affiliation to the site;  http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm .

So, let me recap. Currently all of the momentum gauges that I look at when it comes to analyzing long-term direction is now pointing up. The monthly is up, the weekly is up, the daily is now up, the 120 minute chart is up. I can not say for sure that the market is going to go up on Monday, but the direction is pointing that way as of now. Just reading the current price action.

Below is something that may be helpful for planning and using your time effectively. Learning to trade can be time-consuming and things can get overlooked. The following can help you keep perspective and utilize the time you have to the fullest while still accomplishing your goals.

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Time Management

Factors To Include in Your Time Plan – There are some basic factors that all schedules need in order for them to be realistic and effective:

  1. PRIORITIZE. Write down all your tasks. Sort them into three groups: 1’s, 2’s, and 3’s. The 1’s are essential: do them first. The lower level priorities can usually wait.
  2. WORK TIME. Decide how much time the task requires, and how much energy. You may wish to include the task’s priority level to help make this decision.
  3. RELAX. Regularly plan time to relax and get it together. This time may range in units of 10 minutes to whole days according to your needs. You’ve earned this time off.
  4. EXERCISE. Exercise is essential for superior performance. Your brain would not function well if your body is tired. Stress reduces performance. Workout regularly.
  5. FLEXIBILITY. Allow extra time for UnForeseen Obstacles (UFO’s) that are bound to arise. Something almost always comes up to derail your efforts. Allow for it.
  6. FLOATING TASKS. Floating tasks can be done anywhere, anytime. Carry around a book that you need to read, some cards to review, or a letter that you need to write etc.

 Compromise – Sometimes drastic change isn’t necessary. Learning to compromise can make your life more effective. Try the following suggestions:

  1. RE-PRIORITIZE. Change the importance of various tasks. Reconsider the number of hours of work you’re willing to spend per week, the number of hours you want with the family, and the number of hours for yourself and pursuing your trading goals.  Are you trying to do too much?
  2. POSTPONE. Determine the priority of each activity or task and postpone lower level tasks.
  3. DELEGATE. Get someone else to do it. If it is a task that is not essential for you to accomplish, then this may be an option. Don’t forget to respect other peoples time before pursuing this option.
  4. SPEED UP. Sacrifice excellence for expediency. Get it done. Often, this may be your best option.

I hope this helps, when looking at the coming New Year approaching. Get a jump on things this week and be prepared for new beginnings. If you are organized in your personal affairs, you will have tilted the odds of success in your favor when pursuing ultimate goals and objectives.

Merry Christmas to all my readers,

Vince

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Keep your Day Trading Struggle to a Minimum, Trade for Income !

Monday, December 21st, 2009

This post is for Fridays session December 18th. 

 The market rallied a bit on Friday as it came off-key support. The momentum on the 120 minute chart is still down and will remain that way even if we get a modest rally on Monday. If it were then to back fill and rally again, it would probably turn up. I don’t want to get ahead of ourselves, so we will just wait. I do sense something brewing here very soon.

 The Sentiment numbers will be coming out on Tuesday, just two sessions from now. If the market rallies even a little, it may be enough to influence the balance of power to the long side and get the bulls to finally bit. This last weeks numbers of 52% are the highest since the rally started back in March. That is significant,  one more push to the upside and the trap will have been laid. Meaning the Bulls bit and take the bait for a continued rally. That is just what I potentially see.

 The Bears are at their lowest numbers in 5 plus years, around 17% bearish. That is not very much. There are many in the middle and they may soon be persuaded to join the bulls, a sure sign we will see a sell off. I have been following these numbers for over 25 years and at key turning points in the market it has just been amazing. It has called every turn that I can remember. When you combine that with how I approach the market, you have something.

 When you have a prolonged sell off or rallies these numbers can linger for a while before you see a turn, but we are not in one of those situations right now. I think, once you see the bullish extreme post, it will only be a matter of days before you start to see the sell off start in full swing. We are not there yet, but I will let you know as it develops.

 I will be able to see the current numbers as of Thursday. This is delayed by two days, I do not subscribe to the service.

 With all the gains locked into the market, I do think there is some validity to January being a sell off month, as I wrote about last week. Stay on your toes, I think the volatility will be back pretty soon. Until then, I may be lying low and enjoying the Holiday’s.

 Last week, I did post some turning points in what I call “Scalp Mode”. Those turns are what my method gave me as signal points or turning points as I call them. There is a difference in my T-2 screen turning points, but not by a lot. The point for bringing it up is, these were the signals my method gave as the long and short trades. Two things remain. Actually taking the trades at those points and managing the trade after you get in. I need to have the discipline to follow my own signals and manage the trade well myself, most often, I am right on. It is always up to the individual to follow the method and trade according to the plan.

 Anyone who does not do that is off on their own, sailing in uncharted waters, why do that, when you have a map, GPS satellite and all the latest navigational equipment to get you where you want to go.

 That is what I say, when I deviate and quickly remember what it is I have. So, when I post those turning points again, just remember, that is what is possible. Any trader just needs to follow the signs and learn how to navigate through the waters and he or she can catch there points for the day as well, with very little draw down, a key for me.

 Any trader interested, to learn more, now is the time to inquire, before the volatility come back into the market. Be ready and able to start the year with the right plan to approach your trading. I teach all of this in my course and follow-up with all students, one on one, to equip them for the journey. I provide the full explanation of the method with all the rational and back up which gives me those exact turning points. You will see each day’s turns explained and identified and why. After getting a steady diet of this on a daily basis, you should be able to get the same turning points on your own. I work with students until they understand the method and are able to apply it to the markets. I take as much time with each student as he or she needs. I primarily trade the S&P but it can be applied to other markets.

I teach trading for a modest goal 2-4 points per day, as the market provides. Once you have your goal for the day, I strongly encourage students to close it up and do something else. My motto is “Keep the struggle to a minimum”, don’t fight it. If you have an apple orchard and you like apples, you don’t need to go and pick them all at once, just pick what you can eat for today and get some fresh ones tomorrow. If you picked them all at once, they would go bad after a while and you won’t be able to enjoy them anymore. Maybe that is a corny example but I think you get the point. Trade for daily income as opposed to getting rich all at once. The first may happen the latter probably not.

 I will following up with my Thursday post sometime this coming week.

Until then, Good Trading.

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Importance of Keeping a Day Trading Journal

Friday, December 18th, 2009

Today is Thursday December 17th and the market had a little selloff, down to an important trend line support area, 1096.

The price action was a little better today, a little more volume and the movement looked a little better as well. It has been a bit different than normal, the last week or so and with today’s action, I hope things will be getting back to business as usual. The thing about it is, you have the holiday period upon us and that usually throws a wrench into things. Institutional traders usually take this time off, it is to be expected.

This is really not the best time to trade the markets. If you have modest goals, I believe you can still obtain those goals, but the movement has not been present like it has before and to expect something from nothing is only going to lead you to frustration and mistakes. Tone down your expectations of the market. It will change and the price action movements will come back as well, but we will have to wait.

Being patient is part of the game, if you can’t, then you will be blowing through your account at a time when you should be taming down your expectations. Traders really need to hear this right now. The reason I know this is, because I am talking to myself. Part of the reason I write this blog and do what I do, is to give myself an outlet to express what is going on in myself. Those that want to follow, great. Other reasons are to help keep me accountable to myself.

Trading is a very private endeavor, with no-one usually watching you. I try to expose my trading and what I do, to better hold myself accountable and possibly help others along the way. While doing so, I do have the benefit of getting to know traders who were where I was years ago. Sharing my method, skills and experiences allows them a similar opportunity to excel and me the added benefit to have helped someone. The funny thing is when I help someone else, it really comes back to me, helping myself. So, I end up winning all the way around and I do thank God for the opportunity that I find myself in. It has been a blessing to me and now as I share to others.

Back to the market; I did not take any trades again today, but it was encouraging to get a nice email from one of my students from Switzerland, that said, he enjoyed the private session we had, going over the method and strategy. Today he was able to apply some of that insight to his trading where he has had one of his best days. I believe he said that he took 14 trades, which he knew was a lot and I agree, but fine if he has control, and he only had one small loss. He was just trading small, but booked 800 profit out of a pool of 875 before commission.

I was happy to hear it and it makes me feel like I am doing my job, sharing what I know to others to help them meet and beat their trading goals.

To be able to trade for a living, you need to have discipline, it is so important. I have talked about controlling your thoughts and screening what you allow to come to you. If it is not apart of you and your plan, throw it out. If you write it down, then you will remember what it is you are dealing with. All of the idea’s and thoughts that travel through our minds need to have a filter on it. The same reason why some people buy a water filter. They want to take out the bad and only leave the good, to enjoy and add benefits to the body. We need to do the same thing with our mind. Screen out the bad, unproductive, negative, discouraging, thoughts as they come to us. If you write those thoughts down quickly as it comes to you, you will know what it is you are battling against. Far to often, we forget, and are not even aware that we have these kinds of thoughts.

This is the reason why I encourage having a trading journal. You need to be able to identify the thoughts that you have, to first even know if there is a problem. So, start working on it. Keep a journal and write your thoughts down as you are looking at taking a trade,  record your thoughts. If it is easier, get a digital recorder and talk out what you see and why you see it. Tell yourself, why you are going take the trade, if in fact you should take it at all.

This kind of exercises will give you feedback that is invaluable to help yourself discover where you are strong and where you are weak. This is very good information. Those that are serious about their trading future will think about adopting this as a regular exercise.

Trading successfully has two main dimensions, the actual doing or executing the strategies and the mental side of the game which can often prevent you from doing the first one at all. If you know how to trade and what to do, that is great. There is still no guarantee that you will be consistent and make it as a day trader. You need to exercise control over which trades to take and what are you going to do when you have a loss and then again, another loose. Do you know how to handle a situation like that or are you going to do what most traders do, focus on the loose and how you can get it back.

This area, goes so deep, that I can not even begin to cover it in one post, but would need weeks, just on this one subject. Maybe I will expand on the subject, I don’t know. I never know what I am going to talk about any given day. I never plan it and or even think about it until my fingers start typing. So we will see. I will give it some thought and go from there. The subject matter, I know will help many, if I go deeper. Until the next time, over and out!

P.S. I just checked the sentiment numbers, +4% bulls to 52%. That is not good for the bulls, 55% is usually the tipping point, but it could go from here? We are at the highest bull/bear ratio since October 2007, taking the two together bearish sentiment + bullish sentiment. The bearish side is 16.7, smallest number in 5 years +.

Looking more like this market is going to roll over, we will see, but be ready for it, no surprises.

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Do You Have What It Takes To Be a “Day Trader” !

Sunday, December 6th, 2009

This post is for Friday, December 4th and what a reaction from the unemployment numbers.

Friday’s session started out strong, reacting off of the strong unemployment numbers, only loosing 11,000 jobs for the month. This was a lot better than the street expected, bringing in the buyers. The thing about it is, that it did not last. It sure did make for some nice trades to the upside, but the market stalled and the smart money used the rally to get out with the gains in hand. We did get within a point or two of that 1120 number that I have been eyeing for a long time now. I would call it a HIT, seeing that it has come so close.

This market has been trading very light volume as per the NYSE. The last few month, the volume has been slowing. September was lower than August, October was slower than September and November was slower than October. A growing trend or the calm before the storm?  With the kind of top we are putting in, broadening, with very little price movement, it could be considered worrisome for the bulls.

What has been forming for some time, is called a rising wedge, which is in a up-trend. That traditionally is considered a bearish chart pattern with the resolve being, a break to the downside. The characteristic’s of the formation is a broadening top, one that has slowed and has clear overhead resistance established, yet still making new highs. On the other side of the chart, the bottom side, you will see rising bottoms that seem to accelerate at a much faster pace, forming what appears to be a “Rising Wedge”. The movement is getting squeezed off.

The interesting thing about this formation is, that it is running out of room and something is going to give. As I mentioned, the give, is usually to the downside and often it breaks hard and fast. The reason is, all of the built up sell stop positions under each critical low. Traders and investors have been riding this market move up steady now for 8 months and they have consistently moved their stops up under each one of these critical lows to protect their profits.

We got a taste of how fast and quick the market can move with this type of setup building. Last week, after Thanksgiving as I may have mentioned in an earlier post, the futures market sold off around 45 S&P points in the night trading alone before recovering. That is equivalent to about 450 Dow points. What I believe was also happening, was a  shake out of the shorts. Those traders that tried to position themselves for this expected big selloff, were pulled in and thrown out, with a big fat loss.

The market never likes to make it easy for those traders who are trying to capitalize on any expected move. It will do what it has to in order to incur losses and build frustration before a big move. The next time the trader tries to enter on the real move down, he will hesitate and thinks that the market is just tricking  him again, but this time the move is real and he is “Left Behind”.  As he realizes that the move is real, he jumps in, just as the market is now ready for a reaction rally back up and he looses again.

This is typical market behavior and it happens in every time frame a would be trader engages with the markets. Successful traders have come to understand the natural rhythm and flow of the market. They use the above scenario to their advantage and are able to take money out of the market, where the struggling trader is just trying to make sence of it all.

There are many reasons why the markets tend to flow the way that they do. There is always a great deal of emotion behind buy and sell decisions, which then get released into a sort of herd mentality. As traders, what ever time frame you trade, your job is to minimize your risk first by pre-defining it and exploit the opportunities that favor a move in your direction. You always look to get the edge before you put on the position. No edge, no trade. If you do place a trade and you don’t see your advantage, then you are gambling, straight up.

As professional traders, there is no room for that sort of behavior. A gambler will never have the advantage, but hangs his future on hope and that is never where you want to find yourself. The market will do its job in purging the undisciplined trader from the ranks by leaving him with nothing but losses to show for his action. With this, even stronger emotions set in and self sabotage is too often the end result. It is very sad, that this happens day in and day out, but everyone on Wall Street who trades can not come out on top, even though they all think they will.

What are you going to do to make sure that you are not one of the undisciplined. How are you going to be sure that you have the edge and what will you do if you start to lose that edge? These are all questions that need to be addressed before you start trading.

One thing I caution any trader just getting started and that is, be humble. Don’t be overconfident and think that you are going to make a killing. Usually, it only works against you and makes your goal toward profitability that much harder and or impossible. The second thing is, be conservative and realistic with your performance. Having a goal of 8-10 points for each session is not realistic, especially for a new trader. A goal of 2 to 4 points is more practical.

All that being said, you must have a solid approach to trading or you will never see the light of day. I will try and pick up where I left off in my next posting.

Fridays trading, I did something a little different. I started a little earlier and finally saw some volume and movement, hurrah. Secondly, I played the move for a bigger point return. The first trade was stopped out for -1 point, the next was staggered for several points and I was done. See the video below.

Have a great weekend

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Trading is not always easy

Friday, May 8th, 2009

Today is Thursday, May 7th and the markets put in a reversal day today.

I could have been only a day early, but with today’s action the market pushed higher on the open and formed a real nice triangle formation on the larger time frame charts, then broke down to first fill the higher gap open that we put in. Then, continued to trade down for the rest of the session.

Today, really looks like a reversal day and this may be all this rally has. When you see the markets push up early in the session and later close at their lows for the day, that is not a good sign. This is the first day of price action that we have had that meets this description. This long move has not put in a session like this in 42 trading days.

I don’t know what the internals are, ADV/DEC, but I would bet that today it was real bad. Yesterday’s session looked to have some solid resistance, at the high end of the upper blue line that I drew on the daily chart and with a move slightly past that, THEY drew traders and investors into the web, only to take it down pretty hard. That is the kind of price action you see at market tops. This may only be a short term market top, we don’t know what is going to happen as the pullback takes hold.

Let me remind everyone, that we are still in the up-trend and technically no real damage has taken place. We will have to break the lower blue trend line that I drew on the daily chart, that would violate the uptrend and get things going to the downside. Or it should. The market may buy itself some time and move to the right so that it will have a chance to touch the outside purple line, going back about a year. It is all real close.

Originally I saw the top at 940, but I gave it a little extra room to the upside to get people to bite. It may be that with today’s price action, that may have happened and the short term top may be in. Just watch price action and the key support levels that I mentioned as your clue, but I am getting the feeling we could see more selling soon.

Today’s trading turned out OK in the end, but it was a bit rough. Nothing like yesterday. Difficult days are going to happen, that is just how it is and I realize that. I do have my mental safety net, of no greater of a loss than double my daily goal. My daily goal has been $500 dollars, but I most often trade to double that or more. So my maximum daily loss can be no more than $1,000 before commission cost. I got down to $-800 which is about 3 stops of 1 point each. I had a few gains in there at first, then had a downdraft, follow by a recovery, and one more downdraft, before I saw the light again. I ended up a little over double daily goal in the end.

Trading is not always easy, but it can be very rewarding to those who are committed to the process. Nothing in life is worth while is ever easy. It takes work and dedication. I believe, if someone wants to be a successful trader bad enough, it can be attained. Each individual is different and there are no two traders alike. But there are skills that can be learned and applied, to bring about consistent returns. We need to pursue those skills, they are not going to come to you by accident or mistake, but with purpose.

What ever you do, continue to add to your knowledge and stay humble. Never take the attitude, that you have got this thing licked. There is always something else to learn and experience, keep moving forward and strive to be the best that you can. You may not be the best in the field, but you can strive for your personal best. As I mentioned yesterday, confidence comes from repetition of consistent successful actions, done over and over. You need to want it. If you do find it, you can be richly rewarded.

http://www.screencast.com/t/x9KFNYyDqjm Today’s equity chart

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