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Looking for Market Reversal

Wednesday, December 14th, 2011

Today is December 14th, 2011 as the short term selling continued today, but am looking for a market reversal in tomorrows session.

I could see the S&P futures moving on down to 1197 early on and think that we could see a significant bounce and eventual turn around into next week. This is just my opinion and I will be willing to trade long and or short depending on the days action. This call is mostly for the daily market as I think the selling will start to dry up at the above levels.

In today’s trading I took 3 trades and invested about 30 minutes into my trading before coming up with enough for a modest daily goal. I came into the first trade a touch late but the second attempt was right on.

I put back up the same screen shots as I normally do but did add one other thing into the picture. There are yet more things I build onto the screen and other time frames that are tied directly into each other to make a complete picture, which is not shown. Let me post the days trades and I will continue below.

I recently in a few previous posts, blanked all the indicators off the screen for a reason and that is to make the point that traders really need to trade the price as it moves on there screens. If you only rely on trade indicators you are not really making progress. We need to know why the market moves, not just that is does. Knowing the “why”, is the empowering part that is missing from many traders. If we only react to what we see as trade indicators signal long and short, we can to easily get whipped around the screen and feel out of touch and ultimately out of control. So, the key is learn and understand price. How it moves, how it reverses, when is the likely times for turning points and continuation points and do all of that while risking very little.

Being able to zero in on the low risk spots is so very important. Trading with a 3-5 point stop to make 2 points on a trade is totally out of the question. If you are doing that, you will have problems sooner or later. The key again is risking little for a high probability of making the same at a minimum or preferably 2 to  3 times your risk.

Question; Do you catch yourself saying, “I think the market is going up” but don’t really know why?  If you had to explain your reasons for the market move to go up to someone and or had to write it down, could you. If you can not do that, then you need work. You can not just say, “I think”, you have to know “why” it will and or should go up and have clear compelling reasons.

This kind of thinking takes place all the time and traders are pushed into trades that are far less than desirable. They then have to struggle to justify the position and then do worst damage by blinding themselves to everything that says it is going the other way.

All of this can be eliminated and or reduced a great deal if traders would not take trades solely based on trade indicators. Seeing how and why markets move and positioning themselves in those low risk area’s for gain with limited risk is where you want to be.

Don’t trade just to trade, trade with purpose and a clear understand of price action, the trade indicators could then confirm your decisions and may be a comfort, but don’t let it be a crutch from you learning what you need to know.

Do you want to have fun or make money? Many would say make money, but there action say a very different thing. Think about it. You can do both as long as you strive to make money first in a responsible manner, then that could be fun.

So, the moral of the story is, learn what you need to learn to trade safe and responsibly. What support and resistance is and how you can harness it to your advantage. Easier said than done for many, but having a complete trading method that is spelled out with rules and objectives will take a lot of the pressure off as you will be creating some structure to your approach. It takes time, for some a long time, and for others not as long and still others never get there. Do the hard thing, not the easy thing, that could be your first clue and assignment.

Good trading to all ! Vince

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Valuable Trading Lesson

Tuesday, November 15th, 2011

Today is November 15th, 2011 and was a good trading day, not because of points made, but was a nice regrouping from yesterdays loss. The method is there to follow, and when I don’t follow it, it becomes a gamble on it working or not.

You could see in yesterdays posting, that I took some non method trades. The indicators are only a reflection of the method, but a good way of seeing if one is following it or not. If you are going off the reservation, it will be clear to see and when you are on track, that is also clear to see.

Today, I got back on track as it has been weeks of modest daily gains before this. Losses happen, but they don’t have to induced by lack of patients, or lack of allowable trading time. If one does not have enough time to trade, it can be best to not trade. I need to remember that, as that was my downfall yesterday. I did not want to take the time to wait out the market to best get into position that would allow me to get the trading advantage on my side of the table and it cost me. It was just a few point loss on the day, but that is not the point. I could see I was off and for the fact of me stopping, I get an extra bonus for that and makes up for my mental short comings at least in my mind. Let me post today’s trades below before I get to far along.

Just three trades here, with the first one a 5 tick loss. That is really not a problem as it was an acceptable loss for the entry taken. You can see a reverse signal and that is my confirmation that a stop there was appropriate. The move was a last ditch effort by the market to take out the shorts before it actually does go down. My re-entry was spot on and I did not hesitate as the shorts were right in taking the market down.

It was all in the bigger picture to take the market down, so that it could then take it up higher in a big way as shown. I did miss that next wave up as I was doing a training video for my group as things were developing. I can honestly say, I missed the move as it just got past me. The secondary move higher, was caught as I could clearly see higher prices and did point that out in great detail in the training video I was just finishing up.

The market did move higher after my last exit and that is OK.  I don’t have to get it all and enjoy selling into strength a lot more than selling into weakness.

In a recap of the daily’s, we did get the second day of pull back early on as the market sold off in the night session and again just after the open, only to then recover and move higher on the session modestly.

The market is now in a position any time to make that next move. It could go either way and I won’t say it can not go down, but I do have a bullish bias and would not be surprised to see things resolved to the upside. We always have to remain open minded, which is what allowed me to see the huge reversal at the bottom of the market 6 weeks ago or so.

The same thinking will allow me to accept and see that the resolve could yet again be to the upside, to the complete and utter amazement of the masses and guru’s.  We need to learn to think for ourselves, to see for ourselves, and then trade for ourselves. If we become dependent on others to lend us insight and that means even me, we will not be helping ourselves long term. I think it is fine to get different opinions from others, but that should not be the only thing we do to see what we should be learning and calculating on our own.  If you just don’t know how to go about that, then that is a legitimate concern and there is no fault to bear.

To make trading progress, we need to learn and gather insight from the market as it relates to a proven methodology that will be consistent over time. Next is to not overlook what we are going to do to ensure that we have the ability to follow that trading method and execute it in a way that leaves us profitable.

To do that, we need to always work on ourselves and uncover any mental weakness and replace it with mental fortitude and determination. That can only come by facing the hard cold facts that traders don’t like to face the facts. Are you willing to see what your trading weaknesses are and do what ever you have to change that within you to get the desired goals you aspire to achieve?   Many would say, Yes; but the truth is they are not willing to face those issues and change. It is a lot easier to blame past trading troubles on the method, system, the market, or any other outside factor but ourselves.

In order to take your trading to a higher level, you need to look within. There you will most often find the answers that you seek. Yes, you need a solid trading method, and without it, you will be lost, but you also need everything I just mentioned above as well. I respect my readers enough to tell them the truth.

You may have a good enough trading method as you stand today and all that is needed is the inner strength to maintain control, to follow your personal trading plan as it relates to you.

I had a nice reminder from a member this evening of this simple fact and feel compelled to share that. We all need a personal trading plan within our trading method to succeed. Find yours and you could be on your way.

Trade well, trade committed, Vince

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Market Move Taking Many by Surprise

Tuesday, September 27th, 2011

Today is Tuesday September 27th,  2011:  We saw some nice follow through in today’s session early on with a large gap opening higher and holding to yet higher prices into the afternoon. I only traded for less than 30 minutes in the morning, but later in the mid day was pointing out how the market was going to go to 1189 as a top for the last move. It came together perfectly and went a few ticks over the 1189 mark I called out to my group in a training session I had going. From that point, resistance did come in and a very nice short took hold late in the day. All something clearly seen within the trading method.

Early on, the market was in a very narrow range, much different than we have been accustom to seeing, but you will see days like this. Many times, when you have a huge gap opening, you will get a restricted range.  The bulk of the move came in the gap higher which many were not able to participate in except those trading in the Globex pre-market. The gap higher and its accompanying interest coming in after the open, helped to hold up the market and limit any selling. Those that wanted in, took every opportunity to get long at small pull backs and so supported the gap higher. Until prices reached the target high of 1189 my call and actual 1190, there was no longer any reason to stick around as the move was complete and the smart money hit the doors running, thus the large late day sell off.

Knowing that 1189 was an important trade to target in today’s trading would have given you insight in holding for higher prices if that is withing your trading model. I did not want to stick around and be exposed to the market all day and being in the market for only 20 minutes with a modest trading goal in hand worked for me today. I do have an interest in trying to hold for larger targets and many times I do, but I always balance that with time. I value time as a commodity that I can never get back. The more time I can free up to do the things I like to do, is of great value to me and so there is the balance.  /  My trades from today below.

The market as mentioned and as you can see above early on, was a little choppy, but often that is just fine for me. Either way, trending or choppy, the method will perform.  It is us that just need to read it and get in sync with the price action. If you try and impose your will on the market, you will be humbled. We can’t trade for what is not there just because that is what we want. If you take that stand and you can, then you need to be prepared to wait for hours and even days for some.  The market is the market and what ever we want does not matter to it. You either conform to it or wait until you see what you like, but be prepared to wait, because waiting is a trade just like a long and or a short. Many traders have never thought about that I am sure. Waiting and not taking a trade, “is a trade”.  It is a “no trade”, which again is a trade position. You are waiting for your conditions to come together.

For me and the way I trade, I don’t have to wait long, 10 minutes, 5 minutes, 15 minutes, until what I need to see comes together and then it is down to moments for the entry, which is done without hesitation. As mentioned above, that style appeals to me and I like it. I can get a few points from a variety of market conditions, get out and be off. Time off is one of the things that trading is supposed to offer as a benefit the last time I checked. (pun intended)

Anyway, I took only one trade and scaled out for + 1.75 points, +4.75 points, and +2.50 points, an easy day for what could have been a difficult day for many. The second exit I had a trade to target in mind at the top but ended up closing a few ticks off that high.

The trading indicators are very consistent and is my own twisted version of something to give me a near perfect guiding light that reflects my trading method. The trading indicators are not the trading method.  All members  learn how to read the price structure as it relates to the method. Which came first, the chicken or the egg?  Well, that may not be a good example, but which comes first, the price or the indicators?  “SURVEY SAYS________ “   ‘The Price’ .

When you learn how to read the price and enter where you should, at the “Sniper Holes”, then you will not experience very much draw down after entry and is a great way to trade. I could never sit through 3-4 points of draw down on a regular basis while things shaped up for an advance. I think I would die if I had to do that in the hope that it will pan out. That is no way to trade. Members can get there entries down to ticks and that can still produce several points when proven right, which can be often.

Day Trading is not a easy venture, but for those who are willing and see the opportunities, the rewards are endless in offering you the time to do other things that you really love to do and bring a richer more meaningful existance to your life. It is possible for many more traders who find out what it is that they are lacking. It might not be your method, but it could be you, so look within first for your answers, you just might find what is missing.

Best you all,

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Scalp Trade the S&P Emini’s

Wednesday, July 27th, 2011

Let me start by posting my trades here on top for today and yesterday and then I will get into a little lesson below. Today’s trades first and yesterdays under this. Trying full screen view so you won’t have to click twice for full screen.

Yesterdays trades below;

7-27-11; To  Scalp Trade the S&P Emini’s, traders need to be prepared in more ways than one. You need to “yes” have a solid trading method and plan to follow, but it is essential to be mentally prepared. Distractions can take you away from the easy and obvious trades that the market shows each day.

Last week I mentioned over trading as a possible problem for some traders and that holds true, but not being afraid to scalp trade your way to your trading goals for the session is a life skill that does not come easy for most.

Is it possible?   It sure is, but not without being prepared in all ways. A trader should have his affairs in order. If you are being hit with stressful events at home or say at another job, you will struggle. It will most often spill into your trading life. How are traders handling those chanllenges and events as they come up? For most, not well. It is best to pause if you are under undue  pressures coming at you from other angles. You will not be helping your situation if you find yourself pushing.

Trading for living or extra income needs to be something that is not heart or gut wrenching. It needs to be relaxed, but attentive and focused. To many traders push when they should wait and wait when they should enter. That can be brought on from a lack of discipline and fear. Both of those are very common in this business.

To scalp trade the emini market as I mentioned in my opening line, preparation and hard work is needed. Much of the hard work is not in pouring over the charts to hone your skills, but within each and every traders mind.

The determining factor for success, once you know how to trade and what is expected of you, is the mental side. You can know how to do everything, but still get it wrong. Don’t overlook what you need to do to balance yourself and hold yourself accountable.

I have some traders who send me there trades to help keep themselves accountable to someone outside of themselves. If you know someone else is going to be looking on your enteries and exits, you will be a little more attentive and selective. This is a form of trader coaching and is very hard to do by yourself.

For the most part, trading is a very private and that is how most trade, but in exposing your weakness you have the ability to transform that into your strengths as you are mentored through the process.

I do this for myself by writing my blog and posting all my trades for the session for all to see. This is for me, to help hold myself accountable and expose my strengths and weaknesses.  I am thankful for the experience because many times I do find myself talking myself out of a bad trade and that works.

The trading method will easily show you where your entries can come in at and the trading indicators will confirm and or deny that fact, but in order to scalp trade those moves you need to know what you are doing. You can not guess. If you find yourself doing that, you need to stop. There is no room in this business for those who are guessing at the moves. That is gambling, pure and simple.

If you put on a move just like you have done dozens and or hundreds of times and gotten consistent results from it in the past, the odds are you will get the same percentage of results in the future and thus you have the trading edge and advantage over those who are guessing.

This is not just any percentage of results, there is a consistent logic built into the market because it is made up of people and people are predictable once you know there ways. The key is knowing there ways and exploiting that to your advantage. Day trading is a zero sum game, one wins and one losses. A transfer of wealth to those who don’t know to those who do know. Ask yourself, which group do you fall into?

Trade well, trade committed,

Vince

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The Day Traders Mindset

Tuesday, July 19th, 2011

7-19-11; To be successful at day trading, you need the right traders mindset. If you wait until you are faced with adversities, you have waited to long. We all have the ability to overcome, that is in the human spirit, but not all will.

What is it going to take to overcome the trading adversties that plague so many day traders?

First, is the real belief that you can. Many set out, with a false belief that they will do this and or that, and the profit will come. Well, it is not that easy. You will be challenged, well beyond anything you have ever pursued in most cases.

Trading is actually simple, but it is never easy. With that said, the proper mindset  is key to your consistent ablity to maintain the winning edge.
I don’t really like the term winning, because it equates the effort with a gamble, chance, luck, etc. That is the farthest thing from the truth. Many who don’t understand what day trading is, think just such things. If you are knee deep in this, you know different. You can see it, taste it, smell it, feel it, but it is still yet elusive. Very much like a hunt, you track, trace and pursue as you get closer to that place only you can understand.
That is what it is like and I know I am speaking to many who are in just that environment, so close, but yet so far. There is hope, your believe can be harnessed and leveraged just like you leverage your futures investment to work for you, you can do the same with your mind and the ability to deliver the goods.
Let me post my trades for the day, before I get to far along in this mini trading rant. Today’s trades from the emini market. I was able to make up for not trading yesterday, very cool.

Last week I traveled to S.F. to see and tend to family issue’s and returned on Tuesday. This week, it went down as a carbon copy and did not trade on Monday two weeks in a row. Last week and again now this week, I waited for the opportunities to pick up more than enough to cover my no trading day yesterday. Both times I roughly trippled the minimum daily goal sought after. That is great medicine for a traders confidence. OK, the trades below.

You will see as I always do, posting the turning points and continuation points for as much of the session as will fit. I took a break there in the middle as there was a good short still left on the table, but that is OK. I needed the rest. The later session trade was building. It was either going to drop big and or break out big. I tried for the short at first and gave it more room than I usually do, but no follow through. I reversed to the long as I had my eyes open to all the possibilities and it worked out great. I even added on for better than a point there at the top closing all positions on strength. Just that last trade worked out for 4 points, 6 points and 8 points roughly. I so much prefer to sell on strength than to wait and close out on weakness, but that is me. Either way, it works and will work in the future.

Getting back to where I left off before, every trader has the ability, but not ever trader will overcome the challenges. There are so many and all from different angles. You do need to have a solid trading method, something that shows a consistent pattern of trade consistency that you can follow. The price is the most reliable and that is why I teach how to read the price first and then indicators can confirm and such.

With that said, working on the hidden elements that traders face is just as important, but most often overlooked. Are you at this moment overlooking the mental challenges that you will and or are facing while trying to overcome your adversities?  If you are open to it, you will be doing yourself a great service on the way to your dreams. If you overlook its importance, unfortunately, the dreams of being a successful day trader will be most likely stuck, in your dreams. Bring the reality of those dreams into reality takes will, dedication and an unwavering spirit to change.

For things to change, you have to change, plain and simple. If you make the right changes, the right results will happen. Are you willing to change? Only can answer that and the future of seeing your dreams come true will depend on it.

All through this process, never give up your optimism. Never stand still, get up and fight. Losses are only temporary setbacks, a stepping stone towards seeing yourself through to what you envision.

You need to believe in yourself and your ability to get results, but your belief needs to based on something real. You can not blindly put your faith in something that is only a figment of your imagination. Go through your needs inventory and be sure you have what you need to succeed. If it is all there, you only then need to get it done and do it, one step  and day at a time. If its not there, then find a way to build up the tools, skills and abilties you will need to get the job done, again, questions only you can ask and answer.

I wish all my readers the best on their journey.

Trade well, trade committed. Vince

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Day Trading with Political Insight in mind

Wednesday, July 13th, 2011

I will first post my trades for today before I get into things below. It is easy to get carried away when combining the topic as mentioned in today’s blog title.

7-13-11;  Today’s open was strong as talk of additional Fed involvement to buy up Treasuries continue to flood the the market with low ball offers on Goverment Debt. The market seems to like that for the short term, but it is like an addict, who has to have there fix. They don’t care how they get it, as long as it comes. Very short sighted if you ask me and a reflection of how far we have come, be it, down the wrong path.

The market rallied strong on the news and was up +15 or better on the S&P and something equivelent in the Dow. After an hour or two, it all came apart as reality hit at least some investors and traders. The market filled an opening gap just before the close giving back all of its gains and then bounced slightly at the closing bell. Typically, that is not a good sign, with a reversal of such magnitude for the next day’s opening bell. Well, I guess they just could not wait and sold off the market in the aftermarket Globex about 13 S&P points in minutes. A little search for news, brought up the timing for such a selloff as being, Moody’s is considering downgrading the U.S. Treasury Bonds, if a deal is not struck soon. The ratings that have been talked about are Aa, from AAA.  If that happens, interest rates will go up and along with it, the direct costs for the government to finance its debt.

With QE3 being talked about by the FED, Bernanke and company will be seen as grossly manipulating the the World Reserve Currency.  As it stands, Putin from Russia came out today and called the FED a bunch of Hoolagans. WOW.  As I mentioned yesterday, things are and will continue to heat up if this is not handled soon.

As in the stock market, things are not always as they appear. Most traders might see what they think is a buy or sell, only to find that they were mislead by there own interpretation of price and thus are looking at red and losses. It happens all the time and what may be going on in Washington could be more theather to get what they really want. There are some new freshman Congressman who have not been conpromised and I applaud them for there idealistic approach of standing up for effecting real change, like a balanced budget, but it is unlikely. The other day I stated that altermative sources were saying that Obama may just raise the debt limit himself if he does not get what he wants and today I heard that Larry Reid made a statement that Obama do just that. Crazy.

The point to all of that is, this could be a ploy to get America to a point that it accept change, but not the kind that is in our national heritage as a country. I could go down that rabbit trail, with ease, but I will just keep it simple for now. Again, people are being sold everyday in one form or another in all area’s of life. The key is to try and think independently and read between the lines. We can all learn from history if we take the time to do it, it has all been done before and there is nothing new, if you are aware and that is the key.

The same is true in our trading decisions, we are being pulled into buying just when the market is set to drop and we are pulled into selling just when things are going to soar. How and why is that? You have to know how the game is played and know that you are being sold all the time, just as mentioned in all area’s of life and the stock market is no different. Everyone has there own agenda. Advertisers want to sell you there products and are trying to get you to bite. Politicians are trying to sell you idea’s, your kids are tying to sell you on buying them a car and you can say I am selling my idea’s on trading and so on.  Just read between the lines before you commit is a good idea, in all these area’s.

What is there motive?  Are they there to do you good? Have they shown you honesty and integrity before?  What kind of track record do they have?  In the case of politic’s American’s often lie to themselves because the reality to just to strong for them to handle. I am not even kidding about that. Again, I don’t need to go further, but if you look at it objectively, you will see my point and know that it is true.

It reminds me of a movie with Jack Nicholson and Tom Cruise, where Tom is a lawyer with Jack on the stand, the famous line, “You can’t handle the truth”. Sorry, can’t remember the movie name, but I am sure most have seen it, a classic.

Be independent and objective in your thinking and that goes for trading. That is one of the most important mental things to remember. Read through the lines and think as those who are trying to get you to bite and be ready to do the opposite. There you may start to see the hinden agenda, “in the stock market, or course”………….  I hope you have enjoyed today’s post, comments are always welcomed and I won’t be trying to sell you if you reply.

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Day Trade to Win

Wednesday, June 29th, 2011

We saw continued strength today with the Dow up 72 and the S&P +10.  A nice continuation of the rebound that started a few days back. How long will it continue?  That is the question on many investors mind, but as day traders, that is not as much of an issue.  We look at each day through a new set of eyes.  A fresh start awaits every day trader. One key point to remember is to not let the previous days action get you down. Don’t trade with yesterday fresh in mind good or bad. Forget about it and let the new day stand on its own. If you want to see new beginnings and have them produce what you seek, then shake free from the previous session and just do the right things. Don’t be greedy and try and make up for any previous sessions loses, let it go.

You have the opportunity to make things right, by doing things right. If you can get that into you mind and let it marinate a while, you will have a chance at setting the stage for a fresh start. The opportunities are right in front of you, and will come to pass when you allow the market the time and room to get into a position that will pay off.

If you are impatient and believe that the market owes you something, you will be with a weak mindset and it will come out in your trade exections. You will only make the trades if you know how to trade, pure and simple. If you are forcing the issue, you will make mistakes and struggle. That is the long and short of it. Do the right things and the right things will happen for you. Push it, because of impatience and you will suffer.

Which would rather prefer. The choice is yours to take and it is that way each and every day. What will you do and how will you do it? According to plan is preferred, but the choice is always yours. Shoot to overcome your shortcomings and you will be making progress. One day at a time. Don’t look past the current session, it will cloud your mind and judgment. One day at a time.

Only one trade today for a little better than two points, back into the S&P’s, the chart below.

I wish all my readers the very best on there journey. Day trade to win.

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E-Mini Nasdaq Trading

Tuesday, June 28th, 2011

Today, I again traded the emini Nasdaq market but it only lasted about 10 minutes. I only had two trades one very small stop out, and a reversal long for about 8 points. There was no need to keep trading as the easy and obvious came quickly and that was enough for the day. I posted the early morning screen shot below as I usually do on the days trades. I have been doing this for about a year and half daily and I think those that look on, like it. It gives them an idea of what is possible, even if they are trying to figure things out for themselves, which is OK as long as you are making progress. My trades below.

Trading is definitely a process where you will be tested in many more area’s than you thought was possible. It is imperative that you have a plan of action and it is clearly defined and not open for interpretation. This is so important as you need to have a way to measure the things you do so that you can do them consistently in the future. If you are all over the map and trading by the way you see and feel things shaping up, you are going to be in trouble and it won’t take long.

You can not guess in this business and if you do or find yourself doing that, you should just stop. Don’t take a trade where you don’t have the trading edge. You need to feel and know with a certain degree of confidence that you will come out on top each individual trade. When you have the lost the trading edge, you really should exit. Hitting the close button is just as good as any measure, but you can try to exit on a limit order if you think you can get out. Many times if things are heating up, it can pay to exit at the market but every situation is different and that is where some discression and market intuition can come in.

As far as your entries and exits, you need to have that ironed out and it needs to be clear as stated. If you have not done the work to get there, do it before you trade live and risk your capital. It is the responsible thing to do and that is the only way you can expect to ever get a bead on this trading venture you started.

Work on your mental outlook as well. If you are feeling overconfident, you will likely be setting yourself up for a humbling event soon to visit you. Your confidence needs to be based on your ability to execute the method that you have come up with. It is in the execution where you need to focus your discipline in on and exercise your trading patients to wait for those special moments.

Many times you will have to be willing to let the trade go by even if it hurts, as that extra time may be needed to really let the trade get into its most opportune time to get in. So, to get it, you have to be willing to let it go and not get it. At times, you won’t have the luxury to wait, as those moments can come and go quickly. It is designed that way many times on purpose so you can’t or won’t get it, but again, some of those moments will only come with time invested in the markets.

In the mean time, you will have your trading plan/method to fall back on until you build the screen time you need to get to where you want to be. That is also very valuable time invested as that is where you will see the nuances the market throws off and how to best play those based on your overall method to trade. So be patient and don’t be in a hurry. You will best serve yourself as you learn and slowly earn.

Good Trading to all.

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First Learn to Trade then Control your Emotions to Win

Monday, June 13th, 2011

Today is Monday June 13 and we saw a flat market ahead of a slew of news that is coming out tomorrow. It looks like the bulk of it will be out at 8:30 Eastern time, or 5:30 a.m. West Coast. You can go to a site called briefing.com to see what comes out and when to know and see how the market reacts to the data. It is a good idea to know what is coming out, but often I don’t and or rarely ever read the news. All I need to know is what the price is now doing. The rest of it can be a distraction. You may read a report and say that is a great report and the market is diving faster than a rock over a cliff, sometimes it does not make sense.

Being able to read the price action in what ever it is that you trade is key and have some idea on how to play it. It is more than just the entries, as traders need to know when to let a price run or when to cut it off for quick gains.

If you have modest goals, a few 1-2 point trades may be all you need. I do think it is important to be able to let a price run at times, but it is not really totally necessary. This will eliminate the stress on when to let it run and when to leave it open. With that said, the market does leave plenty of clues with its intentions on sizable moves. If you find yourself in one, you can pick up a bunch of points in a hurry. The danger with that, is traders can become addicted to the big moves and always find themselves looking for them, only to see trade after trade get stopped out. If they had a 1-2 point target on the trade, they would be covering the position on strength, rather then getting stopped out because of no follow through from the markets.

So greed has crept in to not only keep you from the gains you should be booking, but is now taking away from you what should have been modest gains. Did you catch that, GREED. That is a powerful emotion and will take you down and out of the game in a hurry. There is no hurry to make a killing in the markets, as if you make it to fast, you are likely to loose it even faster.

Steady as she goes will win the race and those traders who aspire to slow it down just a bit, you will not only live longer (your account), but have the good chance to increase it substantially. Which would you rather have. It all boils down to controlling your emotions, assuming that you do know how to trade and read the price and enter at low risk spots on the screen. That could be a tall order for some, but it can be done. If you do know how to trade, then you need to zero in on your emotions as you deal with price action on the screen. Many traders just can not handle it, and find themselves doing all sorts of things that hurt. Don’t be one of them.

Get your mind made up that you will be disciplined in your trading and commit to yourself that if you want to be a professional you will have to act like one. That means placing only method trades and setting realistic goals for your entries and exits. If a trader averaged just 3 S&P points per session, you could go as far as you would ever need to go, by just being consistant with a small daily goal and not getting anxioius for more and more. There are a few days per month that you should take the easy trades the market offers and that will help make up for shortcomings, but those days are the exception. Stick with steady as she goes and chip away at your goal.

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Still supporting my family with  health issues my father in law is going through. Its taking a bit of my trading time but I have still found a way to participate, like today with 3 point S&P trade from the Globex night session. I set up the target and and the stop, the first one that gets hit, the other order is cancelled. The turning points for a good chuck of the session is below along with my trade. Good Trading to All.

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Pyramid Trading vs Scaling Out

Wednesday, March 2nd, 2011

3-2-11;

In my trading today, I took 4 trades, two gains and two losses. The losses were small at -2 ticks and -4 ticks, but the gains today were much bigger at 3 and 4 points, (12-16 ticks)  In grading myself today on overall execution and performance for the day, I would give myself a  (B+).

Tomorrow, within the first moves of the day, I see an upward push to at least 1316 to 1319 on the S&P. Currently the night trading is showing a little strength, but that can change any time. Either way with the S&P around 1308 currently, I would be looking for those numbers early on in the session. The S&P will need to stay above the 1305 level for this to stay in tact.

Today, we saw a pretty good market with moves on both sides of the fence, long and short. It was nice to see some movement behind my turning point trades.  In addition, when the method maps out a possible trade to target, that too can give extra insight and patients to wait out the move.

I try and take what the market gives or until I am satisfied. Scaling out of the trades can allow me to stay longer, as I book gains along the way. It is a good feeling when you can actually take some off the table and still participate.

This requires you to enter your position usually in full and then come out gradually. There is another way to play this and it is actually the opposite of what I just mentioned. That would be to enter on smaller size and add to your position along the way up. This requires a very good understanding of price action and its movements. You need to have good secondary entries as you scale in to your position along the way to much higher or much lower prices.

A good example of this could have been seen in yesterdays market sell off or a small move of sorts in the sell off from today between 8-9 am West Coast. Which I did not trade.

A trader needs to see the big picture and how the move or day will likely go before things get going. This can be challenging as it competes with the article I wrote about yesterday. You need to keep your market opinion very loosely. Failing to do that, could put you at risk to only see what you “want to see” instead of what is actually happening.

In a big trending move, a trader still could continue to add to his position along the way with new stops just above or below his last position depending on if he was long or short. Moving your stop down along with your new position entry stop is essential. This way, if you are wrong on any one add on trade, you will be stopped out of your entire position. Your loss is only on your add on position which will be small. Enough for your previous gains to handle the risk.

I don’t do a lot of this, but visit it from time to time. When the market starts long runs again, that would be a time to do it. Another way of characterizing this type of trading is called “pyramid trading”.  Scaling out of trades is very different from pyramid trading and each has it benefits, but the more common entry method for most people is scaling out of  your trades.    That’s it for now, with three good days for the week so far, we have two to go.  Good Trading to all!

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