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Market Volitility Picks Up, to the Down Side

Tuesday, February 22nd, 2011

2-22-11;

What a day today was for the markets -178 for the Dow and -27 points for the S&P.  I was able to get a piece of that. I only traded about 20 minutes and picked up about 5 points total, as you can see my trades and notes on the chart below. Even though I only took a two tick loss on one trade and several other good trades for those points, I could only give myself at the very best, a B- grade for performance.

I had a trade, a re-entry trade that was placed out of fear of loss opportunity. The add on trade would have been the right re-entry for the move, but I got anxious and did not want the trade to take off without me, so came back in when I saw the market firm up. I put myself at risk their needlessly, taking on a couple of ticks more in my stop.

That kind of stuff happens, but I like to keep a lid on things so needless draw downs are avoided. This might be totally acceptable for anyone else, but we need to always hone in our skills to strive to trade at our personal best. That is the reason for me grading myself. It is really not for my readers at all, but just for me. In fact much of what I write is for me and a way for me to be my own trading coach. I am listening to myself and thus re-enforcing all the right things, identifying the bad things and working on those things that could be better.

Well, a little short on time, so until my next post, good trading.

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Scalp Trading by Positioning

Tuesday, February 15th, 2011

2-15-11;

The market was off slightly today, but with a little better volume. The trade volume has been very week and with it the price movement. I know their are a lot of traders having a hard time making money in this kind of market and many of them are going to scalp trading to fill the void.

Many traders find themselves in a position for hours with no progress being made. It is hard to come back once you are down from earlier losses if you can not pin-point low risk entries. That is what scalp trading attempts to do. Traders are in and out before the move or market has a chance to evaporate their gains.

With the leverage that futures trading offers, a scalp trader does not have to hit an overly high point value for the day to come out nicely. A few S&P points will do the trick. The key is do it often and consistent enough to go to the bank with.

The human element of trading is something every trader needs to be able to work through. You might have an excellent trade method or system,  but letting your emotions get the best of you can be a big problem. That is why trading for small blocks of time is best vs trading the whole day. It is hard to keep a high level of concentration up for the whole day, as most traders will find themselves hurting, not helping there account. Looking for trades that are not there, just for the sake of trading is a big one.

Good trades are made up of good trade positioning. Enter to early, and you could find yourself stopped out. Enter to late and the same thing happens, but entering when the market is at its lowest risk and highest reward point can quickly bring you home. Do it a few times and you can be done for the day. That is what “good trade positioning” can do for you. Put it another way, “trade timing”.

Good trade timing and positioning is the key to good scalp trades. Positioning has to do with time, as time passes the price gets into its natural trade position to move up or down, depending on “time and positioning”.

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Above  is my trades for the day of which I was happy about, because my trade timing and positioning were in sync with one another. I don’t like to compensate for bad entries, doing so only tells me my timing is off and I am not in sync with the market and its rhythm. I can not trade the market on my terms, but its terms.

I will be looking for more of the same tomorrow and if I can catch a trend, hope to squeeze out a bit more on at least part of it.    Until then, Good Trading to all !

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Timing your Scalp Trade Entries

Tuesday, February 1st, 2011

2-1-11;

Timing your scalp trade entries is the key in a day traders success. Trade management is also just as important, but first is your entry. Without a good entry, a trader will be fighting the trade from the get go. This will cause unwanted emotions and the mind games will have begun. This is some of the hardest things to overcome once a pattern has taken place.

If your entries are good from the beginning, you are not allowing yourself to give birth to the problems we at times face after the trade. If you take an unwanted amount of heat after your entry, you are not helping yourself in reaching your goals. I know there are those who say that what I am talking about is not possible, but I beg to differ. They only say that it is not possible because they have not been able to do, so it must not be possible for anyone else.

That does not sound like good energy to me. We need to enter our orders with a positive expectation that the move is going to go in our favor. If not, then we lean more towards the side of guessing and that is not a professional platform for us to move on. It becomes more of a gamble if we don’t solidly possess the trading advantage.

I am not willing to gamble. I don’t like the odds, never have. Every day, traders attempt to take on professional traders. They will either do it from a position of strength or a position of weakness. Which one will you be?  Get educated. It doesn’t have to be with me, but find your way through this maze.   To often we all at times think to highly of ourselves, which can only leave us open to overconfidence and a false sense of security.

We have all heard the term, “knowledge is power”. I subscribe to that thinking, because with new knowledge we can open new doors. One of those doors should be opening our eyes to new idea’s. What the majority is doing will not likely work for you. If it did, most would be making money, but they are not.

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In today’s trading, I only took two trades and pick up a few points. There was more to take out of the market for sure, but I shut down my computer and left for the rest of the day. This evening, I just turned things back on to write, as I see we had a big day. I have no regrets as I saw many other possible trades that could have been taken.

You will notice in the screen shot above, that the two trades I took had virtually no trade heat. That can only come about by knowing what to do and when to do it. It is not an accident as all the previous months and months of trades I have posted. Not every single day ends up positive, but the majority of them do.

Timing your scalp trade entries so that you have the move working for you right away is exactly what you want to see. Do this and you will have the advantage. Get educated. Find the answers and you will improve your trading results.

Best to you All !

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Learn to Trade the Emini S&P

Saturday, January 29th, 2011

1-30-11;

In today’s economy, their is no shortage of traders wanting to learn to trade the emini S&P.  It offers everything someone could want.  An income, time freedom and a sense of accomplishment. Day trading the emini S&P is a task that needs to be taken seriously. It is not an easy undertaking for anyone involved. Traders usually learn things about themselves that they never new before. Some of it good, and to often, bad.

Most traders enter with the mindset that this is or should not be to hard !  Well, I would say that it is simple, but not easy. That is a good disclaimer for those looking on as they see themselves crushing this new market as they get started.

Any trader who wishes to learn to trade the emini S&P market, must have a written plan and follow it. Trading systems do not really work, because you are basing your trading decisions on the past and not every trading situation is the same. You need a solid trading method, combined with trading discretion. That way you can leave the bad, take the good and carry on.

Trading principals and a set methodology of how you will take action has been proven to be far superior than back testing trading systems that are designed to take all trades and leave out trading emotion. That is a nice thought, but traders need to have a lot of faith in a system like that as you never really know when you will take a large draw down, that can be painful.

Trying to recover from something like that, can strike a blow to your trading confidence and many do not recover. Being in control of your trading decisions based on a solid understanding of how the markets work is really the best approach. You are following a proven set of trading principals that have always been around but most traders never see it.

The markets consist of an ongoing struggle every session. Those that expect prices to rise and others who expect it to fall. Somewhere in there, are a lot of emotions floating around. No one likes to loose money and most traders will always buy insurance. That would be the famous “Stop Order”. When that trade order goes off, it signifies a certain threshold of risk that traders are willing to accept. What many fail to remember is most traders think alike and most have a herd mentality. What that means, you can expect the same thing to happen when a large group of traders are thinking alike.

If you trader where to think in the opposite direction of what they would normally do, most could make money. You will need good money management and control of personal greed, but that could actually happen.

Just think about how easy it is to loose money while trying to day trade for profit. It is much easier to be wrong and loose. The reason, most do not understand how traders almost universally think alike. Trade trigger points are area’s that we see traders taking action in mass. What would it take for you to not place a sell stop to get out, but place place a sell stop to get in. That would seem weird for many traders to follow the markets as no one likes to think of themselves as having this backwards thinking.

For those who want to learn to trade the emini S&P, you will need help to change your thinking around and start thinking differently. You are not born with that kind of thinking but it can be learned. You will have to pursue the hidden trading language that exists in the market.

The Sniper Day Trading Method, consists of using support and resistance in a very unique way, when combined with momentum. The method also many times will tell you exactly where prices could go, with the knowledge all known well in advance. The first priority is the “Sniper Entry”. That will set the stage for very little draw down and a move in the desired direction. Identifying trade to targets, can as well be seen before the entry, giving you a plan, a point at where you will take action and a target to trade too. This can be better than selling on weakness in extended moves.

You can learn this if you want it bad enough. It is all about desire, dedication and focus.  Many have desire, but lack dedication and focus. You need all three to first learn what it is you should be doing, then overcoming your own shortcomings. That is the hard part for most people. For the ones that know what to do, disciplining yourself to then do it and not be worries about the money, is hard. I do struggle with that at times myself, but it is often only short lived as I am aware of those feelings and emotions. They do me no good, so throw them out quickly.

Trading for 2-3 points a day in the S&P emini market, or 20-30 points in the Dow emini’s is not a lot. If you broke it down, that’s 2 one point trades for S&P to hit two points. If  looking at Friday’s market that was not hard to do by any means, as the market was really on the move. We had a trend day down. In that kind of environment, one could elect to trade for what the market gives them, which could have been very substantial.

Screen shot of Friday’s open showing a limited view of my T-1 scalp screen. This chart is tighter and used for short swings in direction. A strong move down, usually can signify more moves like it coming and usually will pay to trade in the strongest directional trend, but all of that is in the method. Enjoy the rest of week end.

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Trade Lesson and Encouragement

Friday, November 26th, 2010

Saturday, November 26th, 2010. I will give an update to last weeks action on Sunday afternoon, but below is part of an email message I sent out to my group to help them stay focused and give a little encouragement. This is part only and felt I could share this much with my readers here today. It is a little long, but feel it has value enough to share with this group as well. Best wishes to all my readers,  Vince

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One of the reason’s traders have more problems than they should, is that they trade to long and have too high of an expectation. The odds for most traders to loose money greatly increase when they stay to long, that I am convinced of. Unless you have an unwavering ability to sit and wait, most will find themselves over-trading, looking for trades that don’t meet the criteria. It is in these times, frustration and revenge trading can also give birth to additional unwanted losses.

So, to meet a minimum base trade goal that is mixed with limited time to achieve it, small high percentage trades can get you there quickly and easily. When you have it, walk away and do not give it back. If you need screen time, switch to Sim Trading and do not go back to live trading no matter what for the day. When you feel comfortable with the method and find yourself reaching your goals day after day with limited time invested, enjoy some of the benefits traders voice by enjoying your free time. Most traders will say that they like trading and want to pursue the career because of “time freedom”.

Back to meeting our base goal. To hit two points per day all a trader needs to do is to hit two (2) one point trades, or one two point trade, or any small combination their of. The key is to hit those trades with a high degree of accuracy and with confidence. Using the method to Snipe off a few of these trades is not that hard, but if you reach your goal and continue to trade, you will and or can be met with unfavorable conditions, (slow market, choppy random moves, like Wednesday late afternnoon.) Having the ability to stay in control is essential. I hear many times that traders are hitting good point moves in the morning, but give it back in the afternoon. That is more common than many will like to admit. The easy solution is to stop trading.  Traders trade for the money, or that is what most will say, but often times trading fills some other need in our lives that we are often times not aware of. Each one of us needs to search ourselves to find out if that is true and if it is, what are we going to do about it?  This is where the hard work lies and it is the work that many traders are not willing to do. I encourage everyone to search themselves and see how if any of this applies to us, myself included.

A different way of looking at trading for such a small target is, that if we can get so good at hitting high percentage trades and get them quickly, you will never have to worry what kind of market you are in, as it will work in all market conditions, choppy or trending. As time goes on, your ability to see the bigger picture will improve and you will have the ability to stay with a trade for longer runs when the market show it to you, exiting with method rules. Again, getting so comfortable with the small stuff, will open doors for us to trade much larger contract size. Trading 20 contracts for one point is $ 1,000 dollars and can be had in a minute. Two points in an session is 2K for the day. That is a lot of money anyway you shake it.  The key is to look at this with a long term perspective. Becoming tops in any field always takes time, work, dedication, discipline, patience and the ability to stay focused.

Sniper Day Trading is basically a scalp trading method, but it can be “morphed’ into something more or combined with other trade principals to enhance or adapt it to your own style and or personality. With a scalp trading strategy, the emphasis is on high percentage short term moves. To get that, the entry is key. We don’t want the price to back fill or move against us much if any. To do that, precision entries are the key. Without precision entries, we will be risking to much on the trade when compared to the reward. Risking one point to make one point is called a 1:1 ratio and is the smallest ratio I like to see when I trade. There are other strategies out there that only put on higher ratio trades and that is fine, but it is not the basis for what we do. I have adjusted my trading habits a bit over the last year so as not to take many counter trend trades as per the method. This has given me more opportunities for larger point moves but it requires one to wait much longer for those set ups to develop. This has helped some traders to screen out some of the smaller trades, which was in part why I did the updated version.

The market is always changing and there is rarely two trades exactly alike, but they often will show very similar characteristic’s as I pointed out in the last video’s. In those last video’s I did, since I only focused on a small tick chart and no accompanying larger charts to create a clearer structure for us to follow, the emphasis was on the simple patterns only. One can not and should not only trade based on one small tick chart. You can not see what else is going on around you. So don’t get confused their with that. The next video’s will include everything up on the screen and will take you through the process and full method details. It may be good for some to go over the rules for entry and exit’s. The market consistently expresses itself on the screen each day. If we learn to listen to it and adapt ourselves to the price action we will be in tune with the market and will be able to see larger moves coming in advance. Trading for larger point returns requires a lot more from us as traders. You have to have the ability often times to trade for several hours to only take those trades that may meet say a 3:1 trade ratio. They don’t happen that often and you will be required to risk more on your entry/stop. Risking 6 ticks will require you to make 4.50 points on the trade. How many trades meet that criteria in a session, not that many, but they do exist, but not without putting in the extra time it will take to wait for the setup and then again to wait for it to come to fruition (come to pass).

This is where I find an advantage in trading the way I do. Successful traders will so often tell us that trading is more of an “Art” than a “Science” and I would agree with that. So we need to let the art of the trading method express itself out on the screen. Each one of us has the ability to do this, but we need to see the big picture and let your knowledge of this method express itself on the screen. There are rules to follow as per entry. There are rules to follow as per exits. If scalp trading, setting a 1 point target is fine, no matter what the environment, even if you see the move continue on up. No trade management is needed in that environment except possibly moving up your stop a tick or two as you approach your fill. If you see a large consolidation that is building and building, it will likely carry with it a much bigger return and taking a T-2 type trade with no targets but stops only, will work just fine. There is more work to manage the trade in this situation. If you scale with multiple contracts, taking off half at say one point or better on strength is something I often times like to do. This locks in profit and now you can not loose on the trade. You may be giving up what you could have had if you had not closed out half your trade, but that is trading with hindsight and not realistic. By taking half off early, you can often times hold on for a long move up, because you are more relaxed and in control. Ride the move up as per the method, their are many ways you could proceed…………………………….

Well, thanks for tuning in to part of this lesson, as the rest of it gets a bit more specific and am not able to share.

I wish all my readers the very best this Holiday Season.

Vince

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What Is Sniper Day Trading?

Tuesday, November 9th, 2010

Today is Monday November 8th, 2010 and we saw a slow narrow range today as the S&P and Dow backed off their most recent new high ground with the Dow off -37 and the S&P -2 for the day.

We saw a slow narrow range today as the market gaped lower to start things off. We did see another gap filled today, but it took most of the session to get it done. As you can see over the last few weeks, most all the gaps have been filled within the same day or by the open of the next session.

We do have a large gap that is still open from a previous session and would be a good idea to remember where it is and when it happened. It happened 3 sessions ago at 1198 and as mentioned is still open.

I would be watching 1215 for Tuesdays session as an important area of interest. If that area gives way, it is possible the market will work its way back down to fill that gap. Currently in the night session the market is off several points and sitting just above that number, by about one point, so we shall see what happens in the morning.

One interesting thing to note is the Dow never came close to filling its opening gap even though the S&P did. That too is important to know and remember going forward.

In yesterdays blog, I was talking about how important it is to understand how a certain elements work together to give a trader the statistical trading edge. The elements are “time, space and energy”. Space would amount to the movement of price, since its travels are done in an element of space. Understanding all of these elements are important. Some do have a higher value than others, but all are essential.

The element of time is the first one, which traders are required to wait. That waiting is a component of time and essential for the price to work its way into position for its next move. Without time, space (price movement) would not exist and so is needed. It is in passing of time that allows traders to establish there positions and creates price movement, the second element. There is a right time and a wrong time to enter a position. You want to learn when to enter at the “tipping point”. An exact point of time that prices move in your favor with little draw down. That is not always easy to do but it is possible. Enter to soon and you incur additional risk and potential for loss. Enter to late, when the move is now seen by all and you risk being the answer to someones exit, by taking the other side along with everyone else. It can be summed up in two words, “Trade Timing”.

The second element is space, where prices move. Price moves through definable boundaries created by its participants. Those boundaries take place over time and are often well established. If you can spot the trade boundaries and allow time to work for you, you will begin to possess the trading advantage. So, you are allowing time to pass so that price can establish trade boundaries that are definable to you, the trader. So far we have the first two elements working together to create and give you that trading advantage, time and space.

That brings us to the last element, trade energy. This element is not often thought of, but is key in working with the first two. The energy is essential to the move in that, it is what drives the price higher and or lower. That happens at a specific time as discussed, but the energy is what moves the price through space, the second element. All three are working together. As time passes, energy is often building, depending on the definable boundaries discussed above. The way that happens is again first by the passing of time as traders establish positions above and below boundaries that they feel is important to them. When you can identify which area’s are of greatest importance to the largest group of traders, you will often be able spot “stored energy”. It is just sitting there. Here again, you will need the passing of time to allow that stored energy to build.

Generally the bulk of traders and investors think alike. Thinking as they do to better spot where there stops and being prepared to do the opposite can be one way see these area’s. Price establishes itself through space by creating highs and lows. Each high and low says something as pivot points are created. Its understanding this language and the combination of all three elements that creates the trading advantage we seek.

Sniper Day Trading seeks to exploit those three elements to put the statistical trading advantage on my side of aisle. When I can do that, I pick up winning trades. We don’t need a lot as we all know the futures market is highly leverage. The key is better to keep risk low and gains consistent, even if those gains are at times small.

There are key spots on a trade screen that represent small windows of opportunities. If we hit these windows of opportunity right, we keep risk low and have a high degree of success in hitting at least a modest target. We come to learn what price should do at these small windows and when it doesn’t do as it should, getting out does not have to be letting your stop get taken out. Managing the trade is very important, but doing the first part right, this part is much easier as you will be looking to take your profits and not running for cover.

All of this takes time and an understanding of how price action works in conjunction with the elements discussed. Trade indicators are only a reflection of the three trade elements discussed above. They can help you see what is on the screen already, but are not able to identify, because of lack of knowledge and screen time. This is something that can and needs to be learned, so don’t be down or hard on yourself if you are not make the progress you hoped for. More tomorrow……. Today’s trades below.

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Dow Jones Industrial In Position for New Highs on Year

Saturday, October 23rd, 2010

Today’s post is for Friday’s market 10-22-10, as we saw the market put in an inside day as it gets into position for new highs on the year.

Well, that is how I see it and the markets resilience in not letting up its bullish tone which has been impressive. I am sure it is making a lasting impression on the “Bears” who thought this market was done. The last eight weeks have all but took that crash and burn scenario to the grave, at least for now.

The Dow is sitting within striking distance on setting new highs for the year. Some will call it Alice and Wonderland, while others just don’t argue with fact. Price tells all, even if it defies all logic. Under all the news releases, their has not really been a lot of good news to push this market higher. This is truly the wall of worry, because I know their is much to worry about.

We all need to keep our minds open at all times. Many months ago, I called and seen the March 09 bottom, and by April had confirmation that the market was going to move up to exactly where it did. The first target was a little lower at S&P 1120, but later called for the new push to new highs. We did all of that and completed the move more or less as I thought. Once completed, I had in mind that the market would take some time to put in a top and we would then go down to retest the lows or lower. I am sure that is what a lot of people thought, but they did not keep an open mind as to the current environment. They likely only saw what they thought would happen and was not ready for what did actually happen. I could see in early July that the market was not likely to fulfill my early layout and adjusted my mind to see  and call the market rally at that time. Again, in late August was the big move that we are still in and I was waving a bull flag for some time right their at the bottom. The market could have tanked as many were calling for, but that was not the likely outcome.

The moral of the story is not to say that I am so smart, I could have been wrong, but to always look at both sides of isle. If we get so convinced that we are right about a market direction, it can embolden you to trade out of character. Risking to much on any one trade and over extending yourself can work, but it usually leads to a wipe out of some sort.

Market psychology can be a hard thing to understand, but it often plays a bigger part in market direction than most realize.  This ties in with the above, as at most all of the daily market turning points the majority have always been wrong. How do you not become the majority and think independently. Their are many ways, but understanding how market rhythm plays into the flow of prices is one way. Another way is think in the opposite way of the majority as market extremes are met.

I often report on “Investors Intelligence” weekly market survey of “Market Timing Newsletters”. We have been seeing a steady rise from a market extreme as of late August. This is one way that showed me that the majority was wrong about a large sell-off. I mentioned in Tuesdays blog writing that since Tuesdays market was a real downer, it was likely to take steam out of the continual bullish rise in the sentiment numbers. I was right, as that was the first decrease in market sentiment since late August. Every week since then has increased by just a little. Last week we were at 47%+ bullish and after Tuesdays close and the new poll taken, moved down to 45%, a neutral reading. This is going to give more room for an upside advance if the market co-operates.

With the Dow just under new highs for the year, a push up to reach that level is very likely. The thing about that is, the S&P is trailing and will likely offer some additional room their as well. From the way it seems to me, we continue the advance up and make slightly new highs in both index’s before we slow down and reverse back off this move. A new high in both index’s will get headline attention and all those who waited, will be kicking themselves for not getting in at lower levels. They won’t be able to handle a continued advance without them in it and will buy in at the very top, only to see the market drop and a whole new set of pain develop. So that is what I see and what I saw from the bottom. If things change, I will have to adjust that, but so far so good.

Today’s article is mostly about the daily markets, but the lesson in that is, don’t follow the crowd. Learn to think on your own and try and understand why and how the market moves. This is same for smaller time frame trading, which is what I do. I am a scalp trader by nature and like to not overexpose myself to the markets. Getting in at low risk spots to take what the market will freely give is what I like best. I do often scale out on some trades, but the power and momentum is on my side. When I loose the edge, I get out. If after entry, I start to loose the trading edge, I get out. Sometimes the trade still works out, but the price has to prove it before I re-enter.

Below is an equity chart of my trades from Thursday and Friday. I did struggle a bit on Thursday, but came back before I hit my daily loss limit and Friday was much easier.                                    Enjoy the rest of the weekend !

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Major Index’s Move up Sharply, to no surprise

Tuesday, October 5th, 2010

Today is Tuesday October 5th and the major index’s move up sharply, to no surprise as we saw big gains with the Dow being up 191 points and the S&P around +22 points.

Just a quick update on my trading today, as I did very well, but had a stumbling block to get over first. I was up against my daily loss limit, as I got caught in the 7 am West Coast flurry. I did not check for what news was coming out, so that is my first mistake and I did not get my automatic stop in place as the market went against me. Luckily, that was only a 2.50 point loss and not anything worst. So, I gave myself one pass on the mishap to try and come back and I did, all gains after that, for a combination of around 6 net S&P points and 10 points from the bottom. Chart below.

Today’s move was no surprise to me and I welcomed it. Yesterday, one level was broken and I pointed that out, as the second one that was needed to confirm held strong yesterday and even acted as a strong spring board as prices moved off the price I quoted to the tick and we have not looked back since that 1127 S&P low from yesterdays market. Today’s gap looked like it was not one of those that was going to come back and it didn’t.

We are likely to see higher prices in the days to come. As we broke above the long term weekly resistance that was so strongly established from years back. We will likely keep pushing on the uptrend for a while as we get closer to the election. I believe somewhere around 1220 or so was the numbers on the S&P I was looking for this year.

The market has climbed “The Wall of Worry” to a tee and I am sure their are many who can not figure this market out. It constantly does what they don’t expect it too, which is exactly my point.

If the market was always easy to figure out, it would no longer offer the opportunities that it currently does. So be encouraged, when you get their, you will be apart a very small group of people who can consistently pull money out of the market on a regular basis. The thing to do is, get their, easier said than done.

It is possible, to make it into that small group, but it does take a few things that could take you several years to uncover. That is what it usually took all the great traders of today to get where they are.

Is their a way to cut down on the length of time it takes? Yes, I believe so. So many traders go from trading system to system, always looking for what does not really exist. If you trade a trading system or are pursuing such your efforts could be better spent looking into how to read the market. Trading systems usually fail, where as a trading method is very different. Their is so many facets to learning market behavior that any and all time spent here is and will never be a waste of time.

If traders would learn about these three things, “Time – Space – Energy” and how that relates to the stock market, you will be miles ahead. Back to previoius point, trading systems will most often fail, because the market rarely stays the same. It can go through long periods of consistent behavior and then move on to something else. Constantly curve fitting parameters seems like it will work until you start applying it to real trading. If you don’t know why the price is moving (space) then you are only left to guess as to its next move. If you don’t allow for time into the equation, you will often be to soon or to late with your entries and you won’t know why. If you fail to equate the importance of stored energy, you never know how long and far the market is likely to travel.

Anyone who get a handle on the above three elements “Time -Space and Energy as it relates to the stock market, will be able to build for themselves a long lasting trading business that will not be subject to the common elements that cause traders to fail.

I do teach such these things in my course and mentoring program. This is not a big pitch, but it just is what it is.  Try and build your trading business or pursuits on a strong foundation like the one I mentioned above. Pursuing, something that will tell you when to buy and sell only, and that is the key, only, is not going to help you in the long run. You will be trading dependent, instead of independent.

Point yourself in the right direction and spend your trading time towards lasting solid trading principles.  If you need some idea’s or just want some free advise, email me, I will point you in the right direction. If you want more than that, then we can talk, but make your time count while pursuing your dreams. That way, you will always be inching closer and closer to fulfilling it.

Good Trading to all, Vince

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Do you have a daily equity Stop Out Point

Wednesday, September 22nd, 2010

Today is Wednesday, September 22nd, 2010 and the market is trying to hold onto its gains and doing a pretty good job of it as the Dow was off 22 points and the S&P minus 4 points for today’s session.

The market has been running into that resistance I wrote about in Mondays blog. The last two days confirms that this area as stated is solid resistance as it is having trouble making continued headway.Two things, we are either building for pull back, just under today’s lows or we are regrouping for another assault. The night trading is showing some gains right now, but that does not really mean to much right now. Tomorrow we will know more about future direction. If we get over this area with conviction, we will continue the climb to the numbers I wrote about on Monday and a few weeks ago, so far so good.

I was on the road yesterday, but did trade on the open just before I left and lucky me, the one day I decide to get up for exact early open, I get a stop out day. I was down 3.25 points for the first part of the session and called it a day. I normally would have tried to wait a while, but I did not have time since I was leaving. That is not good in that when you have restraints, it can effect how you make decisions and it did for me. I would have been OK, if the market was more normal with its opening active price action, but it was slower than dirt, no movement. I got no follow through on my trades and was not in scalp mode so I kept getting stopped out with small losses.  Another mistake I did look at what news was coming out. If I did, I would have seen that Tuesday was Fed Day.  Many traders don’t even trade on that day, because the action is all very different, and it was. Usually you will see some activity in the early session and then it will grind to a halt as  the announcement gets closer to 11:15 A.M. West Coast.  It picked up nicely after that but I was done and gone for the day.

Today’s trading was back to normal and I was back too. I made up for yesterdays mishap and now, we go forward. My trades are below for the day.

I believe every trader needs to have a daily stop out point. It is essential for long term survival. If you don’t a 3 or 4 point daily loss, can turn into a 7-10 point daily loss, who knows. Don’t give it chance. Cut it off and come back tomorrow. That takes discipline and is what you need to survive. If you can’t do it, you need to find it within yourself to stay in control. It is easy to lose control while trading and it happens to traders all the time. Don’t you be one of them. Their are going to be losing days on occasion, that is a fact that we all have to deal with, but they don’t have to happen that often. If you are a big swing trader, you will at times close your session with more losing days because of lack of opportunity, with the hopes of big winners later on as the trades come together in future sessions.

I can’t handle that. I like to come out on top as often as I can for the day and that is why I trade the way I do. Their are so many opportunities during the course of a day, it is not to hard to snatch a few points and get out. You can see in today’s chart above, there were plenty of potential trades to take and things were not even that busy today, I would call it an OK day as far as price movement. If you try and trade all day, it is too easy to make mistakes and get sloppy. That is where traders make it in the morning and give it all back in the afternoon. It is because they are no longer fresh.  Traders need to take lots of breaks if you are going to trade all day. To keep that pace up, day after day, week after week is to much to expect and as stated, you will not usually make any more than if you traded for 2-4 points a day.

A trader who can average 4  S&P points a day will make 80 points a month. That is a lot. Three points a day is 60 points a month and even only 2 points a day is still 40 points a month. The key to that is average. That is why I do like to shoot for bigger days when the market is willing, to make up for a daily stop out day, like yesterday. In the end, maintaining a high monthly average is what you want and not getting greedy is the key.  For me 2-4 points a day makes the most sense, with the occasional windfall day 2-3 times a month. A trader could not ask for anything more than that in my estimation.  How about you?

Good Trading to all. Vince

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“Day Trading Support & Resistance”

Thursday, July 29th, 2010

Today is Thursday, July 29th and the market advanced and then retreated after the open to close down 5.25 points for the session.

Yesterday, I mentioned that the early morning move was likely a move to 1106 and at which time we would, ” pull back for a moment” and that is first what happened. The market pulled back 3 S&P points and then broke out over the 1106 area making a run for the 1110/ 1111 target area mentioned in yesterdays blog post. Unfortunately all of that happened in the pre-market before the open. We did go a couple of points higher than that, around 1113 before the pullback began. With such a large opening gap, it looked apparent that we were going to fill the gap and it did.

The market continued with the selling into the late morning session where it gained its footing at much lower levels and staged a good rally back up. Selling came in with a slight pull back and that is where we are now, 1096.75 on the S&P 500 emini futures.

I think we still have more of a pull back to go in early trading for tomorrow. I see some short term resistance at 1100 after which we could pull back with a break of 1095 triggering a continuation of the selling of which could take us to 1080 rather quickly in tomorrow session. Support should come in around that level if in fact the sell off takes hold.

On the other hand, if 1103 were to break to the upside, that will be the first sign that the selling has stopped and further sideways to up action could be expected. If 1110 gets taken out, that should spark a very good rally with legs behind it to continue with the overall advance.

By tomorrow mornings pre-market open, I could get a better idea of which way this is going to go. If I had to pick one now, I would say to the downside, but will be met with a lot of buying off that lower level back up rather quickly to continue the advance. At this point its a little hard to say, but I do think the advance will continue into next week after this correction.

Today’s trading went pretty quickly and I did OK picking up my daily goal in short order, about 35 minutes of trading. In-fact it came by way of a few Short trades in the markets second hour. I have my screen shot below and a few notes on it showing the good and the bad parts. I don’t show all of my screen but as I note on the chart, some is better than non. This consistent view of the market on a regular basis, hopefully can give you an idea of the timing that is available to those who see this as a value to there own trading. I don’t say what the tools are and or how I construct it, but the consistent view of price action moving off of the turning points as identified on the screen, as mentioned, may be a help to some traders who think that they could benefit from this.

There is a whole lot more to being successful at day trading, but showing what I do on a regular basis, can help you decide over time if this is something you could see yourself using. I have other time frame charts that work together with this as well as learning how to read the price moves themselves. Trading indicators are a reflection of the price itself as I have said many times, if you can find low risk area’s of interest at short term market turning points and trade with the natural rhythm and flow of the markets, you could do well. The only thing that can likely stop you, is “Yourself”.

We can be our worst enemy, when it comes to trading. Having unrealistic expectations of what we think the market can and should do for us, can be a problem. The first thing any trader needs to do is understand price structure. The market gets taken up, to only get taken down. It does this at key spots for many different reasons. An understanding of support and resistance is also a must. This is the way prices move. When there is a barrier of resistance overhead, prices can not advance. That resistance becomes re-enforced as it attempts to overcome the invisible barrier. As time passes, more resistance and market pressure has built up, and the barrier has now been over-run. A flood of orders hit the market tripping buy orders for different reasons. Some are buying to take advantage of the new move, while others are buying as a means of protection to limit there losses. The same action but for different reasons. I don’t care what the reasons are, but my job is to assess the pressure and see if it is adequate enough for a trade. The more pressure the greater the move.

Time comes into the picture as I mentioned yesterday, by allowing the market pressure to build. If the market has spent all of its energy on a one directional move, it will often need time, to bring in more pressure, trade positions, above and below the current market. Those orders are placed in time and space, which establishes the next level of advancement, long or short. Without the element of time, the process and positions are weak.

This is established on every time frame and with a level of unseen co-operation at every level. Time charts at the yearly, monthly, weekly, daily, hourly, minute, and down into tick and volume charts of every size. There is something for everyone at all levels. Your strategy and trading personality will determine what is best for you. Be sure you put the right peg in the right hole, which means, trade according to your strengths and dominant trading personality. Don’t hold positions overnight if you are a scalp trader and don’t scalp trade if you hold for longer swing trades.

More on the topic tomorrow from where I left off today…   Until then, Good Trading.

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