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Trading Psychology, should not be overlooked

Thursday, December 30th, 2010

Today is Thursday, December 30th and we saw the market back off early and close down slightly for the day.

The market is still in the doldrums with low volume and movement in the major index’s. Look for things to get back to normal after the second week of January. No trading for me until after the New Year, but am posting the low risk market turns as shown in the chart below.

As we approach a new year, traders will be looking for answers to there personal trading performance. Many times, they will be looking for new trading methods and or trading systems to solve their problems and that could be the answer for many, but their could be other solutions to look at first. Trading psychology is best not overlooked.

One of the first things we need to look at when assessing our trading performance is “ourselves”.  I will agree first of all, if you don’t have a solid trading method that you follow, with rules for entry and exit, that is clearly defined and in writing, you are going to have a hard time. Having it in writing, is important, as it defines exactly why, where and when you are to enter a trade. Then can define, when you should exit a trade. All of that said, to say this;  If you have that and things are not working out, many times, it is the unseen things withing ourselves that we are overlooking that is holding you back.

I know for sure that their are traders who have a good trading method that they themselves have come up with and or, purchased from the outside but have failed to make it work. The first order of business is to examine ourselves and see if something has been overlooked within ourselves that is holding us back from hitting our trading goals.

Many times it is these hidden things that if uncovered, will set us straight and put us on the road towards our long term trading goals. Let me expose just a few of them which may help jar some memories.

Do you move your stop after entry?     Do you second guess yourself after pulling the trade trigger?       Do you find yourself over-trading?       Do you find yourself always cutting your gains off early?     Are you taking bigger stops than you should be?      Do you have blow out days?

All of the above are things related to “US” as traders and many times not the trading method. We need to be able to follow the method and not our emotions while trading. That can be easier said than done, but if you identify the possible problems, then you are better able to do something about it. Ignoring these issues will not make you a better trader and looking for the Holy Grail of trading systems or methods will not do it either.

This may sound a little harsh, but it is intended to help only. We need to be totally honest with ourselves if we are going to see the lasting change we desire.

Go back over the list of questions above and ask yourself to answer those question to see if you are doing any of them. No one will see your answers but you.  You need to come clean with yourself and if you find that you are doing some of those things above, ask yourself why? Then ask, what can I do to stop?  Often the answers are found much deeper within you and can be difficult to extract, but is possible.

Fear, is all to often a reason for some of the above. Fear of loss can get you out of a good trade and force you into a bad trade. Both are motivated by a very strong emotion. Eliminating or getting control of that emotion is essential and must start with asking what am I afraid of. Is it fear of being wrong? If so, then it could be your ego is getting in the way. To often we don’t like to be wrong and will force trades and or re-enter a trade to quickly because we so want to be right.

Their is no room for large Ego’s in being successful in this business. The market will humble any trader who sports this attitude before to long. Humility is the opposite of this and is what is needed. If its not within your character to be this way, then you know the first thing you have to change.

Greed is another strong emotion that often goes together with trading fear, kind of like, peanut butter and jelly (lol). Trading greed can make you do things that you will question long after the trade has been made. You will say, “why did I do that, I knew better”. Well, these are only some of the obvious factors that can hold us back at traders. I am not immune to all of this myself. Writing about it, helps me maintain the right attitude and hopefully helps a few along the way.

Not trading with true risk capital can bring in additional pressures that not need be present, which can be traced back to a lack of patients, to wait until your financial situation is best suited to take on this risk. So here risk capital is traced back to lack of patients to wait. What do you think will get transferred to your trading screen and account if you lacked patients before in pushing to trade sooner than your situation properly allowed? That is right, a lack of patients to wait for the right setups and a lack of patients to wait for the trade to develop once in. Both are going to give you less than optimal results.

I can continue, and may pick this up from here tomorrow, but you can see, the traders who engage in some of these things may have perfectly good trading methods, but the problem is within themselves. It is not always the case, but it can be.  Every trader needs a written plan for their trading and it needs to cover everything, whether it is self done or purchased from the outside.

Examine your self and trading behavior to best see the results you desire this coming year, 2011.

Good Trading to all, Vince.            P.S.    Please feel free to comment on the above !

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Trading Lesson – What you Believe can make all the difference-

Sunday, December 19th, 2010

This post is for Friday’s sessions, December 17th, as we saw the market with no gain or loss in the major index’s.

Currently the Stock Market is flirting with new highs for the year as we saw a nice reversal off of Friday’s bottom. As mentioned a few days back, their is more room in this market if it wants to rally. The S&P has upward sloping resistance at around 1258 give or take. Currently we are at 1238.50 as of Fridays close. With that said, it looks like around 20 S&P points and or 200 Dow points to run into this overhead resistance.

Typically, the week before Christmas is a bullish time for stock overall, but the volume tends to dry up. Don’t look for high volume days this week, because a lot of traders will be taking this week off and I will likely be one of them. I will play it by ear as of Monday’s session. If I can get up early enough to put on a trade or two, I will if the market looks active. If I wait to long, the volume will dry up and that is no fun, waiting around for something to happen. Below is my one set of trades from Fridays session. Two entries, two exits, on one move, two points and done.

I will be traveling to the S.F. Bay Area this week, for a few days, so it is unlikely I will do much trading. Outside of that, this is a good time to do some evaluating of your goals and plans for the coming year. This is always a good time to start making plans for 2011. The volume will likely be back by then and starting the new year where we would like to see ourselves be is a good idea.

With that said, I was thinking of a few things the other day and shared them with my group. It started with a single word, “Believe”.  Let me share a small piece of what I sent out to my group the other day, as this is a pretty big issue in what ever method or trade style you hold to. You can apply this to how you trade or the way you see the market. If you have a good trading method, then this may be just one thing that is holding you up. If you need a good consistent trade method, then you could always contact me, but that is all besides the point. See if some of this can help you right now, where you are at. I hope it does.

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When trading, you need to quiet yourself down internally and just express onto the screen what you have learned. Sounds easy, but that can be harder than we to often make it. If their are doubts in your mind that you may not find your way to profitability, you need to get rid of that right now. Do not allow for doubts and negativity to creep into your thinking. You have come so far and need to finish the race. Confidence is important, but we are not even talking about that emotion right now. First, lets start with “believe”. You need to do that first and get that deep down inside of you. The more of that one thought the trader gets into his or her mind, the more power you possess to actually make this happen.

In the dictionary, the word “believe” shows some of these meanings. See how you can apply these attributes to your own trading.
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Believe:  be·lieve  (b-lv)

v. be·lieved, be·liev·ing, be·lieves
v.tr.

1. To accept as true or real: Do you believe the news stories?
2. To credit with veracity: I believe you.
3. To expect or suppose; think: I believe they will arrive shortly.
v.intr.

1. To have firm faith, especially religious faith.
2. To have faith, confidence, or trust: I believe in your ability to solve the problem.
3. To have confidence in the truth or value of something: We believe in free speech.
4. To have an opinion; think: They have already left, I believe.

Idioms:

believe (one’s) ears

To trust what one has heard.

believe (one’s) eyes To trust what one has seen
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Their are so many good points here. To accept as true or real.  Do you accept as true or real what you have learned with this method?  If their are any doubts, then you know what you must do, change that.

Next, to expect;  Do you expect to find what you need in the session to get your points for the day?  If you don’t you need to start thinking that way, not negatively or with doubts.

Next one; To have faith, confidence, or trust, I believe in my ability to solve the problem. Do you have faith in your ability to solve the problems that come up as the trading day is trying to derail you and your emotions?  If you don’t, you need to find some, because you need this, all of this in your trading.

Next on the list; To trust what one has heard. Do you trust that what you have seen and heard with this trading method?

Next;  Believe (one’s) eyes, to trust what one has seen. Do you believe with your eyes the things that you have seen and how it can be harnessed to give the ambitious trader a few points a day?  If you don’t you should, because this works.

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The word “believe” is a power word if it is harnessed properly. If you have doubts, you are going to have problems. You need to get to the place where you possess the real likelihood of overcoming anything that is holding you back. If it is a lack of knowledge, you need to do something about that. If it is your own emotions, running wild, you need to settle down and re-evaluate. With every problem, their is a solution, but it all comes down to us. Are we willing and able to meet the challenge. For some, the cost is too great and for others, they only need a little structure and guidance to help them stay straight. Either way, only you know you need. Take the time with coming weeks to evaluate where you are and where you want to go. Your strengths and your weaknesses. Taking action is always better then just sitting on our hands hoping for something to change. We must make it change.

I wish everyone a great Holiday Session coming up. Enjoy time with your family, and keep a healthy perceptive on everything.

Good Trading to all. Vince

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Traders Self Sabatoge

Sunday, June 27th, 2010

This post is for Friday’s market June 25th as the market did exactly what we expected in stabilizing itself from the multiple day decline.

The S&P futures ended the day up a few points as did the NASDAQ market. This is what I saw for Fridays session, that we would go down early on in the session and that in the afternoon, we would rally off the bottom and stabilize from the recent decline. That is what I posted in Thursdays blog posting and that is how it turned out, a good call.

Now that we are, “where we are”, what’s next. Well, from just a pure price action basis, we should bounce up from here. I am and will be looking for a move up from these levels. It could be just a few days producing a nice rally up of around 25 + points as there is strong resistance around 1108. I would expect a slight pause at those levels if reached. If this moves comes, then we will have drawn the lines in the sand so to speak for the next move after that, but one at a time. If this move does not come and for some reason we continue with a sell off, the 1044-ish area needs to hold at all cost or else. Currently at 1074 S&P futures.

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I would like to talk about a common problem with traders seeking to find there footing in the trading world. This is a common problem across a variety of markets traded. “Maintaining control while trading”. I know I have talked about that before somewhere in a previous blog.

Every trader brings with him or her, excess. What I mean by that is, emotional attachments that can effect there decision making. Trading discipline is just one of the ways to control some of these emotions but there is more. The way to see yourself is also very important. If you have failed in the past at other difficult ventures including trading, you may have negative emotions tied to your current attempt at tying to bring it all together.

Some would call it “baggage” and I guess we can call it that too, just to keep it simple. This baggage wears on our current self image and unless removed, can hold us back subconsciously. Often times, we will find ourselves taking trades that have nothing to do with our trading method or system. “Why”.  That is the big question.

Once traders get over the fear of “pulling the trading trigger”, they at times now think that they have a machine gun. Over trading is yet another negative end result from from unwanted actions. Again, we ask the question, “Why”. Every trader is different and they come to the table with all of this trading baggage that can weigh them down. It is often to much to bear and another unwanted end result can be self sabotage.

Self sabotage, can be a traders worst enemy, because of frustration and so many uncontrollable emotions, they may find themselves doing the very thing that they do not want to do. These are all results from not being able to stay in control while trading, exercising trading self discipline.

Everyone wants to be a successful trader and has there reasons why. Part of the solution can be found here. If yours is big enough, you will do what you have to in order to get a handle on your weaknesses. The very first step is to identify that you have a problem. Don’t run from the thought, but face it. Here is an exercise:  Write your strengths as a trader on one side of the page and your weakness on the other. Being honest with yourself is only going to get you where you want to be faster.

Now you can face your weaknesses and take steps to overcome them with a direct action plan. When you feel the urge to place a non method trade, ask yourself , does this trade meet my criteria for a method trade setup? If it does, you can not hesitate in pulling the trigger, but on the other hand, if it does not, taking a non method trade is will only continue to hurt you. You now know what you are not supposed to do and doing it anyway will continue to prove to yourself that you are not ready to trade live.

We as traders cannot fulfill all of our emotional needs in the trading arena, but that is what often happens. Our need to be right, is just one thing that hurt. We don’t need to be right every time we place a trade. If your assessment is wrong, chalk it up, learn from it and move on. If you insist on always being right lets say in your relationships or discussions with friends, then you are going to have a hard time as a trader. You need to give up your will to always be right, because you will inevitably be wrong at times along the way. This is another example of baggage that I mentioned above.

See yourself as you want to be and take steps in your personal life and trading life, to work towards that. Many people think that the two lives have nothing to do with one another, but I beg to differ. The two world get blended together.

Taking steps to reduce stress in your life will help your trading results. Being relaxed is yet another sign that you have the self discipline needed to trade your plan and you are OK with it. Stress, Kills.  Don’t trade if you are stressed out about anything. If will get transferred into your trading results and you won’t like what it produces.

As much as it is possible be at “Peace” with yourself and others. There are many ways to go about that and will be a topic for another day.

I hope this helped someone out there. Trading can be simple, but is rarely easy. If you need or want help in this area, I can help in addition to the solid trading method that I offer. Send me an email if you want to turn things around.

Good Trading, Vince !

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Controlling Day Trading Emotions, Fear

Monday, May 24th, 2010

Today is Monday May 24th and the market is selling off big time in the night trading after a down day on the street.

Currently the S&P futures are off 18.50 points, 1.73% at 10:35 in the evening West Coast time Monday. After trying to make a go of it, the market went south near the end of the day to close down for the session. Right now the S&P futures are one tick off the low set a couple of weeks ago 1051.50. We are in dangerous waters, let me tell you. Hopefully investors have battened down the hatches. This market could bounce up off this low and buy a little time, but you have to leave the door open for a complete blow out through this previous low.

A couple of days ago, I heard of a poll taken on CNBC that over 50 % of the viewers said that the market was a good buy in this territory. That is scary, because if you know anything about the masses, they are usually wrong and betting against the public is usually a winner. Don’t be apart of the public yourself, or you could get fleeced. Just be careful. Investors with long term money, you are swimming with sharks right now and they smell blood.

I read a few things over the weekend and the situation in Europe does not look good. My hope is people will have a little more time before the hammer drops and it will, it may be tomorrow or after this possible bounce up, but it is coming.

If you see storm clouds coming and they are big and very dark, you don’t have to be a genius to know that it is going to rain and if you don’t have something to protect you from the elements, you are going to get wet. That is what is coming. I hope its not right now, but there is nothing any of us can do to stop it. The only thing you can do is prepare to profit from it or step aside and keep your assets safe until you are ready to exploit price advantages. You have to be in control to pull this off. Do not let your action be controlled by your fears and or any other emotion. When it is your time, see yourself following through with the trade and managing your stops. Taking a defensive approach is really alright most of the time, until and unless you safely have the advantage for the big moves.

Those  moves are here and more is coming, so be prepared to move on what you know. If you don’t know and or feel the setup, don’t do it. Wait. That is a hard thing to do for many traders but it is in your best interest to only trade what you know. Don’t take a trade because you feel the market is going to leave you behind. That is trading out of fear.

You are trading out of a different kind of fear. There is fear of loss, but there is a fear of lost trading opportunity that can be just as bad as the first. Many traders are not aware of this one, but let me tell you, it is just as dangerous as the first one. By entering late, you have to widen your stop many times to allow for your aggressive entry and as the market loves to do, pull back to get your stops and leave without you, which creates only more emotions but of a different sort.

Traders can not afford to be controlled by emotions and it does not matter which ones they are. You need to follow a plan that can take you to where you want to go safely. If its not safe, wait until something comes along.

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OK, enough preaching.  In today’s trading I only took one little trade for .75 points and had to go. I got a call to help a friend and left for the rest of the day. It’s not a problem and I don’t feel like I missed much. Helping others rates pretty high, even when it compares to money. Money can had, but saying no to a friend can not be replaced. It sounds like I am still preaching, O Well, what can I say.

I have a video of today’s action in one chart from my T-2 Trending Screen. I have a couple of indicators on the video, only one at first and then the second one later in the video. I marked up the screen with virtually all of the signals it generated today to show you even if you virtually took all of the signals it gave with no discretion, you would have done very well. That is an understatement, because you will see a lot of trades for a ton of S&P points. Grant it, you only need one or two of those small trades and not even the big ones to make a great day. Using good money management that is apart of Sniper Day Trading, you will be keeping your losses very small, scaling out of your trades and covering your position at all times to make a consistent daily profit.

As I mention in the video, I get the trades from a completely different way than what you see on the screen, but it comes out to be in the exact same area on most all the trades. The indicators can help you see what you can not yet see with your eyes, but will be working towards. Being able to trade without any indicators at all and get the same or better results. That is what I teach and what I encourage my students to learn. The price always comes first and the indicators are a reflection of the price. Not all indicators are the same as you can see on the screen and this is only a portion of what I use. Together it makes it a complete package to easily follow, getting your timing down and not getting ahead of the market.

If you are going long or short at the right moment and you can do it again and again with a high degree of confidence, isn’t that what trading is all about. Then returning tomorrow and doing it again. I think it is OK to rely on the indicators in the beginning, as long as you know what you are supposed to be seeing with your eyes as things develop.

That’s it for now,  good trading to all.

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Solutions For Poor Day Trading Performance

Friday, March 5th, 2010

Special Edition for Traders !

Many traders have the hope and dream of day trading for a living. That is a very worthy goal and represents an opportunity for being your own boss as well as being free from a 9 to 5 type job. With the economy the way it is, living this dream is something that is sought after by many and for good reason.

Having the vision is always the start, executing the vision is another story. Everyone starting out, always has the highest of expectations and why not. No one would want to go into a new venture thinking that they are going to fail, it is normal to hope for the best.

What happens next is often the unseen struggles that traders face. Most all, traders have some knowledge of how to put on a buy or sell order, place a stop and a target, move there stop up to lock in profit, etc. But being a successful trader, long term has a lot more to it than what first meets the eye. As the struggles begin for many traders, they can start to feel angry, frustrated, anxious, confused and at times depressed. Many sense a loss of control over there trading and it is this loss of control that can leave the would be trader feeling powerless.

Lets see if we can help. Most day traders, set out with very high expectations about becoming rich. These thoughts can at times cloud the vision of what it is really going to take to bring it all together. To begin the process of turning things around, “Set smaller achievable goals” for yourself. If you were to go back and check your account to see where it was that you went wrong, many times it is going to be a few bad days that really set you back and put you under water. If you could remove those really bad days and at worst replace them with only minor losses, that right there could make all the difference.

If you notice that you are making repetitively the same mistakes, DON’T DO THAT. It sounds like a no brainier, but you would be surprised by how many people do just that, or maybe you won’t. I am not throwing stones. I have made all the mistakes there are to make while trading, so I can speak from experience. Not exactly the kind of experience we like to talk about, but that is apart of learning. Take the struggles and mistakes, especially the ones that are repeated several times and put a stop to it. Find a way to overcome it. It may mean you need to take a small break and pull things together before re-entering the arena.

Never increase your trading size to try and make up for previous losses. That is pretty important, but it is done all the time. If you are not trading well, what would make you think that trading larger size is going to make you trade better. If you are not trading well, you have two choices.

1)   STOP  & WAIT – give yourself a cooling off period.

2)  Trade smaller size until you get your rhythm back, then as you are connecting with the market, increase your size then and only then.

By increasing your size while taking losses, you are being influence by the money. You want to get back what you feel the market took from you. First of all, that is the wrong mindset and that is the reason, you are increasing your size. You are being controlled by your emotions and are making a bad judgment, which will likely hurt you even greater.

If you take additional losses, with increased size, you can soon see the snow ball effect, well, that is what I call it. Things will only escalate into bigger and greater problems. This is where you could start to feel that “Loss of Control”.

These are where those big loosing days come from. It is days like this, that can mean all the difference in the world to being profitable.

There are many good traders out there, that just need a little adjustment here and there, to turn the corner. Holding onto bad patterns produce consistent results when executed, but these are not the results we are looking for. Separate yourself from your problem and examine exactly what is missing.

It may be that you pull your stops because you don’t want to be proven wrong yet again. That loss is going to to much to bear so, you pull your stop at times.  You may move it by a full S&P point or any unit of measure depending on what you are trading. Other times you leave yourself with No Stop at all, which is always a big mistake. This again is something that you did not plan to do before you entered the trade, but something that you just did. Often, you look back and wonder why did I do that in the first place. Only after all the dust settles can you see that you were not acting rational.

There is a root cause to all of these and many other trading problems that are faced day in and day out across the globe by those pursuing there dream of day trading for a living and experiencing the freedom and the lifestyle that comes with the territory. But what is it and how can I get it. There is no easy quick definite answer that fits for everyone, but I can give you a clue. It all starts in what is between your ears. “THE MIND”. The power of the mind is often overlooked in resolving traders problems. They just think that if I do this or make that change, things will be all better. It goes a little deeper than that.

A successful trader needs to have “Mind Power”. That is not some fancy new age mantra, but the reality that stands in the way for so many. The power of concentration and the ability to focus and only do those things that will produce the results you are looking for is where the base of the solution lie’s.

Take a step in the right direction, TAKE CONTROL, live and fulfill your dreams, I am here to help. Visit www.sniperdaytrading.com and request your free copy of my branded Book on “The Power of Concentration” and see what you can accomplish with your new powers.

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Reach Your Trading Goals With The Power Of Concentration

Thursday, February 18th, 2010

Today is Wednesday February 17th

Continuing from yesterday: Becoming your own Trading Coach. Yesterdays trading lesson, may have seemed a bit harsh for some, but it is the truth that will set us free to live our trading dreams. With that said, having identified what some of our biggest trading problems are, we can now set on a course to find solutions to those problems.

The ability to focus our concentration on our trading setups is going to be key. Let us assume your trading plan is to trade the first 90 minutes of the day or less, which is a good plan. There you will have volume and usually plenty of trades to choose from. If you have a daily goal, like I do, 2-4 points most days, then you can break your goal down to a few bit size pieces or you may get it all at once. The trading session will have to determine that.

You need to be mentally prepared to see and wait for what you believe is a high probability set up. If you take less than that, you put yourself at risk for getting stopped out. You will have to make that up, if you expect to hit your goal within the morning session, so be a little particular, but not so much to where you don’t end up taking any trades. You can not have fear as part of your self talk or underlying mindset. You should be calm and relaxed. It is normal to be a little anxious, but that is what we want to work on. RELAX, but get and stay focused on what you are looking for.

Let the trade come to you, don’t go out searching for it. If you know what you are looking for, then wait for it. A sniper does not go out and use his rifle like a machine gun, hoping to hit something, but he waits for his target, sets his sites and lets the target come to him. When it all lines up, he takes the shot. This reminds me of the resent movie, “The Shooter”. That is what we should be doing, lining up our entries and letting our targets come to us. You will need the power of concentration behind you, to focus and execute the trade.

If you are not exactly sure you know what you are looking for, then you have a problem. You need to be sure, what you are waiting for. If you get confused about your entry, how can you be sure about getting your target. So, that may be one of the things you need to put on your list to solve and resolve.

Assuming you know what your target looks like, you should have a tight set of conditions that can put you in the trade. I, often times put up a small circle on the screen as an acceptable entry area. Going outside that entry area posses more risk on getting stopped out, but also of not hitting my target. Every trader needs a reference point for his entries, something that tells him he is paying too much or just right. If you don’t have one, that to is a problem and another item to put on your list of trading solutions.

Trading for extended periods of time can work against you. So be sure you do not find yourself glued to the chair for 3, 4, or 5 hours straight. You will not be helping yourself, by doing this.  Your ability to concentrate will go down as more time goes by. Sitting at your computer and trying to follow and or trade most of the day is very draining and you will  make mistakes. You may just be trying to work hard and that is admirable but we need to do more activities with direct purpose and concentrated effort. Think of it as leveraging your time, the same way that we leverage ourselves in contract purchases.  You will get far superior results by executing your trading plan this way.  But again, this is only my opinion.

The last point for today. One key element for trading success is going to be your ability to stay focused and concentrate through the whole process as mentioned. Staying sharp and fresh, first starts by making a decision and then doing those things that will bring it about.

Read about the life of any great man and you will generally find that the dominent quality that made him successful was in his ability to concentrate. Study those that were failures and you will often find that there lack of concentration was the cause.

I have tried to give you a few different things to think about here, but the main point is your ability to concentrate and execute your trade plans.

Good Trading to all !

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Todays trades; just small scalp trades today. I have not done this for a long time. I usually have trades for 1 or 2 points or more, but today, I did not have all that much time in between doing other things. I find it odd, that the subject I spoke of today, is what I did not have. I was not as focused as I should have been, but just trying to do too much.

 I do know that I came in late on the first trade and a touch to early on the second trade, the third trade I added on and averaged out a larger position the fourth trade was flat and I re-entered for the last. All winning trades but all small. I just took what I saw quickly in and out. +2 ticks, +2 ticks, + 2 and +1 tick (avg), flat and +2 ticks. These trades were not pretty but it counts and I will take it. I should have a little more time tomorrow.

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Building Solid Mental Foundation for Day Trading

Thursday, February 4th, 2010

Today is Wednesday February 3rd and I picked up my goal today with a few small trades and wrapped it up. I did see a lot of potential trades I could have taken today, but I was satisfied to stop with 2 points. Below is a follow up from yesterday post.

I find it very interesting two days ago as I first made mention of a post “Face your Day-Trading Weaknesses with change”. In that post I talked about how important mental fitness is in the life of a day trader. If we ignore the things that are holding us back and refuse to face and deal with it, we will not be moving forward but backwards, staying true to form with the majority of other traders.

We need to do different things than the majority and be strong enough to face our fears and challenge ourselves in the area’s that hurt. That is where change is going to come from, identifying our weaknesses and building on our strengths. As I mentioned already, failing to do so, we will only find ourselves repeating the same day trading error again and again, to our destructive amazement. That is no way to make it to the top.

In keeping with the theme, yesterday I made mention of a man who puts out really good material to help all people, but it is so applicable to “Day Trading and Trading for a Living”  

 It is very similar to what I have talked about and although it is not earth shattering, it is simple, practical and what we all need to be doing. You would think that something as elementary as this would not be that hard to do, but it can be some of the hardest things to face and overcome.

His post is from February 3rd, and the title is called “Examine your weaknesses”. The February 4 th post is all so true. The site is called “The Daily Motivator”.

Some may find it strange that I am promoting another guys blog or website without personal gain to me, but this site is more than about me. It is a way of helping traders see what it is that they need to do, in order to find success. I feel my trading program will help many as well, because I do offer a road map and some personal mentoring to help those who choose, find their way. If you already have a trading method or plan that you are following, that is fine, but for those that need one, it is always available.

 
That is a lot to swallow in one sitting, but you can take it slow. Make a list of your trading problems. Start with the biggest to the smallest. Clearly identify what it is you are consistently doing wrong and go to the next one and write it all out. This should be in your trading journal as all of us should have one. As you go down the list, try to be as honest as you can. No one will see this, just you, so expose your weaknesses.
 
Now, think of what it is going to take to start changing what you are doing. If you are trading live and your trading equity is slowing going down, that is the first thing you need to do. STOP TRADING. See, that may not be what you want to here, but it is tough medicine. It is only until you get yourself situated. To stop trading is hard, especially if your trading account is funded and ready to go, but unless you stop momentarily, you will end up blowing your account out. Treat your trading funds as though it was the blood in your veins. You need that blood to stay alive, lose it and you die.
 
If you have no plan or trading method that is clearly written out with rules and objectives, that could be your first order of business. Trading without this, is like setting sail for England without a map, compass and other navigational tools, hoping that you will find it if you just go east.  The odds are probably about the same, not good.
 
If you have that already, you need to be sure that what you are following is sound and will be applicable to a variety of market conditions. We rarely see the same market on a regular basis, that is why system trading does not live up to its claims. If your plan or method is rock solid, then you need to follow it. There may be reasons why you struggle to follow it and that may be a lack of confidence in your ability to perform when conditions are right. You may need more time to practice your method and build your confidence, so take the extra time you need before you jump back in and build the mental side of your trading so the two can become one, success will follow.
 
If anyone is in need of a “Trading Method” that works and some “Mentoring” to go along with it, I offer both. Visit, www.sniperdaytrading.com and see the possibilities.

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Identifying Fear Based Day Trading – and what can we do about it !

Monday, January 18th, 2010

This post is for Fridays session, where the Major Market Index’s closed on Key Market Support.

This is going to be a very important week to watch. We are currently resting on key market support that goes a long way back. This support has many times proven itself as a point of interest. Each time the price has moved higher, but will it happen again? That is the 64,000 dollar question that everyone wants to know. Well, anyone who trades for longer swing moves and those that may be trading stocks. The general market trend, accounts for the majority of a stocks overall movement. I don’t remember the actual percentage, but it is very high. So this kind of information is key, to those traders for sure.

Day trading the S&P E-Mini’s for daily income, is very different. We look for the short-term direction and move with it, at low risk entry points along the way. It is different for everyone, most traders trade differently. Almost like snow flakes, no two are the same. Well, maybe not that extreme, but you get the point.

It is vital to have a set strategy as you approach any market. Trading stocks is really no different from trading the Index Futures, because the index consists of stocks. Often, it is much easier to trade the emini index futures, because you do not have to look for what to trade. Each stock does have a certain personality to it and learning the many nuances of each, can be time-consuming. Trading the E-Mini’s you don’t have to hunt or look for what you are going to trade and you do have the leverage to go with it.

OK, I don’t want to get side-tracked and promised to talk about Fear and Greed and how it relates to trading in the way that I see it. Everyone has a perspective on this topic and many things have been said regaurding these two trading emotions. It effects everyone differently and many learn different lessons as they have dealt with this in there past and continue to deal with it at times in the future. It is not something that goes away. You have to manage it and put it in its place. By managing it, I mean, not letting it take root in you, effecting your trading results. It can destroy any trader and humble the most arrogant, very quickly.

Nothing good comes from Fear based day trading. We often react to our positions with this strong emotion. It can make us do things that we would not normally do, only to regret it all at the close of the trading day. We may often ask ourselves, why did I do this or that. It may be, that we pulled our stops and tried to give the trading position more room, only to find out that our first small loss would be the only acceptable loss for us.

Now we find ourselves, not willing to take a loss that large and give it more room, only to find that the more room you give it, it just never seems like its enough. During a time like this, you are not reacting rationally, but out of fear. That fear, can be coming from many directions. One is as simple as not wanting to accept you may be wrong. We may feel at times that our ego and trading confidence are tied to winning trades and when we are not posting them, the thought of losing, just does not match our ideal.

Trading from a fear base, is only going to bring you down any way you look at it. All traders need to accept the fact that you will have losing trades. If you can not handle that simple fact, you may not be ready to trade. I know that I reacted last week to fear, in one trading scenario. I don’t remember which day it was, but, I saw the bottom of the market and felt we were going to go higher, I jumped in to soon and did not follow my entry method and it cost. I was reacting out of fear, but this fear was a little different. It was the fear of missing a move, that caused me to take action to soon and not wait for my base method entry.

It happens to all of us, but the best thing you can do as a trader is go back and write it down. This will cause you to remember why you did that and understanding that, you will have the basis for making changes. People move whole markets based on fear. Trading stops are often triggered by this emotion.

Traders who trade without a trading stop often react to the whims of the market, by getting out at the bottom, only to find the market move up again, but without them. As the price drops against them, they convince themselves that it will come back, it has too, is how it usually goes. Traders often talk to the price as if it can hear them. Fear based trading will produce adrenaline, but that is not what you want. Get that at the gym or some other form of exercise.

You want to have as little emotion as possible and want to remain level and in control. That goes for large gains and your loses. If you feel that you made a mistake, your first loss it best. Never pull your stops, never. Close the trade out right where it is, no matter what and re-evaluate after you are flat. Often, you will be more objective when you are out of the trade and see it more clearly.

Try and trade with as little of a market bias as you can. The danger is in establishing a strong mental opinion, where prices could and should go, only then trying to confirm your predisposed position. We need to follow the market not the other way around.

These are some short answers to help defend against getting in that fear based trading mode in the first place. The opposite of fear, to me, is peace. You are content and at ease with where you are. That is what every trader needs to find. There are many ways to help you get in that state of mind and we can explore them in the coming posts this week. I have many suggestion that I use and will be willing to share them with you, so check back Monday afternoon or early evening and I will continue.  Until then, good trading.

Below is my trading from Fridays session.

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Controlling Your Mind, Controls Your Day Trading Success

Thursday, December 17th, 2009

Today is Wednesday, December 16th and “Fed Day” turned out to be a flop.

You would hardly have known that today was Fed Day, if you did not know, other than the initial swings that you often get after the interest rate decision was released. Everything as far as movement was minimal. It was no different from a normal day after the announcement. There was no break as far as direction and we are still locked in a mode of indecision. But that day will be coming to a close sometime soon, that you can be assured.

As I mentioned, if the market is able to hold on to its gains without any major drop and I say, “if”, then we have a very good chance that you will see some of that selling after January 1st. The gains are to large for the institutions to just leave them their on the table without locking in some of it so that they look good in front of their people. The temptation will be too great. It is never a good idea to let taxes determine your investment decisions but it happens all the time. This year it may be a bigger factor than other years as I mentioned, because of the large gains booked by the S&P, around 66% from the lows set on March 6th, 09.

I don’t want to make more of it than it is, but I only want to point it out so you may be aware of it, that is all. That is part of the reason why I think you may read this blog, to get insight that others are not seeing or talking about.

Today I did not trade again and may not for a little while, I don’t like the price action much this last week. Although after the fed announcement it did get a little better and could have gotten involved, but I was working with someone and did not feel like I needed to trade.

That is always a good idea, you don’t have to trade every day. There is no law that says you must trade, or you will lose your status as a day-trader. The reason why I say this is also because, it is always a good exercise to show yourself that you are in-control. That is one of the deep essential ingredients needed to come out as a consistent earner. Don’t gloss over that statement, it is more powerful and meaningful than meets the eye at first glance.

If you lose control, you can just forget about ever being able to count on day trading the emini’s for daily income, it just is not going to happen. I don’t mean to pop anyones bubble, but the more honest you are with yourself, the closer you will get to achieving your goals. You must and I say, must leave your ego at the door. There is no room for it in this business. We all learn something new and should have a teachable spirit about us. The day you lose that, is the day, you will fall. Your ability to get back up will depend on how soon you realize that you need to stay humble while trading and never get cocky.

Let me give you an example. If you look back or think back in your own trading, when you booked your biggest gains you will see just following those gains will be some of your biggest loses. Now, ask yourself, “why is that true”?  Here, let me answer it for you. When you experience your largest gains or good gains, you will almost always see it followed by large loses and the reason is human nature is as such, to get cocky and think more highly about your ability than you should. The loses are just a reminder that you are ahead of yourself and you will not be able to go farther until your thinking is adjusted to allow yourself to hold onto those gains and add more.

It goes back to last weeks posts, on the way you think determines your outcome. Unless you monitor your thoughts and write them down quickly, they will just blow past you like the wind and you will have lost a valuable opportunity to learn and grow from your mistakes. Change your thinking and you will change your results. It should go as deep as possible so that is it not just mental assertion, but let it turn into core beliefs, values, disciplines, combined with execution.

All of that takes work and guidance from someone who has been there and done that. I am still learning everyday and will continue to learn probably until I die because I have trained myself to have a teachable spirit which allows me to continue to absorb what I need to accomplish my highest goals.

If you settle for average, that is what you will get. If your goals are to just get by and make a modest living, you will never allow yourself to achieve more. Why put restraints on progress and I don’t only mean monetary progress.

It has been said that, the average person has 30,000 thoughts that run through his or her head in an average day. Don’t know if that is exactly true, but the point is, a lot of thoughts come inside our mind every day. We need to learn how to control those thoughts and direct them for good, our good and others. By doing this, you take charge and self direct how you want things to go. If you don’t, you will be pulled in every direction with little purpose and fulfillment.

This directly relates to trading, as it does many other area’s of life. While trading if you get thoughts that tempt you to get in to early because of thoughts about making a ton of money, your timing will be compromises and you will have allowed greed to take over as a controlling emotion. Your results will suffer and often times a domino effect can take place just from one bad move. Cut it off at the pass, don’t let that first thought take root, write it down and counter it with the truth as per your trading method.

Well, I am out of time and was on a roll, but maybe I can pick it up from here tomorrow. Below a video showing where we are and the challenges we face.

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Part Two; “Mental Day-Trading Exercise”

Friday, December 11th, 2009

Today is Thursday, December 10th and the Index’s recaptured the other half of Tuesdays drop.

The sentiment numbers just came in and I would call it good news for the bulls. The bullish sentiment currently stands at 48.4% that is down from 50% even and 50.6% before that. The extreme numbers to watch for are 55% plus, we are not there yet on this side. Looks like room for a potential rally, it is possible.

Over the last 5 days, the market has retraced exactly 62% from the last high hit on December 4th. After hitting that today, the market looks like it just went flat. On top of that, today was roll over day, meaning today the new contract month becomes the front month in the E-Mini Futures. For the S&P the new symbol is esh10. The “H” stands for March and the “10″ stands for next year, 2010.

Roll over day is usually a little strange in that you have half of the days volume in the old contract and half in the new contract. It makes for a slow day if you use tick charts. I feel, it was a slow day anyway you look at it today, not much movement. After the open, we only saw a 6 point range for the whole day. That is not very much and would call it a range bound day of consolidation. The thing is we did have a move up in the pre-market trading of about 8 points and the market basically close in that exact same spot, 1102 on the S&P December contract.

I will probably be looking at the new symbol tomorrow, esh10, as it will have more volume in it then. Today it was about 50/50, even. Tomorrow should be different.

The S&P’s current momentum on the hourly cash chart is up and the 120 minute chart that I also look at is just about to go positive, but hasn’t yet. Lastly, the daily is currently pointing down, so we still have a struggle going on here. If you get all of them pointing up, it could be like Christmas for many, we shall see. The main thing here is, don’t be surprised either way, break out or break down, and hold any opinion about larger direction to a minimum, that way you won’t feel like you have any long-term commitments. I know that thinking is popular with  single people, but while trading the markets, that is the correct philosophy to hold.

 Any follow through after todays move is going to have to be viewed as bullish. I checked the news front and I don’t see any releases scheduled for tomorrow, so the market is going to have to make its own news.

In todays trading, I started late in the day, around 10:30 West Coast, tail end of the New York lunch hours and traded a touch over an hour. I had three trades, + 3 ticks, +4 ticks, and +2 ticks for a total of 2.25 points. It adds up just the same if it was just one trade, minus a little commission and the .25 covers it.

Yesterday I said I was going to give you a small exercise to do and so here it is.

Re-read the second half of yesterdays post to get refreshed from where I left off,

Make a list of single words, about the way that you see yourself. This list is for no-one else to see or know about, so try and be honest with yourself. This really could help your trading, even if you currently don’t think it will. Take a deep breath and ask yourself the question, write down what comes to your mind and keep writing, don’t think about it too much and again, no-one will see it, just you.

OK, I will bet that was interesting. Your actions will be determined by the way that you see yourself, it’s just the way it is. If you have negative thought and attitudes about not only your trading or your results, but life in general, it will spill over into your trading. If it doesn’t, then you are probably from another planet, “Cripton”, maybe.  This is real, so give it a try, what do you have to lose.

If on your list you see things that you would like to change or think you should change, then, you know what it is you need to do. It needs to go a little deeper than a mental assertion that you will alter something. The reason why is, it probably will not stick if it is just mental recognition.

Let me give you an example. Have you ever made a “New Years Resolution” before? Sure you have, we all have done that. If you think back about some of those resolutions you made, I am sure, if you are like most people, that you may have only kept them for a week, two at best. The reason is you only let it go to the surface of your mind and then again, you may not have really wanted to change those things deep down.

If you make a commitment to yourself to do something, don’t take it lightly, follow through and be consistent. The reason is, it provides mental strength that you will need when you are trading. I can tell you that most of my trading mistakes occur when I try and take non-method trades, or going beyond my method. There is really no need for me to do that, but I do at times feel stronger than other times mentally and I do feel at times, the pull to take non-method trades, especially when I know I should not. When I am feeling mentally strong, I can resist the temptation to enter to soon and wait for things to better come together. The opposite is true as well.

Going back to the original point, if you see yourself as successful, disciplined, patient, determined and do things in your everyday life to match up with beliefs or soon to be beliefs, then you will be on your way to achieving it. Your actions will follow your beliefs and play itself out in pretty much all area’s of your life, with trading being just one of them. So now your know what you need to do. Prepare for “Battle” and the “Victory”.  You can “Do It”.

http://www.screencast.com/t/NzBmMTI3ZD     Todays trades

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