Posts Tagged ‘Big swings’

December Santa Clause Rally, Boom or Bust

Tuesday, December 22nd, 2009

This post is for Mondays session, December 21st, posting a little late.

Mondays trading turned out to be a mover, to the upside. The market has pushed itself back up to the top of its range and in fact hit that all elusive number I had called for so many months ago, 1120. Mondays we hit 1120.25 on the cash market S&P a full 50% fibonaci retracement of the full trading move over the past two years.

 The momentum did turn rather quickly with the size of the move and currently is up on the 120 minute chart. As I write this post it is currently Tuesday a.m. and today happens to be the day that the new investors sentiment numbers come out. I will not see them until Thursday, but the price action that takes place today is reflective of those numbers. So today’s close on Tuesday, is going to be very important.

I am anticipating the numbers to turn more positive which in-fact will be more negative in reality, but we will have to see how it turns out, first with todays close and then with the numbers themselves.

The month of December has traditionally been a positive one and some have even called it “The Santa Clause rally”.  In the last 20 years, Decembers trading has shown a gain 16 out of the last 20 years. At this level, it would be 17, but we are not finished yet. It is noteworthy and that is why I point it out.

Below, I have posted the trades I took for Monday. I have not traded for several days, but thought I would squeeze a little in. The market was just coming off a big rally up and then I come in. Well, I knew better, to try to play the trend, because we were coming into overhead resistance and coming off a large move up already, which started in the pre-market. That is why I have a different model to trade out of, based on price action conditions. It is not rocket science for me to switch to “Scalp Mode” and pick up a few trades and points in both directions. All I do is follow my “Turning Points” as I have shown you before. In-fact I mentioned it in my last post. The thing to do is just follow it. If you do, the trades work out, if you don’t, they don’t, pretty simple. I did an OK job in following my signals, I could have done better. You can see where I came in and compare that to the signal turns in the link below.

If I was trading earlier, I am sure I would have had those break outs to the upside. Starting January, I will definitely be trading the open and getting my points for the day will be easier and quicker for me. The pace is faster and I like it. Trading after the market has slowed, is not what I prefer, but as I have said before, I have to take what the market gives at the time I decide to trade. A trader can not impose there will on the markets, so you learn to take what it offers at that time.

I absolutely love the way I approach the market. I could always stay in “Scalp Mode” if I want to, but I would at times miss out when the market shows signs of life and has legs. I have my other screen set up to accomodate this type of run away condition and can easily take advantage of it, if it presents itself. It is not really hard to switch into this screen, one click of the mouse at the bottom of my Trade Station Platform and I am there. A screen set up to accomodate large moves that are very clearly defined that only require you to follow it. It always boils down to that, can you follow signs to get to your destination, they are clearly marked.

In my blog, I often talk about things that hold traders back from following their signals. If you can get a handle on the trading discipline that is required to execute, you will make it. You first need the method or plan and some may call it system, but what ever it is you follow, it needs to be clearly defined and show consistency. Then you need to exercise your mind and build your character to follow through with it. If you don’t have the first one, the second one will not help you and if you have the first one without the second, you will still be in trouble, the two go hand in hand.

Start the rebuilding process now, start exercising your mind, write out your plans on paper in your trading journal, hopefully you have one. Start exercising your body as well, this will get your endorphins kicking in and give you some blood flow and hopefully motivation, be consistent. Get going now, see the picture in your mind of how it all comes together, but it takes action. It is not going to happen only by thinking about it. Once you see the big picture, break it down into small bit size pieces. What is it going to take to get step one finished or started, then on to step two. Break each one of the steps down as well, if it requires more work. If you write it out and take this approach, you will be moving forward towards your goal and dreams. This takes you out of the dream state and puts you in the driver seat. Do you know where you are going? When will you get there? What will it be like when you arrive? Taking charge of your life is up to you and all it really requires is one small word “DECIDE”. Have you?

http://www.screencast.com/t/YTRiM2U3Y

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Posted in Price Action | No Comments »

Keep Your Trading Eyes, Ears, and Mind Open

Saturday, May 30th, 2009

Today is Friday, May 29th and the markets continue to mark time and drift sideways.

Well, the last couple of days I did not have time to update my blog. My daughter came to visit from out of town last week and it took up most of my days.

Yesterday’s trading went well, with a pretty big day on the S&P’s. I pulled in about 5 times my daily goal with some big runners. We just had that kind of day yesterday where prices were trending very nicely. I will include a video of one of the bigger trades that I put on below. I did get stopped out just before that trade by one tick but re-entered and it pulled down nicely back to the middle of its range. I did take an add on trade at the bottom. Note that the placement of entry was not marked in the right spot. I took no heat on the add on and covered it quickly.

This morning I tried to play the market the same way, it was a mistake.

There were plenty of nice 1 point trades through 10 am West Coast but before that, I was trying to hold onto the whole position for bigger returns. There are times that the general theme of the markets are trending, but this is not that time. Often, yesterday was moving and today is choppy. In this kind of  market, you cannot expect big swings every day and I know that.

Today, I had to stop trading at my daily loss limit. This is only the second time since late January that I did not make it. I would have to say that this was human error and not the market at all. There were plenty of moves through out the day, but I got caught up looking for more. I had my daily goal, but stayed with retracements that took me out.  It will be back to basics on Monday.

As traders, we all slip from our trading models at times, but it should be the exception and not the rule. We all need to keep our eyes, ears and mind open to the rhythm of the market. We cannot get the market to do what we want it to do. I have said that before and it holds true for me as well.  I need to take my own advice here and get back up to the basics of getting my points.

We all have the tendency to shoot for more, but my last blog said it clearly. What do we trade for? Picking up a daily goal with the least amount of effort in the least amount of time, but not being in a hurry, is the order of choice. All traders struggle, but if we want that struggle to be kept to a minimum, we need to take the path of least resistance and flow with the market’s energy.

It’s really all there before us to exploit on a daily basis. There are imbalances being applied to price all through out the day. There is a center point, where prices move away from and return to, with adjustments up and down along the way. Coming to understand how that rhythm is played out on the charts each and every day is what we try and adjust ourselves to, not the other way around. If you have the framework and understanding, it really is not that hard, but at the same time, it can be the hardest thing you have ever set out to do.

There are things every aspiring trader can do to put the edge on your side of the fence. Some of them are real easy to see and understand, while others are a bit more difficult. You can leave the difficult ones for the brave and allow the screening process to bring you the jewels that are on your own personal treasure map. The question is, do you know how to read the map?

I will post another article maybe tomorrow with some things to think about and look at, so check back over the weekend.

http://www.screencast.com/t/yLszshSoA Equity chart Thursday

http://www.screencast.com/t/XZ6KN94Kvx One of my Live Trades

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Posted in Trading Psychology | No Comments »

Advantages of Short Term Trading, Part 2

Tuesday, April 21st, 2009

Today is Tuesday, April 21 and the markets had a nice positive reaction to yesterday’s sell off.

Yes, the market turned higher after it set itself up for a big rally. I did not catch any of that and came in once it was all over. At the top of the range, the market just consolidated back and forth, not making any head way for quite a while. I chose to trade small in this environment, just 5 contract, and that was really just fine. I put on 7 trades all with split exits, just in case I saw something that was worth staying in for. But I didn’t and only had small targets of 4-6 ticks. I ended up with 5 gains and 2 losses and about $550 dollars. A little less than I would like, but I would have had to wait the market out for directional changes and I did not want to do that today. For what I was trading, I hit my daily goal.

Yesterday, I wrote out a trading scenario that I am sure takes place every trading day across the world. It is people who only know how to trade one style. I don’t really mean to be critical of the people who trade for only large risk/reward returns, but if that is the only style of trading they are willing to put on, it could be holding them back.

For instance, yesterday the bulk of the drop came from the pre-market and there was very little in the way of catching a trend. If you were trying to trade like that yesterday, you most certainly were getting stopped out all day. The market had a downward bent to it, but very little in the way of directional swings. If  you see that is all the market is offering you and you don’t adjust yourself, you are going into the market closing underwater and not a happy camper.

I have noticed, after the market experiences a large run up or run down, that is the time it starts the choppy trading, with little direction. The market is trending only about 30%,  leaving 70% of the time in the CHOP.  So if you are looking for the big swings all of the time, you will definitely have your share of stop outs.

Some people are just fine with trading all day and there are those who can do it successfully. But most cannot and I think you need to find a way to bring the advantage to your side of the plate. When I tell people that I only use 4 or 5 tick stops, many have a hard time believing that. Well, it’s true, and I often target only 1 point. That’s a 1 to 1 ratio and seems to be flawed for many.

Everyone trades differently and I like the way I trade. When the market presents large swings, I can easily take advantage of it and when it does not, I am still walking away in positive territory for the day, until it offers me something different. The idea is to make money and do it consistently. I am sure there’s no argument there.

I feel if you can learn to scalp for small moves, you can trade any kind of market. It is easier to trade for more, once you know you entered at the lowest risk point, now exiting at higher levels as the market allows. If you only know how to get in, giving yourself a 3 or 4 point stop, you are limited to only taking trades consistent with that type of room. They do not come that often and you need a lot of patience to wait for it and when you get stopped out, you may have the tendency to take less than desirable trades after that, possibly incurring greater losses and ending the day with a large black-eye.

If you are or have suffered losses as your day starts out, one of the ways to change that is to get your confidence up by just taking a few small trades for profit. I remember one day a few weeks ago, I had so many 1 point trades, some for only 2-3 ticks too, but I had 30 some odd trades in a row like that. I think it was even more than that, but I don’t want to exaggerate, so I will underestimate it. The point is, 30 points or more for the day is off the charts. I did not worry that day if the move was a runner or not. I just took every trade as a short target. I had my best day ever. I was not preoccupied with the larger direction, just took what was in front of me. I am not saying that is the best way to trade, but that day, it worked great for me, as well as so many other days similarly have.

If you are down, the best trading tonic you can take is a winning trade. Then, sit up and order another, straight. Pretty soon, you are going to start feeling better about things. Don’t try and drink the whole bottle at once, you will get sick. Remember, trading is very much a mental game. If you don’t know how to play, you will most certainly lose.

Confidence is very important. When you know with a high degree of certainty that when you place an order, you will hear shortly after, TARGET FILLED, it’s a beautiful thing.

Trading for income is different than trading to get rich. Perspective and self control, is what’s needed to accomplish that. If you don’t have any, put your requests in and order yourself some, it could do wonders for your BOTTOM LINE.

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

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Posted in Trading Lesson | No Comments »

Very light volume ahead of Presidential election

Tuesday, November 4th, 2008

Today, I saw very light volume and a market that did not know where to go or what to do. It was basically in a holding pattern until the market knows who is going to be elected. But let me tell you one thing, when we find the winner, boy oh boy. This market is going to go right back to his old tricks of BIG swings. It happens every election and I remember all of the past one’s. 

When George Bush was elected the night trading was incredible. The market was establishing itself for new policy in so many areas. The environment, oil, exports, on and on. Every category saw shifts taking place and I would imagine that this time will be no different. With an Obama win, you can expect a big surge in alternative energy stocks. Solar power is going to experience a big surge in volume as people pile in. Every one has their buy lists ready to go and with a push of the button the reallocation is going to take place. In addition, those expecting an Obama win have placed their positions already, but that could be premature. Who knows? But we will see shortly. Expect big moves and it could be to upside. My job at Sniperdaytrading is not to predict, but to interpret and there is a difference. Once something happens, and as it is happening, we position ourselves to take advantage of the movement and thus the profit.

Below is a small sample of some trading chart setups that I look for. This is a very small sample but when I see these setups I move on them to capture my piece of the pie.  After that, is a small section of trades that I took today. I have notes next to the trades showing if it was a winning trade or loss. This small section of time is only 20 minutes, but a lot can happen in such a short time. Take a look for yourself.

Enjoy,

Vince

http://www.screencast.com/t/uR0XutHp2

http://www.screencast.com/t/jxZCIipcC4D

http://www.screencast.com/t/ByMOh7Ars

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Posted in Slow Market | No Comments »