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Business Plan

Friday, February 26th, 2010
# Contract x $50 per x1 pt. x 2pts x 5 days wk = $ ——– Weekly Draw

1 x 50 dollars pt. x 2 pts x 5 days wk $500.00
2 x 50 dollars pt. x 2 pts x 5 days wk $1,000.00
3 x 50 dollars pt. x 2 pts x 5 days wk $1,500.00
4 x 50 dollars pt. x 2 pts x 5 days wk $2,000.00
5 x 50 dollars pt. x 2 pts x 5 days wk $2,500.00 $250.00
6 x 50 dollars pt. x 2 pts x 5 days wk $3,000.00 $500.00
7 x 50 dollars pt. x 2 pts x 5 days wk $3,500.00 $750.00
8 x 50 dollars pt. x 2 pts x 5 days wk $4,000.00 $1,000.00
9 x 50 dollars pt. x 2 pts x 5 days wk $4,500.00 $1,250.00
10 x 50 dollars pt. x 2 pts x 5 days wk $5,000.00 $1,500.00
11 x 50 dollars pt. x 2 pts x 5 days wk $5,500.00 $1,750.00
12 x 50 dollars pt. x 2 pts x 5 days wk $6,000.00 $2,000.00
13 x 50 dollars pt. x 2 pts x 5 days wk $6,500.00 $2,250.00
14 x 50 dollars pt. x 2 pts x 5 days wk $7,000.00 $2,500.00
15 x 50 dollars pt. x 2 pts x 5 days wk $7,500.00 $2,750.00
16 x 50 dollars pt. x 2 pts x 5 days wk $8,000.00 $3,000.00

This first 16 week section is the bedrock or foundation for going all the way. Not many people will be able to do this, I tell you that right now and up front. These results are not typical and I am not representing them as such. That being said, it is possible.

Just because most people do not have the discipline it takes to realize these results and the ones from below, does not mean it can not be done. It is up to the individual and their drive, passion, hard work and dedication to make this a reality for those that want it.

Many traders are quite satisfied to trade smaller lots and stick with that. I would add, it is easier to trade small size for the most part. When you increase contract size, it usually changes things for most people. Notice how I said, most people. Maybe you are not like most people and in-fact do not want to be put in a class with “Most People”. I don’t blame you, I don’t either.

What I am saying is, if someone does not lay out the possibilities to attain a specific goal, he will never know how to achieve it or even the idea of achieving it, will be foreign to him. So that is why I lay it out as such, for seeing the possibilities of what the exceptional could do.

The most difficult part in reaching this goal is not attaining the 2 points per day to acquire the results, but it is in the mental preparation and “mind games” that people allow themselves to become subjected to.

As you increase your size, there may come a point that you start to get affected by the money. You may say to yourself, “that is a lot of money, I don’t know about that, maybe I should trade smaller”. Here, the money is affecting your decisions and may start creating problems for your actual trading results.

In this case, it come down to personal choice and meeting your overall objectives. If your goal is to earn 200,000 a year at trading, that is a worthy goal. You may only need to trade up to a specific number of contracts and stop at that point. (The number of contracts to do that is 8-9 contracts at 2 points per day, that is do-able.) What you feel comfortable with at that time. As your account grows, you may feel more comfortable with increasing your size and you may not. Again, personal choice.

If you decide to go to the next level, it usually does get harder, but it is only in your mind. If you stick to the plane and do all the things I teach in my trading manual, listen to the mental exercises two or three times a week, which will allow the neuro-linguistic programming their to take effect and in addition, work on yourself as I explain, there is no reason why you will not have a shot at moving on to the next level.

17 x 50 dollars pt. x 2 pts x 5 days wk $ 9,000 $ 3,500 wk
18 x 50 dollars pt. x 2 pts x 5 days wk $ 9,500 $ 3,750 wk
19 x 50 dollars pt. x 2 pts x 5 days wk $ 10,000 $ 3,000 wk
20 x 50 dollars pt. x 2 pts x 5 days wk $ 10,500 $ 4,250 wk
21 x 50 dollars pt. x 2 pts x 5 days wk $ 11,000 $ 4,500 wk
22 x 50 dollars pt. x 2 pts x 5 days wk $ 11,500 $ 4,750 wk
23 x 50 dollars pt. x 2 pts x 5 days wk $ 12,000 $ 5,000 wk
24 x 50 dollars pt. x 2 pts x 5 days wk $ 12,500 $ 5,250 wk
25 x 50 dollars pt. x 2 pts x 5 days wk $ 13,000 $ 5,500 wk
26 x 50 dollars pt. x 2 pts x 5 days wk $ 13,000 $ 5,500 wk
27 x 50 dollars pt. x 2 pts x 5 days wk $ 14,000 $ 6,000 wk
28 x 50 dollars pt. x 2 pts x 5 days wk $ 14,500 $ 6,250 wk
29 x 50 dollars pt. x 2 pts x 5 days wk $ 15,000 $ 6,500 wk
30 x 50 dollars pt. x 2 pts x 5 days wk $ 15,500 $ 6,750 wk
31 x 50 dollars pt. x 2 pts x 5 days wk $ 16,000 $ 7,000 wk
32 x 50 dollars pt. x 2 pts x 5 days wk $ 16,500 $ 7,250 wk

So, you decided to go for it. You will need support. NO DOUBT. Trading for Big Money does not come easy. When things get a little tough in this section, you will need someone to help you through.

I offer support long after the purchase of my course and anyone scaling up their contract size over time is going to need help in keeping perspective, clarity and focus when targeting higher objectives. This is not an option. If you need and want much more time to attain these higher goal objectives I am sure we can work something out. Just let me know.

I currently have a small group of traders and do plan to grow, but I am not interested in growing into very large group. This way, I will have time to address individual needs from traders as the process of meeting their daily trading goals unfold.

33 x 50 dollars pt. x 2 pts x 5 $ 17,500 $ 7,250 wk
34 x 50 dollars pt. x 2 pts x 5 $ 18,000 $ 7,250 wk
35 x 50 dollars pt. x 2 pts x 5 $ 18,500 $ 7,250 wk
36 x 50 dollars pt. x 2 pts x 5 $ 19,000 $ 7,250 wk
37 x 50 dollars pt. x 2 pts x 5 $ 19,500 $ 7,250 wk
38 x 50 dollars pt. x 2 pts x 5 $ 20,000 $ 7,250 wk
39 x 50 dollars pt. x 2 pts x 5 $ 20,500 $ 7,250 wk
40 x 50 dollars pt. x 2 pts x 5 $ 21,000 $ 7,250 wk
41 x 50 dollars pt. x 2 pts x 5 $ 21,500 $ 7,250 wk
42 x 50 dollars pt. x 2 pts x 5 $ 22,000 $ 7,250 wk
43 x 50 dollars pt. x 2 pts x 5 $ 22,500 $ 7,250 wk
44 x 50 dollars pt. x 2 pts x 5 $ 23,000 $ 7,250 wk
45 x 50 dollars pt. x 2 pts x 5 $ 23,500 $ 7,250 wk
46 x 50 dollars pt. x 2 pts x 5 $ 24,000 $ 7,250 wk
47 x 50 dollars pt. x 2 pts x 5 $ 24,500 $ 7,250 wk
48 x 50 dollars pt. x 2 pts x 5 $ 25,000 $ 7,250 wk
48 x 50 dollars pt. x 2 pts x 5 $ 25,500 $ 7,250 wk
49 x 50 dollars pt. x 2 pts x 5 $ 26,000 $ 7,250 wk
50 x 50 dollars pt. x 2 pts x 5 $ 26,500 $ 7,250 wk
51 x 50 dollars pt. x 2 pts x 5 $ 27,000 $ 7,250 wk
52 x 50 dollars pt. x 2 pts x 5 $ 27,500 $ 7,250 wk

If you are on a quest for greatness, this section is where it happens. You will need all of the things mentioned in the section just above and now, more. If you are able to continue scaling up your trades and get an occasional day that you bring in 6 or 8 points, say two or three times a month, this will insulate you from the occasional day that you get stopped out at your daily loss limit. (-4 points) Having a daily loss limit is so important, I cannot express it enough. YOU NEED TO CONTROL LOSSES.

That is what is always needed at any stage. There would not be any reason to consistently trade for your daily goals and in one day or week, loose a ton or ground and cash. That is what happens to traders all the time. They make it fast and loose it faster.

You need to make it slow and hold on to it. In my trading manual, I lay out all the specifics on how to go about doing this and again, you will need some kind of additional support.

When you start out at week 2, after your 1st week warm-up, you will be risking $100 (1 point, $50 pt x 2 contracts) against an account of say $5,000, an average opening balance for many people. That represents 2% of your equity per trade taken.

After the second section from above, if you are still on course, your risk per trade is now down to .85% per trade taken. Very Good, considering that you have been taking money out of your account. After the third and last section, if you are again still on course, your risk per trade is down to a touch over .50% and that is outstanding.

Overall your risk is going down all along the way and you are taking cash out of the market. By doing this, you are lessening the impact that the money will have on you. You do not have it all on the line, something a gambler would do.

This is the reason why, I do think it is possible for the exceptional to achieve results similar to this. It, by any means does not happen very often, but again, do not let that hold you back. Just because others have tried and not been able to do it, does not mean that has to be transferred over to you, does it?

I DON’T THINK SO! and you shouldn’t either.

Trading for as lofty of a goal as described in this section is again not easy and it may be as previously stated that you trade up to a specific number of contracts and “Hold the Line, Stay with Me”. A famous line from the movie Gladiator. Sorry there, a little off subject. The point is, this plan is not for everyone.

A very attainable goal, is to start trading just one contract for the whole month. If you have averaged 2 points per day, high and lows, then you increase your contract size to two, for the month. If you do not get to a net 20 days x 2 points per day, you stay at one contract until you do. Then you can move on to three and so on.

If you stay close to this plan, with conservative daily targets of 2 points + an occasional windfall 6-8 points once of twice a month, you will be trading 12 contracts and on pace to making over $250,000 a year. That is making it slow and holding on to it.

For so many others, it will only seem like a dream and those that have failed will tell you, “It can not be done”. Don’t let anyone’s negativism take your dream. Back in the day, others who knew what I was doing tried to do just that to me. If I would have listened to them, where would I be know, no where close to what I have achieved.

In closing, I believe that trading for 2 points per day is achievable and feel totally confident in my approach in getting it. I don’t currently trade the size I would like, but that will soon change. Getting my daily goal and helping people get theirs has clearly defined my objectives at this time.

Good Trading to All

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Will Dow Jones Industrial support hold?

Monday, November 2nd, 2009

This post is for Fridays session, October 30th.

The market sold off like fiercely on Friday and took the Dow down about 250 points. The S&P was off about 30 points. I did think that a re-test of the Wednesday and Thursdays low would come, but not so fast. I thought we had at least one more day to top out for the counter trend rally. There was news that came out on Friday, not really sure what it was to tell you the truth, but I could only imagine that it wasn’t good and the market reacted to it. It is to be expected.

Let me tell you, that in the month of September and October, the general public has become bullish. The last two months has only produced paltry gains when compared to the gains of the previous six months. That is where all of the money has been made. The general public is always late to the party and I don’t imagine that this time is going to be any different.

Mondays session is going to tell all, at least for now. What I mean is as I was telling you last week that the Dow has been outperforming the S&P and that was a problem. Well, it is not only the S&P that it is outperforming but the other index’s, but in a bigger way.

Based on my experience and I did not see this or hear this from anywhere, but years of seeing price action at work, the institutions are lightening up their riskier positions and reallocating equity assets in the high quality Dow Stocks. I mentioned this a couple of weeks ago, if I remember correctly. That is pretty typical at market tops

The Nasdaq Index is at a double bottom from its most recent pivot point low, something that the S&P is thinking about doing, to follow suit. The Russel 2000 Index has already overwhelmingly broke its most recent pivot low, by a wide margin. The Dow on the other hand has not broken down yet at all, but is sitting right on a major trend line support.

So, the Dow is the strongest, next comes the S&P 500, then the Nasdaq and lastly the Russel 2000. If the Dow holds and moves higher, the other indexes will only be making a counter trend rally, but will still remain in a down-trend, stopping at overhead resistance. Once the Dow does break down, all of the other Indexes will only go down that much farther and faster. There is a lot of room for the market to move back to the middle of its range of the last 8 months.

The last thing I will say about all of this tonight is, “Earnings”. I don’t follow this much either, but just the big picture. The projected earning that Standard & Poors are putting out for the S&P 500 for next year are a bit of a fairy tale. They have been constantly wrong and now they are painting a wonderful rebound of large proportion in earnings. Anything is possible, but I doubt it. I had heard, according to Bloomburg, that the S&P has had declining earnings for 9 straight quarters and only this last quarter have they been able to increase earnings. Those increases are from very depressed levels, not that hard. The increase in earnings in my estimation is coming from cost cutting in various forms. You can only cut cost so much and for so long, before you can not cut anymore. Where are the increases in sales going to come from. No one is spending and no one is lending and money??? INTERESTING.

That is why, the market is going to adjust itself to reflect where it is going to be in 6-9 months from now, probable lower. Just now the S&P is turning their earnings, like this month. If you invest in these companies now, you are going to pay way to much. But that is what the public does. You needed to be invested at least 6 months ago to be able to enjoy some of this rally, not two months ago, like I talked about at the top of todays post.

We need to see what the Dow is going to do in Mondays session. If it to breaks support, then all of the indexes will have downside momentum working for it. But if it can hold, there is now room for it to clear 10,300, a complete 50 retracement from it’s all time high. The S&P numbers for the same retracement are 1120. We got close.

The sentiment numbers backed off just a little last week. It is sitting at 48% Bulls. A reading of 55% is considered bearish. We only got as high as 51. One last push to the numbers above could push the reading to 55%, the big word in there is COULD.

Friday’s session was incredible. So many great clear signals all day long. I only took one trade and it was split up, what I call a “T-2″.   The first half for +1 point and the second part for 3 1/2 points. I was in the market for less than 1 minute on the first part and 4 more minutes for the second part. I really only had my screen open for 15 minutes, start to finish. There will be plenty of other trading days to capture higher point returns. But my daily goal was meet, no struggle, no fuss, no mess. Just the way I like it.

Until tomorrow

 

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Dow Hit Resistance at 8240 + Level

Friday, May 1st, 2009

Today is Wednesday, April 30 and resistance is met at 8240, will it break through?

Today’s trading went easy, picking up all trades entered, 8 for 8, but all the trades were very small contract size. I just took it easy because yesterday after the Fed announcement, which I don’t even know what they said, I took a trade that looked real good. I planned it for a high point move and it played out as planned, 5 1/2 points on 5 contracts, 1375. So I just took it easy today and totaled little over 4 points, but just on a few contracts.

Yesterday, I said to watch the 8250 level, that was going to be a key resistance level. Well, it went right up to it yesterday and retreated like it saw a ghost, straight down. Today, it went for a second run at that resistance level, same thing, retreat. Two attempts and no luck. That level will need to be broken to the upside for the trend to continue. Tomorrow, I will show a chart of it, looks very clear.

Also, in looking at the Fed news release, it was funny to see it play out exactly like I said that it usually does. That is, after the announcement, it will shoot in one direction, to suck players in, then over shoot in the other direction and take everyone out and then it will establish the move that it wants to make. Pretty much exact. Once it hit that 8240-8250 level, it went straight down.

All of this is not really that important.  It’s only important that you are able to position yourself to take advantage of some of these moves and I did that as stated above.

I will post a full article for tomorrow’s blog and possibly show the trade after the Fed news – I recorded it!

Have a great evening!

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

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Trading Discipline, Part 4

Friday, April 17th, 2009

Today is Thursday April 16th, and I have a valuable trading lesson below.

I started my day on the wrong foot, that was for sure. I know the potential always exists to mess up a bit, but I also know that I have enough discipline to stop trading if I am having a bad day. We all need to know at what point you will stop trading for the day if you hit your daily loss limit.

This is a discipline question that needs to be known before you start the trading session. I always know what that point is and I feel other traders in the business should also, but everyone trades differently and there are almost no two styles alike. You may mirror yourself after a successful trader and that can work well, but you will eventually need to OWN IT for long term success to take hold.

This would be whatever you learn that seems to work and slowly adopt it as your own, because everyone will see things at least a little differently. The bottom line is, did you follow the “base method setups” to get your points. If you did, then your results are duplicatable for future profits and that is what we want – daily positive results.

Today, I came up to my daily loss limit, which for me is always two times my minimum daily goal. My daily goal has been one thousand dollars, so my maximum loss for the day can be no larger than two thousand dollars. My first couple of trades were small, then went to double positions. If I click 5 contracts twice, that is a double position, but it shows up as two separate orders when taking losses and gains.

I was using double positions and not hitting my targets – not a good thing. I usually lighten up until I get a better footing for the day, but I did not, which pushed me down right above my limit. Funny thing is, when the chips were really down, I know I had to hit the next trade or I was going to have my first losing day in months.

I finally got it together and waited for a very good runner and followed it up with another one almost just like it. I put one last trade on to top off those two large gains for a total profit for the day of $ 2,600 dollars – over double daily goal. WOW, that was close.

I was not feeling well this whole week and it finally showed up. I noticed I did not have any focus and patience to wait and look for my basic trade setups and it showed. I almost was not going to trade this morning, but I reasoned with myself and went ahead.  I did not like the feeling of having a string of losses like I did (remember I took several double positions, which makes it look worst), but how I handled the emotions is what I am going to talk about today. This is the exact topic I had planned to discuss, no kidding. Is that not ironic?

Trading Discipline: Part 4

Trading Discipline has many aspects to it and I could write many more articles on the subject, but the one I will discuss today is how to handle your emotions after having multiple losses in a row. The easy answer is to just tell yourself not to get anxious and wait the move out for a directional change.

Easier said than done. We have all been there and will likely be there again at some point, but you really need to rehearse this scenario in your mind to pre-plan how you are going to deal with it when it happens. If you don’t do the work now, you will certainly do it later, but under different circumstances, which could cost you big dollars.

This is a very serious matter, more than you may realize, because it is at this point that many traders can just LOSE IT.  What I mean is, you get to a point where you can no longer handle the pain of loss and if you don’t pull it together quickly, you will self destruct. No kidding. Everything you do will be wrong, not matter what. Your trading plan will get tossed right out the window and you will go into survival mode, which is better classified as SELF DESTRUCT MODE and you really don’t want that.  So the very first thing is:

* Take a deep breath, get some oxygen in your body, so you can think clearly and take at least 30 minutes off.

* Go back over your contingency plans you thought of before this whole thing started.

* Imagine what you did when you rehearsed this scenario in your mind, see yourself confidently putting on a positive trade, while imagining hitting your target or your expected outcome.

* Be sure you do not trade past your daily loss limit.

* If you still have room to trade, plan it out, just like a sniper would pick his target. You may only have 1 or 2 bullets. Make it count.

* Have next to your computer a script of positive self talk, that will help you change your negative state of mind, this should be something you read often for this scenario.

If after doing the above, you still have a loss or even hit your daily loss limit, don’t beat yourself up. One of the reasons for a daily loss limit is it takes the pressure off. If you already know ahead of time that this is the very worst that can happen today and you accept that, how much easier can it be in relieving the stress and pressure.

One double daily goal loss is not bad, when you consider that there will eventually be days that you hit double daily goals. I do it all the time. In fact, most days are at least double daily goal. That gives me plenty of room to come back the very next day and still stay on target of at least hitting a daily goal average for the week.

Never let your trading account losses get away from you. As “Day Traders”, we need to stay alive and our life blood is trading capital. Keep the trading capital in your account, so you can trade again. If we lose our blood, we die. Don’t let this happen to you!

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

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Trading Discipline, Part 3

Wednesday, April 15th, 2009

Today is Wednesday April15th, and all is well.

I had a fairly easy day on the board today. It could have been better, but the opposite is also true. I had one loss that totally could have been avoided, but I had to get over it and move forward. If I were to beat myself up over that, it could effect future trades. Knowing that, I saw my mistake very easily and learned something from it. It’s always important to go over your trades, especially after the trading day, to see anything that you might have missed. If you make mistakes, its OK, we all do, but we need to learn from them so we can minimize the damage and not repeat it if possible.

Today’s trading I had 12 gains 4 losses and came right up to $1,000 dollars and stopped. I turned my data feed off and did other things today. I traded for about one hour from 8:45 to 9:45 am West Coast time. There was not a lot of movement and it was a bit choppy, but I was still able to squeeze out my daily goal. I was only trading 5 contracts for all orders, so I had the equivalent of capturing 4 points net after commission. I came in to today’s market with low volume, not a great deal of direction, not a lot of overall movement and still captured my points. I am pleased when ever I get good results with less than ideal conditions.

Yesterday, I went over a new idea that portrays discipline in the life of a trader. Last week I pointed out another idea and will give a short recap now.

1) Your trading environment has an effect on your trading performance, so keep it neat and organized, it makes a difference. (last week)

2) A balanced home life and priorities that are a reflection of your personal long term goals and values, a key ingredient for long term success. (yesterday)

3) Exercises that you can take to expand your general level of self-control in any area, which will spill over into greater control while trading. (today)

Point number three is what I will briefly discuss now. Maintaining control while trading is going to be one of your best friends, if you can find a way to harness it’s benefits. One of the hardest things to do is to act when you need to, not before, and not after.

If you discipline yourself in small areas of life, it will send a message to your brain that you do what you say, when you say it. If you procrastinate in putting things off and then scramble to get it done at the last minute, like finishing your Taxes on the deadline day, you may not be as in control as you would like.

The good news is, we can all get better at improving in this area. Find something small, that you know you can overcome. It may take some thought and it can be just about anything that can effect positive change. If you resolve to overcome whatever that is, and get some desired benefit, you are now exercising your mind, will power, self control and gaining greater self esteem.  There are many benefits that can spill over into your trading session. You will come to trust yourself more over time as you exercise yourself in these areas. That will give you added self control when you need to stay out of the market because your trade setups are not yet present and a whole host of other benefits as well.

Back to trading technicals. Before you put a trade on, your TIMING is going to be critical.  When you see the trade setup that will yield you an easy point, you need to have the discipline to take the trade at that moment. If you wait for confirmation, you will either overpay and risk getting stopped out, thus also hurting your chances of getting filled at your target.

This kind of discipline and confidence can only come from getting a good handle on what you are looking for, but once you know that, the thing to do is execute. If you hesitate and are not sure, when a perfect trade setup presents itself, you have a problem. You will eventually get frustrated and your next few trades may become losses, when you finally get the courage to take the trade.

You need to not let that happen, by envisioning the whole process ahead of time, you can train your mind to jump on the trade, the moment you are sure it meets all the qualifications of a legitimate trade setup. With short term trading, you need to put it on only when your timing tells you to, but do not hesitate. Whatever time you take to examine your strategy for what constitutes a trade setup, that is what you need to get familiar with. You know what it looks likes before and have seen it hundreds of times, so when you see it in live trading action, that memory recall is what you will need to draw on.

Seeing the trade set itself up and developing in a live environment is critical. As the trade develops you see what has happened so many times before when the conditions are met, you come to expect the same outcome this time and place the trade with a high level of confidence and capture the  intended outcome.

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

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Successful Day Trading Continues

Tuesday, April 14th, 2009

Today is Monday April 13th and I had a nice smooth day trading, although not feeling very well.

I took Thursday and Friday off last week and meant to post a note letting everyone know, but I forgot. Friday the markets were closed so not much happened anyway. I had a great Easter weekend with family and friends.

As the morning started, I was not feeling like myself today and considered not trading at all, but I gave myself a little extra time to see if I could handle putting on a few trades. I guess it turned out pretty good.

I was only going to make a few trades, get to one thousand dollars and stop. That would have been plenty good enough, but since I had not had a loss and it was coming to me pretty easily, I decided to stay with it for a while.

I really had patience to wait for the trade. I let a few go by but I took many trades for small profits, some for only 1/2 point. That was all the market was giving me, because the range was so small. I started in the slow time of day and had to wait out the trades, but there just was very little movement and it took a long time to develop, so I picked up whatever I could get safely on each turn. It added up just the same, like I have said before.

A little later, I had a nice 3 point + trade to tack on to what I had put together. All in all, I took 27 trades and they were all gains, with one trade at break even, for a $3,500 dollar day and I was not feeling well.  I should get sick more often -  just kidding.

It sure is nice to hit the trades for gains over and over again. It adds nicely to your confidence and will set you up for the rest of the week. You can be sure, I will not let my guard down.

We always need to respect the markets, like I have talked about so many times. Many traders will have their biggest losses right after they had their biggest gains. It’s all in the mind and how it processes the emotions of a big day. Settle down and take tomorrow just like you had no gains at all today. Each day needs to really stand on its own. It would be best for me to put this day out of my mind and prepare for a smooth day of profits tomorrow, with as little draw down as possible.

I am going to wrap it up a little early today and will have some kind of trading lesson for tomorrow’s blog.

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

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Mental Discipline / Key to Success

Thursday, April 9th, 2009

Today is Wednesday, April 8th and things keep moving right along.

Today was an interesting day. Well, they are all interesting if you think about. It’s kind of like that box of chocolates I keep hearing about – you never know what you are going to get. What I am referring to is price action. We never really know ahead of time what kind of price action we will get, other than the pre-market trading that takes place before the open. That can give you your best indication, but it’s after the open that really counts.

I started the the day trading in a cluster of consolidation, but my timing was really good and I picked up 5 trades in a row. I had about 3 & 1/2 points and was going to call it a day, but since I was only trading small, I did not get the desired $ amount I was looking for and kept trading.

I did something today that I don’t usually do. What’s that you ask? I put a string of 4 losses together in a row, taking my equity from around +750 to -600. Very unusual for me to do that, but it goes to show you, if you let your guard down, you can get clocked.

Going over the trades afterwards, I saw that the market flow was really just fine and if I had just stuck to my tight style and kept an open mind, those trades would all have been gains. I got it in my mind that the market was going to start moving bigger and I was sticking around for those larger moves, and they did not come. I did not scale out on those trades, which would have at least got me to break even.

It was not the end of the world, I took a break, made a few phone calls, got something to eat and came back later to literally pick it apart wih a long string of winning trades. I made myself one of those deals again. I would stop trading for the day after I had my first loss and I did, but not after I had 10 positive trades in a row, with 14 pieces of profit – some I doubled up on the position. I ended the day around +$2,500 with 72% profitable trades.

I will be trading the open starting on Monday this coming week and the reason is low volume. The start of the day has high volume and movement to go with it, and that is what I need. As I said earlier, I started trading in a low volume cluster/consolidation and still did good, 5 for 5, but those were for on average of only 3 ticks, because the price action was not giving me more. All of those trades over shot my target by a couple of ticks and that’s good, but I need more volume. The last two hours has volume, but I don’t plan on sticking around that long usually. The upcoming Holiday has something to do with the low volume I am sure. A lot of people take this week off and it shows.

Mental Discipline is one of the key ingredients to your trading success. If you have it, you will have one important part of the equation. If you don’t, you will see the difference. You need to know what to do, and what to look for, in waiting for high percentage trades.

The other part is knowing how to handle yourself when you hit a tough patch. Are you going to step aside and take a break, assess the situation, wait for a change up in direction, so you have new reads and opportunities? Or are you going to force the situation because you cannot handle the fact of being wrong. Well, if you have a big ego, and a lot of us do, you will have to check it in at the door, before you enter the trading world, or else you will not do very well.

Humility is a very important virtue as a day trader. If you never thought about that before, you would be well served to cut yourself a slice and eat it slowly so you can digest it well. If you choose to pass that one by, get ready to be “served”. You cannot afford to think you have this thing licked. You need the discipline to hold yourself back when conditions are not right. “Just say no”. Go back to the basics and don’t trade it unless you see it – STRONGLY.

If you have no conviction before placing the trade, just let it go. If you miss the bus, another one is going to come in just a few minutes. Remember, we are trading for a daily goal, something in you that says, “it’s enough for today”. Once you reach that point, have the discipline to stop trading and wait for tomorrow. If you trade past your daily goal, make a deal with yourself, that you will not let your equity go any lower than x, after you reached your spot.  If you find that you break your promise to yourself, then you have work to do in the discipline area.

Who is in control?   Ask yourself that question.  

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

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Posted in Trading Psychology | No Comments »

Quick on the draw today

Wednesday, April 8th, 2009

Today is Tuesday April 7th and I only had a few minutes to trade today.

Today was a quick day for me. I had to travel to the S.F. Bay Area and needed to get an early start. I kept the day to a minimum with capturing my daily goal in short order. I think I was at it for about 20 minutes. I really had to exercise patience today and not let the long drive deter me from concentrating on good set ups.

I did get in on one trade too early, but I quickly made up for it. I picked up a little over$1,000 and I was done with it. Again, this is a great advantage to so many other methods that are out in the trading world. I really don’t need to sit in front of the screen all day to get what I came for. You have heard me say that before many times, so I won’t repeat myself. Not today, anyway.

I will be back at it with a full article tomorrow.

http://www.screencast.com/t/zgwh80bIh      Today’s equity chart

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Posted in Day Trading | 1 Comment »

Trading Environment, a key component

Monday, April 6th, 2009

Today is Monday April 6th and the Indexes closed well off their lows for the day.

The Dow moved up off its low by 110 points, and the S&P did something similar. The volume was very light on the futures trading side, coming in at around 2 million contracts. Whatever the news was, there seems to have been a reason or excuse that the market sold off in the pre-market as much as it did.

I rarely ever look at the news. I don’t look at a lot of things, like the Advance/Decline ratio, the Trin, Ticki and a  host of other things that other traders look at. To me, all of those things are present in the price action. They can be a distraction, influencing me to hold a bias, in overall direction.  

The direction will be revealed as price action unfolds. Your job is to position yourself in front of key turning points. We look for pressure points, like an acupuncturist would do. When you press down on built up points, it releases tension and energy then begins to flow. The same is true in finding our entry points. We look for pressure points and position ourselves in front of the release, to take advantage of the movement, up or down. We are usually out of the trade before the energy is depleted, then we wait for the next pressure point to build.

Today, there was no follow through on so many trades. For the people looking to trend trade this market, you were chopped up into little tiny pieces. If you only know how to trade for larger moves, what do you do if they don’t come? Try again, no luck, no movement. Try again, same results.  In addition, with wide stops of 2-4 points per trade, you are now hurting pretty bad.

If you are not able to trade for the small stuff, until the bigger swings are present, you are just going to give back all of your gains from other days, which will keep you unprofitable. You may find yourself having gains 1 or 2 days per week and giving back those gains the other 3 or 4 days.

Everyone is different, but anyone who only knows one trading style, is limiting himself. You need to put a lot of time in, to wait for trade setups as well and when those don’t work out, you may be tempted to make foolish trades. It is very easy to lose discipline when you are not doing the right things. It can turn into a snow ball effect and eventually a very destructive behavioral pattern of SELF SABOTAGE – if you are not careful. Trading is as much a mental game of discipline as it is knowing how to trade itself. Both are key ingredients to a successful venture.

You may consider trying to exercise your mental disciplines. Here are a few examples. I would first start with your trading environment.  Your trading results will be effected by a smooth home life, one that is in order. If your trading office is clean and neat, it will have an effect on other areas like your actual trading.

A small detail, but it does have an effect. It says that you put things in their place and you know where to find what it is you are looking for. You waste no mental energy. In trading, you know the trade setup you are looking for and you know right where to find it – same thing. So even something as small as what I just mentioned has an effect on your results. I will talk more about this tomorrow, so stay tuned.

In today’s trading, I had a very nice day. It was smooth, because I waited for the right setups. I took 15 trades with a few trades for 1 and 2 point exits and had 2 tiny losses and one full stop of 5 ticks. All in all, 16 pieces of profit with 3 losses for 85% profitable. I only traded with 5 contracts or less, with one trade for a double position of 5+5. I posted $2,063 for the day and my actual time in all the trades was less than 30 minutes, but I traded about 2 hours total.

One of my students did very well today, posting about 20 1 point gains and only a couple of 5 tick losses. Most of these gains were short trades. This is the same person who was having a lot of trouble seeing the short trade setups. After working with him, he is nailing the shorts and the long trades. Today was initially a down day, he took 14 short trades and hit all of them for 1 point each. Very nice.

It is great to see someone pick up a method like mine and now make it his own. He is getting it. If anyone out there wants to potentially get it as well, send me an email and we can go from there.

http://www.screencast.com/t/ly8jGduaiDv                Today’s equity chart

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Posted in Trading Turning Points | No Comments »

Interesting Trading Lesson Today

Saturday, April 4th, 2009

Today is Friday, April 3rd and I had a good day, but not without a few problems.

I started out just fine. I almost had my daily goal in just a few minutes. But then I was not patient enough to wait just a minute more for a clear signal and sure enough, I got stopped out. That trade was going to put me over the top and capture my daily goal, about 15 minutes worth.

What happened after that is, I found myself in an up-trending market and was looking for a counter trend trade setup. This was the trend starting about 8:30 am W.C. time. I doubled up on a trade short 5+5 for two positions short and got stopped out with a 4 tick stop. Why I fought that trend up, I don’t know. This goes back to what I was commenting on earlier in the week. If you get a picture or idea in your mind that the market is going to do something and it is not co-operating with you, the problem is not in the market action, but with you, or me in this case.

This is why we all need to be humble and respect the markets. Trading success can be a great thing to give you confidence in your ability to put together winning trades, but it can also be an Achilles heel. Each and every day, you really need to keep an open mind to direction. This is what can happen to a lot of traders if they think they know the next move of the market. Let the market tell you and don’t be impatient. If the whole series of moves looks a little confusing, just let a little time go by. That is what I did today, when I was up to almost daily goal and slipped back just a little in the red.

I took a break and came back a little later and started nailing it. I came right back like I have done in the past to post some real nice gains for the day. I ended up taking it to two times daily goal or around $2,500 in equity, but it took me some time. I just put on mostly small trades, 1 point, 3 ticks and so on. I was just focusing on market timing. I took my trade size down to average 5 contracts, some smaller, a few bigger, but averaged around 5. With a 5 contract average I probably picked up a net after commission 10 points of profit to get my totals.

If I am having trouble, for whatever reason, I almost always go back to my bread and butter trading. Sometimes when you are targeting 2 or 3 points in a trade and the market is not giving it to you, change and be satisfied with 1 point here and 1 point there. It adds up pretty fast, if you keep stringing them along one after another. It counts just the same as a 3 point trade. Trading is not always easy and there are many unseen factors you could be battling, but try and keep it simple. My method is simple, but not easy. And there is a difference.

I have a short video of some of the last trades I took today. It is on a clean chart and I will show you some of my timing techniques while using trendlines. I could have captured a lot more points on a lot of these trades, but that was not even in my mind for the most part. I was concentrating on market timing. If I just get that part right, I know I can pick up the profit, it all adds up the same at the end of the day.

Have a great weekend!  Vince

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

http://www.screencast.com/t/e73y7VRj1                  Trendline trading lesson,  video 5 minutes

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Posted in Trading Lesson | No Comments »

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