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Friday, February 26th, 2010

If you have 60 to 90 minutes a day, a computer, risk capital, the Internet, mental discipline and “Sniper Day Trading”, I believe you may have what it takes to attain financial and time freedom by Day Trading the E-Mini Futures.

Emini Course and Mentoring Program

In my Emini Trading Course, I show you how to utilize a “Sniper Trading” type approach using my tested method to earn at least 2 points per day from the markets. You could learn how to make consistent profits in good or bad markets. Our method focuses on high probability trading, delivering you your points for the day. Day trading for a living does not have to be hard, if you have the right method, plan, course of action and someone to explain it to you in a live market trading environment.

Price action, is driven by emotional buying and selling decisions for a variety of reasons, all of which are present in the current price at any given moment. Our job, is to find the turning points that exist in each session through precision market timing. These turning points are present every day the markets are open. Sniper Day trading will teach you to clearly spot where these turning points are, using a trading mastery type approach. These points show up like consistent “Sniper” shots on your trading screen and are clearly defined by using the custom tools I have created.

We strive to teach our students to learn price action apart from indicators or tools, but they are helpful to point out what may not be seen in the beginning. I am sure what I have in full is not being taught by anyone and is unique to me and the many years I have spent developing and now clearly defining the “Sniper Day Trading Method”. The signals generated by my method will produce the same signals to anyone who is following it, there is really no gray area, only which trades you decide to take and which you let go by.

Sniper Day Trading Method

We trade with tick data and use multiple time frames in timing our trade entries. I have three different styles I trade and bring them up as the price action dictates. One is a “Scalp Trading Method”, (T-1 Trade) that is very accurate in picking up 2,3 or 4 ticks on the S&P. My stops are such, that this approach averages a one to one risk/reward ratio, but enjoys a very high percentage “Win/Loss” ratio. This is bread and butter for me.
The second style enjoys the benefit of my “Precision Turning Points” model, (T-2 Trade) and is usually traded with multiple contracts. The first part is scaled out around 1 point, which quickly brings me to a no loose position and the second half is usually allowed to run. I have four incredible ways to get out, all of which act independently of each other, but are uncannily similar in their results.

The last, is a “Pyramid Trading Method”, that when conditions are right, you are able to keep your first risk small but scale into the trade, adding positions in the direction of the trend, but only at very low risk entry points, keeping your stops down to 1 S&P point. Each one of these methods are very clearly explained in my 80 page trading manual and followed up in the DVD training part of my course. They will also be gone over in our live trading sessions.

While only needing to pull 2 points after commission per day out of the market, (8 ticks) catching a few scalp trades or a T-2 trade, is really all you need to hit your daily goal. I believe in setting realistic goals, which increase your chances to meet them. By having a clear mind, a solid trading plan, with position sizing risk limits and rock solid money management, you come that much closer to trade your way to financial and time freedom.
Examples of two typical trading days back to back, applying the Sniper Day Trading Method. It only took about 20 minutes to get my daily goal plus on both of these days.

Mental Discipline and Trading Psychology. I have told you what I can offer to you, but this is not all you will need for success. I am convinced that my method, custom indicators and complete approach could make the aspiring trader profitable on a regular basis, but do you have what it takes? Trading psychology plays a huge roll in all traders, whether they know it or not. You have forces constantly working against you. Success is only going to become a reality to you, if you have the qualities needed to pull this off. What you are going to need is * Discipline * Patience * Ability to follow rules * Control your fears * Get a grip on personal greed. Frequently, I talk about this in my daily blog, because they are too often why traders fail to reach their goals.
I offer a lot of support in this area as well, if you are a struggling trader and want to change, I have the tools, method and know how to likely turn you around, so that you can create the consistent income, free up your time and fulfill your dreams in becoming a successful day trader.

Mental Exercises

In my program I address some of these issues in a series of “Mental Training Exercises” that I have put together. They are designed to get your mind thinking and believing that trading for a living and meeting your daily trading goal is normal, natural and the only outcome you will accept. The titles in the first series are; * Financial Freedom * Positive Risk Taking * Holding your concentration while trading * Achieving your Trading Goals. The titles in the second series are; * Overcoming Trading Obstacles * Controlling Emotions while Trading * Overcoming the Fear of Failure * Creating Hope & Success.

These I believe are very powerful and are in, “the first person” and will become personal to you. They are a form of Neuro-Linguistic programming that can take you farther and bring you closer to meeting your trading goals. They are, in written form and in audio CD and created by me. My plans are to continue to expand these in the future and make any new additions available to students who come on board, all at no extra charge. These training series are specific to traders and cover issues they face.

Solutions for traders, Sniper Day Trading

I realize that not everyone is born with all the qualities a successful trader will need, but I feel it can be learned if you want it bad enough. Ask yourself, how much do you want to become a consistent successful trader ? The answer to that is going to make all the difference in the world.

I know personally the things that hold traders back from bringing it all together and I know exactly what to do to help them change. I believe I can help the struggling trader as well as the trader who has never done this before.
I can set you on a course that is tailored to your experience level and walk you through everything needed and expected. The good part is, you won’t have to go it along. If you have any question, I can not only answer it, but help you apply it, to get the results you will need. Our daily goal is not to hard to hit, 2 points + per day. We can take a conservative approach to help you get that goal regularly.

If you are honest and know you need help and are willing to work hard and change what ever you have to, then I am sure I can help. Trading for a living is possible, but you need to do different, be different and think different from the majority of other traders. If you first commit to yourself these things, then I will commit to you, which will bring you one step closer to the success that we all strive for. Lastly, I want to assure anyone with doubts, my method, straight up works. The only question that remains is, will you move forward and decide to make it work for “YOU”.

Price Action Day Trading

“Price Action Day Trading”, is the key to your long term success. The markets do something everyday that is consistent since they began trading, over one hundred years ago. It exists in all time frames and gets played out on trading screens across the globe each day. It is important to understand and learn, “good price structure” and how it is built. That is what I teach and that is what students get when they partner with me at Sniper Day Trading. The key is learning what to do and when to do it and why. If you don’t know the answers to those questions you will eventually fall short. Many traders use indicators to help them and that is OK. I have them and use them also, but I do not base my trading decisions on the indicators. I base it on good price structure and trade setups that happen over and over, day after day. Traders and investors are very predictable, they base many of there trading decisions on emotion. Knowing slightly ahead, how they will react when certain prices are reached and breached, give us the trading edge we look for. With that said, the indicators magically line up with our trading decisions which can give us the added confidence to put our money on the line.

Below is a typical trading day where you will see the trading, “Turning Point”. I have stripped away everything from the screen except two things. There is much more, but I just want to show you that the indicators line up with our turning points. Which came first the chicken or the egg. The chicken and that is price. Price is always first and the indicators are second. That being said, the indicators can help traders see what is already on the trading screen. I hope this explanation helps clarify in the minds of seeking traders that what we have and do is real and works.

What You Get With Sniper Day Trading

  • My E-Mini Trading Manual (hard copy 80 full pages) with future updates. (very nicely done)
  • Complete DVD video training package in very nice hard cover locking case / extra: will include method applied to stock trading.
  • Method explained throughout the week, with full screen video and audio illustration in both the T-1 and T-2 screens, “Turning Points”. Very powerful part of ongoing training. (This service will be included ongoing all at no extra charge)
  • All custom chart settings to build your trading platform and help by me if needed to set it up.
  • All of my custom and modified indicators I created, that will unmistakably identify my “TURNING POINTS” for the T-1 and T-2 trades, when applied to the method.
  • Method checklist work-sheet ( for examining trades against method).
  • Laminated 8×11 “Method Overview”, to pin up over trading screen. Laminated 8×11 “Mental Exercise Overview” pin up over screen.
  • Mental Training Exercises: eight titles – audio CD and in written form. On-going future title releases no extra charge.
  • Leather bound “Trading Journal”, to help you keep your thoughts, progress, questions and answers.
  • I will personally work with each trader by screen sharing technology and voice of I.P. through SKYPE, in a live trading environment. After you go through the material, we will set appointments for our personal sessions together. We will apply live market data to the method and I will show you exactly what to do and how to do it. The manual and video’s will give you a head start, but working with me personally will undoubtedly bring it all together. I will spend as much time as needed with each trader who comes on board until he or she understands the complete trading method.

If in the future if you have questions, I will always be here to discuss them and go over your charts to help point you in the right direction. I am not just selling my trading method, but offering much more, mentoring and getting you profitable. Traders often face mental barriers that hold them back, but they do not know exactly what it is or why they consistently make the same mistakes over and over again. I can uncover the problems here, find the solutions and set you on your new course.

My goal is to get each trader that joins with Sniper Day Trading to book at least 2 points per day and gradually increasing contract size to a desired income goal. I will do my part as stated above, will you do yours?

ORDER HERE

Important Notice – Risk Disclaimer:

Futures Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any e mini trading system or methodology is not necessarily indicative of future results.

Daytrading Involves High Risks and You Can Lose A Lot of Money.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under or over-compensated for the impact, if any, certain market factors, such as lack of liquidity. Simulated e mini trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Additional Cautions

There are no guarantees or certainties in trading. Reliability of trading signals for mechanical systems are in probabilities only. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during the methods off times (and all methods or systems have off times) – If you are looking for guarantees, trading is not for you. Most people lose trading. One of the reasons is that they are not consistent and lack discipline. A method of system can help you become consistent, BUT you have to stick to the method like a formula. The ability to be disciplined and control your emotions is even more important than any technical indicators a trader may use. Worrying about the money aspect of trades (which is an emotion) can contribute to and cause a trader to make errors. It is important to trade only with true risk capital. You can find further information at: www.sec.gov

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Resources

Thursday, February 25th, 2010

tradestation.com
This is what I recommend to start your trading business. They are data venders and brokers combined. They are who I use and this is where you will have all the custom indicators I have recreated to help place your orders. They have been rated number one in many categories. They will provide the charting applications you will need as well as the broker exchange needed to place your transactions. Minimum to open Futures account is $ 5,000 dollars to trade the E-Mini S&P Futures.

ampfutures.com
AMP Trading is a great alternative to tradestation and offers a much lower dollar amount to open an account, $2,000. There day trading margins are a lot lower as well. They use the Ninja trading platform which will work with my method.

Economic Calendar
This is a good site to see what is coming up in the economic calendar. News releases, economic data, fed interest rate meeting announcements, etc.

shadowstat.com
This website gives you more of the real economic picture by publishing data that more clearly reflects the current environment. The work is done by John Williams and have found the site to be insightful in providing an alternative view of what is happen in the U.S. Economy.

market-harmonics.com
This site gives you contrary readings on a variety of investment instruments. One being Professional Investment newsletter writers. When extremes are reached, in market sentiment, a likely turn in direction is often seen. I nice little tool to measure market extremes.

intouch.org
This is a site I often go to which helps me grow in other area’s of life. It may not be for everyone as it is a Christian website to help those who are open to expanding there relationship with God. I am a Christian but I do not impose my beliefs on others, but for those who may be open to this line of thinking, I do find it a big help in numerous parts of life. It does relate to day trading in that being spiritually grounded is one more factor for those seeking to accomplish there goals in life. In addition, often we face struggles and challenges in numerous area’s of life, those difficulties can cause us to be so shaken that it will be carried into our personal trading efforts.

I particularly like to go to the broadcast section, then to radio archives and scroll through the topic’s to help with what I may be going through, you may find it beneficial as well. There is an area that has some great subjects that I believe are related to living your dreams and reaching your goals, which can be to become a successful day trader.

Go to Broadcasts, then to Radio Archives and click on March 2009. This area has 5 titles that I really like and they are all in one area. The titles are 1) Thinking our way to success  2) Time for success  3) Power of persistence  4) Belief brings success  5) Overcoming obstacles. The messages are about 15 minutes each part 1 & 2 and will give you inspiration and insight to help meet your trading objectives and life goals.

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Learn Day Trading Skills – offer – Through Sniper Day Trading!

Saturday, January 23rd, 2010

Today is Friday January 22nd, and the sell-off continues.

Well, the only thing I can say is, I am not surprised with today’s price action. The market is doing everything it would normally do after a break in formation, as I layed out in yesterday’s blog post.

There may be a bounce somewhere in here, but time will tell. I know there are people out there that love to buy the dips. Engrained by the media and such, you have the sheep step up to the plate, ”FOR SHEARING”.

I did not see the news, but I can only imagine. I see the market through purely a technical lens and reading moves as they unfold. It is easier than trying to predict far in advance. With the break two days ago, it was not hard to imagine or expect the kind of downward price action we have seen. Institutions, investors and traders have their stops at those key support points for a reason, to protect themselves against a sell-off. Once the first domino was tossed, the next one gets hit and there you go. I am sure we have all seen the domino effect, that is what just happened the last couple of days.

At some point, there will be the brave, to step up and buy, thinking they are getting a good deal and maybe they are, but it is risky. The S&P is now in an area of support. It is the same area that I was looking at, but on the Dow Jones. That index traded below where I thought support would come in today, but the S&P over-road the support by breaking to the similar area where it now may try to find support. If I had called the support for the S&P yesterday, I would have used the area close to where we are now.

The S&P price of 1085 was hit 5 times over the past couple of months which may be a temporary spot for the market to pause. Currently we are at 1091.  If we trade past that, you will probably see a whole new wave of selling come in and we could find ourselves down to the S&P 1028 level. The middle of the range as I point out yesterday is Dow 8100 to 8600 and S&P 910 to 855.

Pretty scary stuff, but this is what I was warning about for some time. When the formation breaks, you will see the sell-off, sharp and deep.

When we bounce, where ever that is, what happens after that, is going to tell us how quick all of this may take. A slow gradual process will probably be better for most people.

On, to other topic’s;  In todays trading I was only at it, for 10 minutes and picked up my daily goal. I did mark up some trades on the screen after that for a little while and picked up some nice turning points. I may trade for a little higher point return next week, but with this Monday being a holiday and Tuesdays session flat. I wanted to make sure I picked up my net goal for the week safely and I did that. So, next week, I may trade a little more. Also, I needed a little cooling off period for the bad trades I took on Tuesday. It all worked out well and look forward to next week.

Below, I marked up my screen with the turning points as I did yesterday but I took the indicator off. I just have the signals as they were generated. I screened out only a few of the very obvious no trades, but marked up most of the trades generated just by that one indicator as I did yesterday. I look at a lot more than indicators, I look at price action through its structure, to see if the components are there for the trade. The indicators, only confirm what I see already through the price. That is how it works for me. I know others use it the other way around. Using the indicators to confirm price. I don’t teach that or do that. If you learn how good price structure looks like, you will be looking for something very specific. When the indicators confirm your timing, it can give the learning trader a little more confidence to take the trade. But over time, seeing the same patterns again and again, we learn to look for what makes up a good trade just by its structure.

Anyone who wants to learn more, can. I do teach this as the “Sniper Day Trading Method” designed by me.

It is a collection of techniques and repeatable price pattern structures that happen with a great deal of consistency. Using the full spectrum of indicators I have on top of the price as well as under the price, will only make the job easier to see what is already present on the basic clean chart itself. This stuff speaks out its own language as the swings taking place, each and every day. 

There is something here for everyone. If you like to scalp trade as I do, trading with the trend and counter trend, I have that. If you prefer to only trade in the direction of the dominant trend we can set that up, if you like to trade higher time frame charts and go for a higher profit loss ratios, we can customize that for you. The principles are all the same. This will work great on Stocks as well as Forex currency pairs. The higher the time frame, the higher the risk, but the higher reward. You also get fewer trades as you go up in the time frame spectrum.

I use a small 1 point stop on most all my trades or less, but that is me. I know some in my group use 5 ticks. That is fine, but I urge all to move there stops up with price as things go your way. I like to scale out and put myself in a no loose situation and I teach that too.

I don’t only offer the trading course, I work with each trader, to not only answer there questions, but to explain it and call it out during the live market, so you can see the same thing on the screen live. I will work with any trader as long as it takes to fully understand how he or she can use the Sniper Day Trading method through screen sharing technology over Skype.

If you have questions, feel free to contact me through Skype, my screen name is SniperDayTrading. Have a great weekend.

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Can you say “REVERSAL DAY”

Tuesday, October 27th, 2009

Today is Monday, October 26th and the markets took investors for quite a ride today.

Yesterdays blog, I stated that it appeared that we had broken the down-trend late in Fridays trading and a move back up to the 1086 + level was likely. That is exactly what happened in this mornings session. Here is the quote from yesterday.

It looks like the down-trend has been broken but we really still need to get over the last minor pivot high at 1080.50 . Once that is taken out we will have a good chance to get back up to 1086 + in quick fashion.

Well, the break came on the open, in quick fashion, I might add and did shoot up to 1086 +, with the plus being another 5 points for a total of about 12 points in the first 35 minutes. This is from the cash S&P.

The next move after that came at 7:37 & 8:14 am, West Coast time. The move at 8:14 was real nice. It cut right through all the stops from the mornings open like a hot knife through butter and kept on going to take out the critical support I mentioned from Thursdays pivot low. In the S&P E-Mini’s, it broke about 9 points past the low, before it pulled up to take a breath. Over the last 5 trading days, the momentum in the hourly cash S&P market has been in a down-trend and still is as of now.

Today we saw a 27 S&P point swing from high to low, that is a lot. Currently the cash S&P support is about 7 points lower from its current level. The next support comes in at around 1045-46. The short-term momentum is pointing to the downside but the daily and weekly is still up. This is where you have opposing forces at work from different time frames. Who will win the battle. You really need to let the market decide this one  and go along for the ride.

http://www.screencast.com/t/lAkJmeVoGY4z     a couple of trades I took towards the end of the day.

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Reversal on Wall Street

Thursday, September 24th, 2009

Today is Wednesday, September 22nd and the markets were on the move today.

Things started to move after the fed announcement at 11:15 am this morning. The market shot up several S&P points only to sell off soon there after. It looked like an 18 point sell off from top to bottom in less than an hour. When you get moves like that, it is best not to fight it. Look for entry points in the direction of the sell off. If your timing is not right you can suffer a loss, so stay alert for the next one.

That sell off today, did not look to good for the bull’s. The current uptrend is still somewhat in tact but it can not suffer much more of a draw down from here. The bulls need to come back in and bid this back up. Another day like today and it may all be over. We will get that bounce back up that I was talking about yesterday and that is going to tell the story. If it is a week recovery bounce, the bears may elect to sell into strength and there goes your rally. Very critical area, so stay alert.

We came very close to 10,000 Dow and not far from 1100 on the S&P there may be traders and investors jumping the gun. No one wants to be left at the gate holding the bag. You look down into it and find out that its empty inside. Many of these guys probably said I had enough and started to close out positions. Well lets hope the rally can stay in tack for a little while longer. It will not be up to me, but we can choose to see it, then react off of it.

Below, today’s turning points.       http://www.screencast.com/t/oDxnBv2Iw

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Sentiment numbers stronger than expected

Sunday, March 8th, 2009

This is for Friday’s market March 6th, and the sentiment numbers are out.

I had talked about the investment newsletter writer’s poll out for this week, expecting them to be a bit weaker than last week was, adding to a more negative environment, which would set the stage for a bigger rally. It did not work out that way.

We may still get a rally but when is the big question? The numbers changed in the positive direction, which is a little bit of a surprise. They were 28.6 bullish last week and they moved up to 29.7 bullish this week. A reading below 35 is typically a bullish sign, with a rally potentially at hand. With this sell off, extremes are difficult to time and it can take longer for the signals to have their usual counter effect. The reading only went up by 1.1%.  That may help in prolonging the coming rally. We will have a rally, that is for sure, but we don’t know if it is going to be from 1,ooo dow points lower. These numbers are just something to watch and keep in the back of your mind.

Most people who write investment newsletters have their opinion taken each week and some of them became a little more bullish this last week as of  the Tuesday reading. The point is they are usually wrong when polled as a group. It is just like so many other investors, they follow the trend and as the trend continues in the initial direction for some time more and more of them become bullish or bearish, whichever the direction.

Basically, they are late to the party and become bullish at the top of the market, when it is only then apparent to them The herd mentality. The same is true during a market sell off, they then think it is going to continue down, since that is the direction of the current trend. Last week 45 percent of them thought the market was going down. This week only 44 percent had those same feelings. That lets up the pressure a bit for the market to continue down possibly, but I would say, not by much. It is not a science. I have posted and explained this before, but for the benefit of those who are not aware of it, there you have it.

There is another point to all of this. Learn how to read the markets for yourself and you won’t be victimized by other people’s opinions. There is a way to do that. It is kind of like a language. If you don’t know it, you will be lost, wandering from place to place, looking for your way. I am not the only person who knows how to read the markets, for sure.  But I would say, there are very few who can do it effectively and consistently. I will be talking more in the future about just reading the charts themselves, with no indicators at all, just the price action.

This is a great way to start understanding what is happening on the screen. There is a struggle going on, constantly. A change in ownership, from weak hands to strong hands. Those that want to sell to others who want to buy – but at what price. It is their price, the price that they are willing to pay. In the case of a sell off, it is people who cannot handle the heat (weak hands) who sell to those who can assume the risk and are at that moment strong (hands). It usually takes only a short while of seeing lower prices until those strong hands soon become the new weak hands and begin to offer their shares and/or contracts to other stronger hands, but at their price (the new strong hands). This is how a sell off is carried on and how we get continued lower prices.

There is always someone buying, all day long, but again at their price, which often times does not hold and then the selling continues. This process stops when there are no longer a majority of sellers left to sell to and the buyers are taking the upper hand, taking all of the available supply the market has to offer and the struggle continues. There is always someone selling and there is always someone buying – but at adjusted prices. That is how and why the price changes.

We step in now and then and help them out. We create liquidity for the market place. When a mutual fund manager is faced with selling a large portion of his portfolio to meet redemption requests, but feels the drop is only short term, he can sell futures contracts by the thousands and give himself the insurance that he needs from a large market drop. If he had to sell all of the shares in the open market, he may be pushing the market down with his large size and thus adding fuel to a down market. If the drop comes, he is protecting his portfolio ( a kind of insurance ) from a market decline. When the market comes back up, the original value comes back into his portfolio but he has made a big profit from the decline. If the market does not come back, his portfolio has taken a big loss in the drop in value, but he has large gains in selling the futures contracts so he has offset his portfolio and has not lost money for his clients. If there was no one to take the other side of the trade, when he wanted to sell thousands of contracts over time, he would not be able to do what he did in the example above.

Traders and yes, day-traders, provide an essential part to the process. We make it possible for so many to buy the insurance they need to protect themselves. The market would have so much more volatility to it if we traders were not there to help smooth out the process. So there is a purpose being served here.

It is the same for the farmer growing corn or the company selling orange juice or coffee beans. By them selling futures contracts in the future, they are agreeing on a price they can live with, a set price in the future. If at that time the current price is much higher, they do not get to enjoy that higher price. Their contract says they agreed on xyz price and that is the price they will get 2 or 3 months from now when the crop come to harvest. By same token, if the current price at the time of harvest is 20% lower, they will still get the agreed price of xyz at the day the contract was agreed on.

Traders take the other sides of those trades and speculate that the price will be higher or lower in the future. The farmer is guaranteed on his price and he is happy to get it. If he came to market in the future and received  30% lower than current price, he may get financially destroyed and he can’t afford to take on that risk. But others are able to.

Those are just a couple of examples in the financial and commodity markets of the functionality of the instruments that we trade and why. On a personal note, most traders trade for personnel profit and that is understandable. They are taking a risk, and for that risk they can be rewarded when they are right.

The trading day was good today, picking up 1 & 1/2 times daily goal. I have some of those trades in a small recording from the session. I think it may be helpful for some to see the market trade in a live environment. I have had technical problems in posting my equity chart so this is the next best thing and probably better for most. As soon as I can get it fixed, I will post them again.

http://www.screencast.com/t/m8FOo2HQwNj       some live trades from Friday’s session

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S&P 500 bounces off double bottom & Trading Lesson

Monday, February 23rd, 2009

It is Sunday February 22nd with a weekend report and review.

The S&P 500 bounced off the previous low set on November 20th last year. It did close up off of that low which is good. I have been hoping the overall market can hold on for a while before it continues down, but what I want does not matter to the markets. It would be wise, to learn from that point of view. When you trade, don’t try and impose your will on the markets, by your strong directional bias. The market does not care about what we think, it is going to do everything it can to fake you out and get you to establish a position in the wrong direction.

The S&P 500 is currently at the bottom end of it’s range. Usually, when that happens you will get a bounce off that bottom. At this point there is really no way of knowing how big a bounce it will be. I suspect that it would be enough to make up a bit of the drop that we have recently experienced the last week. This rally, if we get one,  is what I would call a retail rally. What I mean by retail, is this is usually not the smart experienced money. A double bottom is a very basic chart formation and it looks to me like this may hold over the next couple of days.  It could turn into something more significant, I hope, for the country’s sake.  The Dow actually broke down over 100 points below it’s November low. Sometimes that can be a sign that a short term rally will come. It broke just enough for investors and traders to bit. Now we shall see, if the market turns.

One interesting thing that many people do not know is that the Dow has recently had some changes in the stocks that make up the 30 companies in the index. It seems that any stock under 10 dollars per share has been taken out and replaced by other companies that have higher share prices. This will change the index values and not really give us a true representation of the market. Its like playing cards and you know you are going to loose with the hand that you have and so you just get a new set of cards and see if those work better for you. Seems a little shady and misleading to me. There has been a lot of that going on these days. On another day, I will have more to say about what is really going on in the markets and economy. Believe me, there is a lot more than meets the eye on this one. I have been following the stock market, politics and world events for over 25 years and there is a story here, but for another day.

                                                               TRADING LESSON: Trading Without Bias

When you establish a position in your mind, that the market should do this or that and when price action is saying something different, you are about to get burned. Fortunately my stops are small and my losses are thus small as well. When you have 2 or 3 stops in a row, you just need to stop. It does not matter what is going on, you are out of rhythm with the markets. Until you let a little time go by and focus on what is actually happening, only then will you begin to see the light. A little time is the best medicine for this scenario. If you still do not get it right, you need to stop for the day.

I have a rule, that if I am down more than my daily goal, I need to take a break, no matter what. After that break, when I come back if I go down in equity by double daily goal, that day’s trading is over, period. I came up to this point once this week and my next trade had to be right or I was going to have my first losing day in months. Fortunately, I waited until I found a high percentage trade and built my equity back up from there, one trade after another.  That bears repeating, one trade at a time.

Many people will try and make up negative equity by getting it back all at once. I do not advise this. If the patterns present themselves, then take the trade, but you may even want to decrease your size for a short time until you know you are back on track. Once you have yourself in tune with the markets again, you can then resume your normal trade size. I would throw in taking small breaks during your come back, to insure you are not getting overloaded or burnt out. A fresh mind can do wonders for your P&L.

This one rule can save many traders from blowing their account out in such a short amount of time. If you don’t stop, it then becomes compulsive negative behavior and that will ingrain in you very bad habits, which you may never break until the market has broken you.

If traders followed this one idea and have the trading discipline to adhere to it, the percentage of successful traders would go up by a wide margin. But human nature as it is, we know through studies of trader psychology that most people will not change. They will insist that they know how to trade these markets and they had just gotten a bad break here or there. Well, if it was not this day’s bad breaks or next week’s mishap, it will be something else. The market has a way of cleaning out all of the weak hands. Whatever their problems are, it will find them and exploit them, until it breaks you. That is the hard cold facts.

Now on the other hand, when you are aware of this force and plan and train for the days that the market is trying to take you down, you need to fight back. How do you do that, you may ask? Well, it first starts out by having a trading plan. You would be surprised how many people do not have one. Second, you will need a trading journal. This helps you record for yourself, if you are following your trading plan with what you are doing right and what you are doing wrong. If you can identify what you are doing wrong, then you can take steps to change and/or improve. When you are doing things right, that also is very important, because it is establishing in you consistent trading behavior that you will need to fall back on when things become difficult. You need to have a plum line, something that is constant, your trading plane.  Everyone’s trading style is different, because we are all different in our personalities.

Trading involves emotions, that is what brings most people to make a buying decision or not. The struggle of bulls and bears during the trading day is all about personal convictions for most people. We need not get caught up in the struggle, but knowing that it is going on is vital in positioning ourselves in front of that emotion. When we do that, we will be able to ride small waves of movement or (emotion) and capture profit from that. The markets have proven themselves to be consistent because people are creatures of habit. They seem to do the same things over and over again. We just put ourselves in the position to capitalize on that predictability.

More coming tomorrow

Vince

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