Posts Tagged ‘stock market fractal’

Trading Discipline and Self Control- do you have it?

Saturday, April 16th, 2011

4-15-11;  Friday’s trading, was met with little struggle and little draw down after the entries. I only took three trades all gains and plenty for meeting my daily trading goal. I know I always repeat this, but it bears repeating. The trading indicators are not the trading method. There is a complete trading method built around price structure, a unique form of support and resistance and the use of momentum as it all relates to keeping draw downs small and getting the price to move out in my favor right after entry. The trading indicators I show here do very closely mimic or copy my trading method and I do find it very helpful at times to confirm what I am doing with the trading method.

It is still amazing to me that it all comes together the way it does and all I can say is that I am very thankful that I have come to learn all of this over my long trading career since the early 1980’s. I have seen a lot and have make every mistake know to man as it relates to trading, so I write and speak from experience and all I can say is that this stuff works, straight up. We are the ones at times that don’t work and that is where trading discipline and the controlling of our emotions is vital to our success. I will pick this up down below, so keep reading.

Friday’s trades below, which marks two weeks of daily gains in a row, and all of which is posted here daily for all to see.

Friday’s market was filled with good trading opportunities as we saw mostly upside buying pressure, to close on a positive note. We are likely to see a little more follow through come Monday’s market, but do believe that later in the week, we could see selling pressure come back in and take the market down to very key support at 1290 in the cash S&P. That is going to be a very important area. We may see one more bounce up off that area and that will tell us more of what the next move will be. Going forward just another move, if a bounce then comes back in off the 1290 area and then we break that, to the downside, that is going to be the turning point for a big sell off.

There is a lot of forward projecting here, but we first have to see how it shapes up. Recap; Monday’s early morning move to 1325-26 area, then bigger move back down during the week to 1290 area, then bounce up slightly off that and then we will see. A break of the 1290 area on a closing basis, is going to send the S&P into a sell off of a minimum of 100 S&P points or more in pretty quick fashion, 1290 to 1190 at a minimum with 1155 very reasonable as a destination area for that drop.

If the market holds the 1290 area and try’s to mount a continuation rally, we will just have to wait and see for that. With a massive shift in market sentiment, I am lead to believe that the break is going to take place and we are now only getting into position for a drop but I will update this as we go forward to confirm.  This is all my own opinion and not considered investment advise. Consult your own financial people before you make any trading decisions.

I look at market structure and that pretty much tells me, what is coming next. I have been doing this in small times frames with a great deal of accuracy and it is no different with large time frames. The stock market is fractal in nature and what that means is, that the same types of formations exist at all levels, whether it be in weekly charts, daily charts, hourly charts, minute charts or tick charts. Fractal, the same at all levels. The exact market flow exists at all these levels and is a reflection of the masses that drive them. Since people are basically the same in their make up, emotions of fear, greed, self-control and the lack of it, you can come to expect the same type of market behavior at every level.

Day Trading is achievable for those who want it, but there is a price to pay and that price is dedication, trading discipline and self control. If you don’t have those qualities, you can acquire them. I believe everyone has the ability to change. If you don’t see those qualities in your daily life in general, you won’t all of the sudden be able to muster them up when wanting to trade the markets, you will loose. On the other hand, if you have the dedication to learn a solid trading method and the discipline to stay close to it, followed by the self control to wait when you need to wait and pull the trigger when you are supposed to pull the trigger, you could do it.

Following our dreams is a great thing and I encourage everyone to do that, where ever they are at, but you need to be realistic and have a plan on how you are going to change and do what is expected of you to make any of this a reality.

Every trader starts out with the best intentions, but it is what we actually do that will make the difference, not what we want. You need a solid trading method to start. Then, you can start changing yourself and your attitudes to line up with success.

If you trade from a fear based approach, you won’t make it. You will sabotage yourself and your efforts for what seems like no apparent reason. Getting control of your emotions and removing trading fear to be replaced with confidence will take time. It is not going to happen overnight. If you expect that, you again will be disappointed. That is where dedication comes back in, trading dedication to the trading method that you are learning. Your confidence will grow as you see and experience market reactions being played out again and again. It is like exercising a muscle. The more you train, the bigger and more confident you become.

Give it some thought, if have a good trading method that works, then the only thing holding you back is yourself. Change that and you will change your trading destiny. Good Trading to all. Vince

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New Highs for the Stock Market and it not over !

Wednesday, October 13th, 2010

Today is Wednesday October 13th, 2010 and the market is moving higher posting solid gains in the face of adversity, with +75 on the Dow and +10.25 on the S&P.

We saw more upside as I mentioned we would in the last few posts. We had a nice reversal day with yesterdays gap lower and then higher close. That is a good sign in a bull run that their is more to come. I have a few targets that I called out many weeks ago. I called 1225 or better on the S&P and we are not really that far from it now, with today hitting 1181. My big mantra for a bull move surprise started when the S&P was hovering around the 1040 area. That is now 140 S&P points higher. It has take a little while but we finally are over the long term weekly resistance that was over head and on to the upper end of the target area I called for in late August. You can go back and read my posts, as it was overwhelmingly pointing to a surprise rally taking most by surprise. All during that week of consolidation back then, I was commenting on the coming move again and again.

The third week of July was when I was getting strong indications of a major move up. We saw that for a few weeks and then a correction which set up this longer advance and here we are. Take it one day at a time and know that the trend is up, until other wise notified, by the market. The price tells all and indicators are only a reflection of what is happening within the price. So, if you learn how to read the price, the indicators will only confirm what you already know. If you try and learn the indicators, you will never know why they are giving buy and sell readings and you will be confused with which one to follow. If you know the language, you will posses the trading advantage. That is what every trader needs. Without it, you are only guessing and the odds of long term success do not show well with this.

The stock market is fractal in nature, which means what ever time frame you are looking at, you should be able to see, read and learn what the next move of the market will be at select times. No one will know ever twist and turn and we don’t try and figure out every wiggle, but when the language becomes very clear, as to its next move while keeping your risks low, that is when you move. At that time, you posses the trading advantage.

In today’s trading I hit just a few trades, all winning moves, but just small. I was in scalp mode and just wanted to get a few points and be done. I only spend 30 minutes at it today and got what I needed.  I totally saw exactly to the tick 1181 as a potential high for today’s market. I thought of trading for it on the second have of my last trade, but I did not have my chart set up for that. If my target gets hit, my stop will automatically cancel itself and I could actually walk away from the trade and be OK, but I did not have it set up for that this time, that was fine and just closed it out and left.

I am trying to finish up a few things and it is time consuming. I may share more of that later, but it is not trading related. People in my area need help, and I am making myself available to them. This is what I love about trading the markets. You can put in a little time, get rewarded and move on. That is one of the big benefits of being able to trade. You are able to get a modest goal or return for the day and go do something else. “Time Freedom”.  With it, you have endless options as to what you do with your free time.

So, don’t give up. If you have it in your blood to master trading, in what ever form, keep trying, but be responsible with your passion. It is hard to trade with funds that are not part of true risk capital. Just getting to that spot, can really help your own trading. It will help you relax and take the edge off. That is not to say, you can be reckless and loose, but just the contrary. If you are not worried about other obligations, it is a lot easier to get to where you want to go. How ever you proceed, take your time. Going to a 4 year college is expensive and many times, you don’t really have all you need to succeed in the real world. So, if you can allot extra time to what ever you think achieving your goals will take in your trading pursuits, you will also be releasing pressure off of you expectations and this too will help you in the long run.

We are trained to get what we want and get it now, unfortunately, being apart of a small minority of traders who can pull money out of the market will take time and dedication. I truly believe, for those that want it badly enough, they will find it eventually. It may be that you have had to put your dreams on hold now and then, but with the right method, you can prosper. That does not even have to be my trading method. Their are good approaches available, but knowing which is good and which works, is another thing. All I know is, that what I do works and can be duplicated.

If you have questions and want to know more about what I do, or just need some advise, drop me an email message and I will do my best to help. If you have questions about what you are doing, and want my advise, I will help where I can.

Good trading to all, Vince

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Fractal Nature of the Stock Market

Wednesday, March 31st, 2010

Today is Wednesday March 31st and the market bounced off some key support today, 1162, two times.

The S&P market is holding in there. It does not want to go down and not able to move up, for some time now. A big report is coming out on Friday, the unemployment numbers. The last report was the first decrease in unemployment since the recession started and a back to back positive reading is going to send a strong message to Wall Street. There are many traders and investors thinking only one way. That this market was going to go down. That is having tunnel vision and not usually a good idea. You need to stay open to direction and then interpret the price action to properly trade this market.

I know there are traders who are adamant about this market falling and they may be right, but it has made virtually a complete come back from the drop earlier in the year. If the unemployment numbers are good, it may spark a big rally just be ready either way.

The trend is up and holding, but five trading days ago, we traded at 1177 to the next days low of 1157 and we are currently at 1167, right in the middle. We have bounced up and down inside this range for the last 5 days. That is why yesterday I said that we will probably see inside action over the next day or two, “Containment”. This containment is only adding to the fuel that will be expelled once the market gives way outside of this consolidating range. I will show a chart of it tomorrow and explain a thing or two about it, so be sure to come back and get some insight as to the next big move.

In today’s trading I took 8 or 9 trades and did pretty well. I only had two small losses for a few ticks, the rest gains. I scaled out of the early trades and took an all in, all out approach for the last bunch. equity chart below.

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I have been talking in between various topic’s, like trading within your dominant trading personality. If you trade stocks and look at 15 bar charts, your pool or available trades are going to be limited, but your rewards are going to be much bigger than someone trading 5 or 1 minute bars. Your stops are going to automatically be larger based on your time frame, but everything about trading is still the same and is relative to the time frame you are trading.

That is because the stock market is fractal in nature. Some may not know what that means so I will explain. If you trade daily charts and follow a set trading method, you will have to wait for days as the bars line up to a desired formation or condition as per your method or system. Again, your rewards will be much greater than someone trading hourly bars, but your risk will be greater as well. The stock market shows consistent patterns inside of every time frame and can virtually be traded exactly the same in any time frame producing the same type of results, but with relative returns. I have an example of this fractal nature found in nature itself below.

This is the reason why it is important to trade within the time frame that best serves you and your personality and situation. With the leverage available through trading futures contracts, a trader does not have to trade for very large moves to make a good daily return, but he needs to be able to keep risks small and exploit market moves as they are given to him. Just as the price moves are relative to the time frame you trade, the returns are as well relative. By using leverage in the market you magnify your moves, positively and negatively or you could say, for you or against you.

It has been said, that the smaller the time frame you trade the harder it is. Now, why do you think that is?  I think the reason is, traders are not conditioned enough to react as new patterns are presented to them. They are pron to make more mistakes and to over-trade. What can be done to change this. Practice and get the conditioning you need by knowing what to do and when to do it. Get the knowledge you need to exploit these price imbalances and live your dreams of trading for a living. There is rarely any way around paying your dues if you are going to attain this goal. Many forgo training and leave there results to a combination of idea’s, but never having a complete trading method, and road map to follow. If you are going to trade, you need knowledge and support.

If you become proactive in learning how to trade, you can trade stocks, commodities, forex or any trade-able investment instrument and speed up your learning by trading the smaller time frames. You will be forces to interpret the price action and follow what ever indicators you have if any, to gain the trading edge.  After doing this, you will see that when you go back to higher time frame instruments, you will see, feel and know so much more than when you traded daily, hourly or 15 minute bar charts. In addition, you may find that this smaller time frame type trading is what you are best suited for all along. That is how it was for me, but it took years to figure it out on my own. I am just presenting the idea’s to those who have not thought about it.

Consider it a training boot camp as you get dozens of market conditions reads per session, capturing the trading edge.

Give it some thought, trade on and trade safe.               Video of today’s turning points using tick charts, take a look.

http://www.screencast.com/t/NGJlNTJi                     Equity chart of today’s trades

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