Posts Tagged ‘trade management’

Follow up on Market Calls

Monday, September 26th, 2011

Today is Monday September 26th, 2011 and want to do a follow up to the market calls recently made.

First let me post my trades from today and will keep my comments short unlike Friday’s post.

I have been getting up a little later and so missing the early parts of the sessions recently, but that is not always bad. It gives a little insight into what is happening and what may continue to happen as things move along.

I took 4 trades total, 2 were for pretty good gains, with one for a small loss and one nearly flat. An average day with only 45 minutes invested trading and a little better than 50 minutes in follow the market. From that stand point a perfect day.

I gave myself a B- grade as my second trade had poor placement but good overall direction still. The short did not produce within the time it should have and just exited nearly flat. I added on 1 and that one had -1 tick. The last long, I did not get filled at the high tick and exited at my increased stop, close but no cigar. I may have been a little harsh on my grade, but I can’t change that now. An easy day overall with little struggle.

The afternoon session I did live video’s for my group and called out several entries on the way to a 1155 target that I was talking about in my Friday post and in my video’s.

I stated in Friday’s post that we should see 1155 within the morning session or unless we get it in the premarket. I should have took that a little farther as we did see the best part of a 25 point S&P call to 20.75 points a couple hours before the open.

The next part could have pushed that completion to the afternoon session of which we did complete that call right at the end of day with a point or two to spare. I could see that early on and choose to talk about it in a recorded training session with my group.  I showed them all the reasons why that was the likely target for the session and it was nice to see it come to pass.

The next follow up call I made yesterday in regards to the metals was that Silver was going to continue to fall until 26.50 and that would be a great area to buy as a long term hold. Well, the metal did drop an additional 10%+ in just that one session and hit $ 26 and change and reversed course all the way back up to the $30 area. Wow, that was fast.

The point there would be that the market respected the numbers that the method identified with great confidence. I would expect that low to hold even if we back fill a little lower from here. If anyone can buy physical silver at the upper 20’s area, that I believe would be a great long term buy. I expect the metals to do well for the next few years and reaching well over 100 per ounce.

We have some work to do currently to get things turned around which at this time we have not yet done, but am expecting big things in the next 12-18 months. It is a great alternative than  just letting cash sit in the bank and or participating in the Treasury market. A portion of ones assets in metals is prudent even with the volatility. Time here will heal many woes.

As far as the Stock Market in general, I believe we have put in a tradable bottom and higher prices overall I feel can be expected. That is not a popular opinion just as I wrote that on Friday when the market was 272 Dow points lower. It takes a lot of courage to make a call like I did, but when you know what you can expect from the market as per my trading method, which is very unique, it is in reality not that hard to do.

I can be wrong at times and I did in part get the final target on my last S&P call coming up short, but that is trading. I will get many more right than I will get wrong and if one trades with good trade management, partial profits should be taken while on the way to the full target.

This is all in the daily market that I am talking about, of which I don’t really trade but look at and many others do as well. I like to follow and call that out because so many follow it and it is an easy way to point out that my trading method works in various time frames as my members can testify.

The other part is that this is really just for me. To exercise my skills to call market turning points in the daily market, the hourly market and on down to various tick charts. The method works across various time frames and is customizable to the trader who is flexible.

I have more to say, but will save it for tomorrow, until then, good trading to all.

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A Few Day Trading Things to Remember

Sunday, June 12th, 2011

Friday’s market we saw more selling, taking those who established longs out as the market closed at its lows for the session and the past several weeks.

The market sentiment is building now to the negative side aggressively. It may be too early just yet to point to an extreme, but a little more time may be all the market needs. The put/call ratio is suggesting retail investors are building up short positions for they believe will be a significant market drop. Investors intellegence is currently with a bullish reading of 41%, close but not the reading needed to spark a large rally just yet. We should see something closer to 35 or less.

The cash positions held by insititutions is at one of its highest readings in recent memory. At the market low in March 09, and one other time has it been this low, both instances, we saw powerful rallies to follow.

Small investors in general are feeling very bearish towards the market and many are out completely with no interest on returning. This all does make for a good case that we will not see the crash that many are calling for. To this point we have seen a fairly orderly pull back. In looking at the daily and weekly charts of the S&P, a pull back to 1176 would not be out of the question, but when I see the sentiment views shifting so strongly, it may be more than the market is willing to give up.

In Friday’s trading I was able to squeeze in an hour of trading and glad to pick up a few points. I have the turning points identified also pointing out those turns. Some entries are better than others, but have them marked as such. We are now in the new contract month September, on the S&P, esu11.  Everyone should now be on the new contract month as this is the new front month. The volume will be the highest here as the previous contract will expire by this coming Friday. I had a long term position in the previous contract month that got stopped out with a gain of just two points. There was a lot more, but could not whether the pull back, but that is fine.

I don’t really care which way the market moves but just that it does. With that, we can read it and trade it.

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A few points for traders to remember;  *Don’t have an agenda on direction while day trading. If your market opinion on direction is to strong, you will blind yourself from the easy and obvious trades the market is willing to give you.

*Respect the markets and never let you guard down. *Commit to yourself that you will use good trade management decisions and not become greedy so as to loose built up equity. *Commit to yourself that you will not hunt for a trade, but let it come to you, there is less effort expelled and you can use that energy towards trade management.

*Commit to yourself that you will exercise patients while waiting for the trade and if within the trade and your method for that trade that you will give it time to work for you.

*Don’t try and pick tops and or bottoms, it will leave you frustrated and with losses most often and lastly, *commit to you yourself that you will be disiplined in your trading as you read what you see and trade what you know, leaving the rest.

Those are some quick points that could be turned into real points for your bottom line. Give it some thought, you will be glad you did.

Good Trading to all.

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Key points for Successful Day Trading

Monday, February 7th, 2011

2-7-11;

Day trading is a very sought after profession. Many try, but few last. Why is that and what can be done for those who really want to overcome the barriers? There is no substitute for experience and being exposed to the daily market fluctuations that take place every day. Short cuts, to help speed up the process can be to find a sound trading method to build upon. This can cut down some of the learning curve for those who pursue this, but it is not the final answer. The individual trader is where the responsibility lies for success.

Every traders comes with different baggage from his past and many of those can be very negative and hidden deep within the subconscious. It is essential to know who you are and what limitations you may have from your past. Uncovering some of this first, will go a long way to overcoming your personal trading barriers.

Every trader needs to know what kind of trader they really are. If you try and trade a style that is not part of your stronger inner traits, you are not in sync with yourself and the markets. So, take time to examine that.

Me personally, I don’t like staying in a trade very long and look to exit on strength rather than on weakness. Knowing that ahead of time even as a scalp trader, I am lining up with my strength’s and the results are improved.

Being successful once you have a good idea of what to do and what you are looking for, is money management. Without this, you are going to suffer. I always try and measure how much is in the move, or where it is naturally and likely to move to. Then I try and underestimate that a bit to be sure I will get there.

The first part of the equation happens before you get into the trade, that would be trade selection. Knowing which trades to take and which ones to pass on is very important. This part is called discretionary trading and when combined with rules and principals to follow, is the best kind of trading with the best results. This would separate what is called a trading system from a trading method. Discretionary trading is putting everything you know about the market and its character to your advantage with a buy or sell signal.

Trading systems are not discriminatory, as they take signals from a predefined set of conditions automatically, putting you in the trade as those conditions are met. The problem is, if and when you hit a draw down, you are either going to keep trading it or stop. When you stop, that is the likely time that it will turn around and start to recover from its earlier losses, but without you. As you re-enter, thinking it is back on track, it then again starts to suffer draw downs and you are again underwater. This is frustrating for many traders I am sure. I never traded that way with a mechanical system but I do know the scenario’s that it plays out.

A trading method, is going to have discretionary trades to take and pass on. You need to interpret the current market conditions and see if they are favorable per your trading method conditions. If parts are missing, you are better off to pass. If the ingredients are all their, proceed and do not hesitate. This is the biggest difference between the two approaches.

To trade a method successfully, you really need to get comfortable with it and that is going to take time. To many traders rush into the trading pit and want to see what they can do. That is fine, but when the time is right. If you are going to go college for a degree, they don’t hand one out in 3 months and say thanks for coming. It is a long term venture of commitment, passion and desire what will take them to their goals. Becoming any professional is no minor operation, just the same as becoming a successful trader. It takes time to know how price reacts to different market conditions. You can jump start that, but their is no substitute for this. Those traders that have a years mindset, as a opposed to a weeks and months mindset, know that it is the truly committed who will persevere and overcome.

The other thing is having realistic weekly and monthly goals. As daytraders we strive to be profitable every day, but that is not always going to happen for sure. Shooting for a weekly and monthly profitability goal is more realistic. If you apply to much preasure on yourself in any one day that you are off, you will force trades and make mistakes trying to come back. If you have a daily loss limit, you always know ahead of time what is the worst thing that is going to happen this day. You don’t have to wait until your losses mount either, as if you are off, you can always stop before that threshold is reached. Having a weekly and monthly goal helps to release some of that market performance pressure. You always have tomorrow when market conditions are likely more favorable.

To recap; A trading method is better than a trading system, but it can be harder and take longer to master. The end results are improved performance and you maintaining control. Money management, a key to success. Without it, you will not make money. Take what the market gives easily and freely, and exit what becomes a struggle. Protecting profits and moving up your stops are a key part of that management.

Every trade starts out as a scalp for me, until the market proves itself. Scaling out is another key part of that trade management. Taking a small piece of that easy trade can allow you to stick around for the rest of the trade to develop into more without the fear of quickly giving it all back and the trade becoming a looser. All apart of trade and money management.

All of this comes with time and experience as you follow the markets. A few more things,  price always comes first. Be a student of “price” and see how indicators reflect that, not the other way around. Lastly, do not forget how time plays a very important role in all of this. “Time and Price go together”.

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No trading on Friday and today. There is something wrong with the price data at Trade Station. The tick charts are way off, posting like 5 times as many bars as normal. I don’t want to try and trade what I don’t understand, not worth it. It started from the afternoon session on Friday and has continued into today. Lets hope they fix it soon. Any comments from traders on this welcomed.

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Scalp Trading for 2 points a Day

Thursday, January 6th, 2011

Today is Thursday January 7th, 2011;

We saw the market fall back slightly today with the Dow down -25 and the S&P -2.  The daily momentum is still up as we have one more day until we finish the first 5 days of January completing the first round of the January effect. Lets see how tomorrow finishes up.

I welcome this bull run and am personally glad it is still alive. I do know we are on borrowed time as the market defies gratify. Again, I would have to say this big move up did catch me by surprise as the market sentiment did sway me to become more bearish overall. A confirming break never did come back in late November, so that is some saving grace. Once the market turned up past its old highs of around 1225, I did start to see the 1260 area as a possible target. We hit that and restested yet a bit higher, so as of now, I will just wait and see what the daily charts have in store.

Below on more U-Tube video of the days turning points and continuation trades as per a few of my indicator tools. Trading for a few points is not to hard if you can follow some of these signals, but know what is driving these signals is much better yet. The market does react in predicable fashion more often than not and harnessing some of these trades can yield nice returns. It takes discipline and focus to hit these area’s, but it is totally possible to achieve.

As mentioned, if you know how trader typically act as the price bars are constructed and laid out on your screen, you will know what is coming before it gets their and you will be mentally prepared to take action as it all comes together. The key is knowing, and when to pull the trigger. These marked area’s are kind of like “Cliff Notes” are to reading a book.  You will get a lot more out of reading the whole book as opposed to just getting a summary of it. The results can be similar, but with the book, you understand all the related circumstances around why, when and how far moves are likely to move once they do (as it relates to trading).

To be successful at this, you have to keep your losses very small. I can not take a 2-3 point stop in the S&P. That does not work for me as it proves that my entry was not as it should. Keeping losses down to 2-4 ticks is key to making your points for the day. I usually start out with a 4-5 tick stop, but it gets moved up as things move my way.

Scalp trading is said to be some of the hardest forms of trading, but it can be the most rewarding in many ways. If you have limited time to trade, you want to see multiple trades within the time you have.  If you only see one trade in the first 60-90 minutes of the session, you won’t be able to come back if your first trade is stopped out. So you end the day with a loss. Your minimum risk reward ratio should not be less than one to one when you start out, but if you loose the edge, getting out with two ticks on the emini S&P should be fine. Being flexible will help you go a lot farther as you live to trade another day.

Trade management is another very key element for success. You need to be able keep yourself protected and minimize your risk at all times. Overexposure to market risk will eat away at your confidence and cause you to hesitate when it comes time to pull the trigger. A few small losses can quickly be covered on one trade. Say you have -3 ticks, -2 ticks, -4 ticks as your losses and then come back with a 2.5 point trade, you are about even including commission. The next trade may be scaled out at +1 point and two points for 1.5 point average day. That is 5 trades with 3 losses and two gains. Nothing earth shattering here, but maybe tomorrow you won’t have the three losses and just hit the first two trades which would be a 4 point day minus commission.

So, the key is keeping your losses small and get out of the trade once you loose the trading edge. You live to trade again, and you don’t do big damage to your account. I will say most traders end up beating themselves. Many know what it is they should do, but just don’t do it. Take a break if you are having loosing days. If you have three loosing days in a row, you need to take some time off. This is a must. What ever you are doing, it is not working. Step back and assess your action and attitudes as it relates to your trading method.

I think traders need to talk out what they are seeing and doing as it relates to their trading.  If I was struggling, I would record my trading sessions with some type of screen capture software. You can find them for free many times on the internet.  I have one that works well and saves it to small files if you want to archive it.  I am not afiliated in any way with this software, but I use a program called “Capture Wiz Pro”. You can easily record your trading session and play it back for review to see if you are living up to your written plans.

If you don’t have a well written trading method to follow, you are at a disadvantage right their. You can not just have this stuff floating around in your head with a general idea of what you are suppose to do, that is not going to work. You might as well save your money and practice until you do. Up and coming traders are trading against professionals and big money institutions who thrive on this type of trader as though they were “chum” for a feeding frenzy. I don’t want to put anyone down and that is not my intention.  All of us are still learning and need to humble, but I know what it takes.

If you don’t have the time, will or ability you can follow someone you trust or feel is right for you or you can do it yourself. Cover everything as it relates to entry, exits, stops, trade management, daily goal, etc.    More Tomorrow……

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Risk Management – Part two

Thursday, March 25th, 2010

Today is Thursday March 25th and what wild ride on Wall Street today.

It is to bad I did not have or allocate more time to trade today. This is one of those days that my T-2 trade model would have cleaned up, if you had traded it for any length of time. A trending market is great to catch up in any daily trading goals you may have come up short on in past trading days. If a trader could work a trending market a couple of days a month, you can make more than your daily goal by 5 or 10 times.

Yesterday, I suggested that if your trading is flat, to decrease your contract size until more favorable conditions open up, or to just wait it out. The idea is do not increase your size if you are under-performing. If you do, you are being influenced by outside forces, MONEY. That is not a good idea in the long run. The worst thing that can happen is you increase your size when trading poorly and you hit a few good trades to make up for it quickly. I am tempted to do this myself now and then, but it is really not a good idea. You will build precedence for doing this the next time and you may not be so luck then. Doubling up when you are underwater is a form of being impatient. You want what you want and you want it now. Resist the temptation and talk it out, to yourself if you have no one to listen to you, most likely. It is to easy to go only deeper underwater and this is where those dreaded wipe out days come from two or three times a month. You may say to yourself, if I could only remove those really bad days, I would have come out pretty good for the month. Well, there is hope.

First, you need to be strong mentally and not let yourself loose control. Again,resist the temptation and tell yourself  “focus on what is before you at that moment in time” and do not become anxious. Tell yourself, “my moment will come”, just wait and you will see the open door you were looking for. Take each trade one at a time. If it is a choppy market, take it a piece at a time, just use good judgment and take the high probability trades, assuming that you know what those are. (If you don’t, then maybe you should email me get some training & mentoring)  If the market is showing signs of trending, then you should adopt that type of strategy to make the most of it.

This brings me to my main point for today. If you have the time, feeling good and the market is co-operating, that is the day you want to take advantage of the conditions. All three of those need to be present, if you are not feeling great, then it is better to get your daily goal and wrap it up. It is to easy to make mistakes if you are not all mentally there. You may have not gotten enough sleep the night before and or what have ya.

Back to the point, if all three of the above conditions are present, I feel a traders has a green light to clean up. There are several ways to approach that.  A conservative way is to gradually decrease your size as the day goes on, but keep trading. That way, if you have draw downs, as the day comes closer to the close you will ensure that you are going to close well in the green even if you have loses near the close. Try and remember that, it could serve you well. There is nothing wrong with being conservative, you will ensure your survival.

Another way and it is an alternative that can pay big if you have discipline and feel well grounded. As mentioned, with the above conditions met, adding on to positions or “scaling in”, as the market is moving in your favor at key spots. This is a form of “Trade Management”.

I don’t do this that often myself, but I do know how to and could if I want to, for sure. Take a day like today. You need to trade what you see and not what you think to start. Next, in a strong moving market instead of scaling out of your trades, you scale into them, at key spots.

If your first entry is wrong, you have a smaller more manageable loss. If you entry is good, you scale in along the way at key low risk spots. Each add on has its own independent stop and as the trade moves your way, you clean up. This is an advanced strategy and you really need to feel comfortable with the basic all in all out approach first. This is risk management to the upside. The opposite of those big loosing days to the downside. If you get just two days like this per month, you can make up a lot of ground and or you can forge ahead into new equity territory.

If you try and get what you want from the market but do it at the wrong time, you will not only get what you want, but loose what you could have had and then some. Think about it. This is “Risk Management and Trade Management”.

Trade more aggressively when the market tells you to, not when you want to. Again, you will be glad you did.

Trade on and be safe.        P.S. will show two small winning trades I took today in tomorrow post.

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