Posts Tagged ‘trade setups’

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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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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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Called Live, Short Term Top In Today’s market.

Tuesday, March 17th, 2009

Today is Monday March 16th and I posted another good day on the e-minis.

While Trading the S&P e-minis today, I called out the short term top in the market before it happened. You can hear me make the call before it happens exactly at the the high of the day. Then you can hear me make the call, on how we will be pulling back from that high point down to lower levels. At the close of the day, the S&P pulled back off of my short term target, by 20 points. That is a lot in two hours, with the Dow off 190 points.

This is going to lay the ground work for a continued pull back. I suspect that, at the open, we will get a small reactionary rally, but I would definitely be watching for short trades. We have had some technical damage and the path of least resistance should be to the downside.

With this being said, the market can do anything it wants at any time, there is no guarantees. All I can tell you is that when I see a pattern like the one I am looking at right now, a pull back is what usually follows. I will be watching for short trade setups and will stagger some of my exits. That does not mean all of them. I always watch price action to tell me what to do and that is what I will be doing.

I try to not have a strong bias for direction too far in advance, but it is something I will be looking at. It may be that the big sell off does not come until the afternoon session, or it could come early on. Price action is what will influence my decisions at that time. I only lay this out for you because I am looking at the daily chart, just like I am looking at a 5 minute chart or tick chart for that matter. The price action is the same and currently looks bearish.

The day was really pretty smooth. I had the time to trade, so I just kept at it. I started out with some nice gains and within a few minutes I had my daily goal. I cut my size back but kept on trading and added to earlier gains. I mostly traded small all day, 2’s and 3’s were the most common contract size. If I had some draw downs it was not going to eat into earlier gains with the small size. I did have some good runners today and captured some of them on video below, so be sure to take a look.

There are different ways to approach the trading market based on price action. If we are in a choppy market and you are trying to go for bigger moves, you are going to struggle. One way that I overcome some of that is to first identify what kind of market we are in. If its choppy, don’t even think about going for more than 4-6 ticks. You will have another trade in just a couple of minutes to capture additional profit. If in a trending market, you can set yourself up for a few more ticks, but you have to know how to play it and not get greedy.

Again, in today’s market, I had quit a few of these. If you have the time, take a look. If short on time, you can always come back later. The bottom line is that I try to get myself in a break even situation first, then a small gain, locked in. After that, if the market runs, it’s all gravy.  By only trading small, I was still able to post some nice gains because of the runners.

I closed out a long position that I got stuck with over the week end for a profit of several points. That gain did not count towards today’s numbers below. Today, I took 32 trades, 25 gainers and 7 losers and my total scaled out percentage was 77%. The total equity gain for the day was just a little under $2,500 dollars on mostly small size.

During a couple of the videos I am calling the intermediate term direction and as the next video progresses you can see it come to pass. We hit the short term top in the market today and pulled back 20 points, take a look.

http://www.screencast.com/t/oPiqTiFG6              Today’s equity chart

http://www.screencast.com/t/P9iiuTUPd              Some of  Today’s Live Trades

http://www.screencast.com/t/Bna8H6Oe              Some of  Today’s Live Trades

http://www.screencast.com/t/NAik15UUR           Some of  Today’s Live Trades

http://www.screencast.com/t/y7YeoTIZC            Some of  Today’s Live Trades

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Consistent Day Trading Success

Thursday, March 12th, 2009

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Training series / First in a nine part series

Monday, February 9th, 2009

Hello, this post is for Monday, February 9 th, 2009 and today I will begin a 9 part sample training series on how to trade the S&P 500 E-Mini Futures for daily profit.

I know some of you missed Saturday’s training with conflicting schedules, but I have decided to give out some of my material to the readers of this blog. The information is, I feel, very valuable to the person who is trying to find a method that has the ability to take money out of the market every day.

All traders are different, in that you may find a group of traders who all use the same method, but they all use different entries and get different results. That being said, you can train yourself to react in a consistent fashion when you have repeatable patterns presented to you. The main idea is to walk away with a modest profit and do it again the next day and so on. It is a very attainable goal if you know what to do.

The first thing anyone who aspires to become a successful day trader is you need to know how to trade. That may sound a little simplistic, but you would be surprised at how many people do not trade with a plan but by the seat of their pants. I don’t mean to offend anyone out there who is able to trade this way, but whatever feels good or looks good usually does not produce consistent results.

There are so few people who are able to be successful at this. In a way, I guess that’s good because the returns would not be as large as they can be for some. For the person who makes a million dollars a year, the odds drop way down. One of the reasons for that is most people are not able to 1) trade profitably and consistently;  2) they cannot overcome the mental aspect of trading . You first need to know how, then you need to work on yourself in ways you may have never thought about before. Sounds like a lot of work and it is. Nothing worth while is ever easy, cheap and without cost.

Have you ever thought of the main reason for your trading pursuits?  One of the many benefits I find rewarding about living a trader’s lifestyle is you have the ability to make your own hours. For me, that is a high on my priority list. Not having to work for someone else is without a doubt high in the ranking. You know, the money is not as important for me as it may be for others, because I don’t need so much to meet my daily needs. The time freedom is probably the most valuable to me. The money just affords the opportunity to take advantage of that benefit. The answer to the question above is going to be different for everyone, but it is a good question, so maybe give it some thought.

This business is not for everyone and I will be the first one to tell you that. You need to have a desire and/or a passion to pursue this seriously because you will be going up against professional traders worldwide. You cannot take a casual approach and expect to consistently come out on top.  

Back to the training series. I have part one of a nine part series posted below. These are only 5 minute clips and they will continue the next day where I left off. The nine parts will last a total of 45 minutes and this represents just one complete trading day. I have moved up my chart to a 233 tick chart from what I usually trade, 100 tick.  I look at 3 different time frames during the day and make my final trading decision in the 100 tick. When you trade a higher time frame chart, two things happen. You usually need to account for a bigger stop, so your target needs to be higher as well to account for that, and the second thing is you have fewer trade setups.

The smallest time frame for me is the 100 tick as I have said and this is basically a scalping method by definition (taking small profits of a few ticks to a few points). I find that, it would be advantageous for someone to trade a separate account for a different style. Like trading for larger point runs based on the appropriate trade setup. With this style, I do like to gradually scale out of trades when I see nice chart patterns present themselves. Maybe taking off the first part at 1 to 2 points, then the second at 2 to 3 points and the rest, let it go to where ever the market says get out, that is easy to identify with my method.

I might add, there is another way I have handled nice trade setups and that is, I would identify the next biggest time frame up from the 100 (I usually go up in incriments of 4, for me that would be the 400 tick chart). When I see a nice pattern in the 400, that I know in the past has produced nice movement, I look to the 100 tick and go long with a standard order, lets just say 3 contracts. I will add another 3 at a new break out with my new stop in place and move up my old stop to the second add on spot. I will add again at a new break out treating it as a separate order with its own separate stop.  In a 10 point run you may be able to add 4 or 5 times safely without any additional risk other than your first order. Basically, I am pyramiding my position for maximum return without the risk. You stay within the larger trend which is pushing you higher and add in the smaller time frame for maximum return. You can do that if you are able to recognize patterns and be ready with your plan in place. Keep that in mind when you view the short video’s.

You can see the patterns more easily in a larger time frame. That is why I have gone up to the 233 tick chart. It does not matter the time frame, everything is always the same. There are a lot of ways to trade and no one can say that my way is the best way, because it may be the best way for you but different for others. I would say, I do like the 233 tick chart and I have traded it before. It is the maximum time frame I can go and still keep a small 5 tick stop, so it is a very good alternative to the 100 tick, which may be a little too fast for someone who is just starting out. This is still plenty fast and the trade setups are still fairly frequent. When I counted the trade triggers generated in the one day, there were 50 possible trades for this time frame (233 tick)

Again, the training is broken down into 9 segments of 5 minutes each, given to you one each day and represents the full trading day of  Thursday, February 5th, 2009.  By the way, Friday’s market action looks the same as Thursday’s and Wednesday’s looks the same as Friday’s, they all  more or less look the same, repeatable trading patterns that happen over and over again.

This is just a sample of what you can learn with me. If you decide to partner with me, you will be able to follow me in the morning for 30 to 60 minutes, capturing your daily goal. I think you will be nicely rewarded with new knowledge, experience and hopefully some extra cash to go along with it. 

Ask about my “Mentoring Special”, Learn While You Earn.

Have a great day!

Vince

http://www.screencast.com/t/WhGbWgD8Y                     Sample Training part  #1

http://www.screencast.com/t/44E4Uu492Qt                   Today’s equity chart

http://www.screencast.com/t/tBnsAUQswkN                   Today’s trades

http://www.screencast.com/t/kGkg0mjTPe                     Add on trade/1 entry 3 exits

http://www.screencast.com/t/ut61mZJgZn                      Updated equity chart

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Today’s low needs to hold, so far so good

Monday, February 2nd, 2009

As of 8:40 am on Monday, February 2,  the S&P 500 cash market is pulling up off  its low of the day. As I write this, we are up +9 points off this low.

I stated on Thursday’s blog, we were going to go down for the next few days with a market turn expected on Friday or Monday. Well, it’s Monday and we are starting to turn now, but what happens now is not going to count because it’s how the day ends up. The market needs to stay above the lower purple line on the daily S&P chart posted below. Very important low. 

We are currently in a short term down trend and that trend will likely stay in place until the outside trend line gets broken to the upside. I have anticipated a short term market bounce, but that cannot and will not happen until and unless the technical picture supports that opinion. We shall see.

With today’s day trading, I was able to pick up my daily goal plus.  Here are the trades.  +4 ticks, -5 ticks, +2 ticks, +9 ticks, -4 ticks, +2 ticks, even , +4 ticks, +3 ticks.  The total of these trades comes to 3  and 3/4 points for the morning. I will show you the trades below.

I was not that happy with the  two losses that I had, not because they were losses, everyone has there share of those, but because they were not good trade setups. I waited on a few trades and let them go and that is ok, but those were good trade setups and I got a little impatient and took two less than desirable trades for me. Not to worry, I came right back and picked up some nice trades to recover. 

Today, I have at the bottom some of Friday’s early morning trades and today’s early morning trades. I did not take these trades, but it is nice to see where and what the trade setups look like. There is a nice market flow to the early morning action. One thing I noticed while looking at these two charts is that Friday’s open and Monday’s open look almost exactly the same. They both started off the same way and continued to trade in the same manner. Just an interesting observation here.

I will soon be trading this morning. I need to get my schedule lined up first. But as you can see, you can trade any time of the day. The middle of the day tends to be slow, between 9 a.m and 11 a.m. It usually picks up after that with the institutional traders in New York coming back from their late lunches. 

That’s it for today, I wish you all the best.

Vince

http://www.screencast.com/t/NdN6sA3AXpP      Some of today’s live trades

http://www.screencast.com/t/EAE9lZXyrl             Daily S&P 500 update

http://www.screencast.com/t/x4GFgN6Z4B       Friday’s early morning potential trades

http://www.screencast.com/t/DFwszVb3rt         Today’s early morning potential trades

http://www.screencast.com/t/cayVwMI6b       Took few more trades 16 gain 3 loss 1 flat

http://www.screencast.com/t/Ruglbpu5           Chart of the day equity curve

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