Today is Friday the 13th day of August and the Index’s were down slightly -16 on the Dow and -3.50 on the S&P futures.

I guess the market needed to take a breather from yesterdays sell-off, as we did not go to far in the session today. A very narrow range was not exactly what I was expecting. I thought it would start to pick up, but it did not. The market went back to sleep. Come Monday, it is going to have to show its hand if in-fact the support from Thursdays market is going hold. That is key support and if broken, we are in a bit of trouble as I see it. I expect a bounce off this current level of at least 20 S&P points, maybe a little more, come the next few sessions. After the bounce, (if it comes) that is really the moment of truth for this market.

I talked about the market sentiment in yesterdays postings as the bearish sentiment dropped a lot. Last week we saw a 6% drop in bears as per “Stock Market news letter writers”. It went from 34% bearish to only 28%. That is significant, but the more important side is the bullish percent. That did increase from 38% to 41%, still a little on the light side. A figure of 35 is bullish and we are coming off of that now and a reading of 55 is bearish. This number does not have to get to the upper extreme for the market to sell off, just somewhere in the middle is enough. Tuesday the new numbers will be coming out and if we see a rally on those days, it could push the bullish camp to the middle of range and then the market can do what ever it wants from there. A strong signal a month ago has given only a modest market move, if in-fact this market is done, that I don’t know. One thing is for sure, one needs to play the price action as it relates. A big bounce will be setting itself up for a good predictive move either way at that point.

To better illustrate this, I have a “Daily Chart” of the S&P cash market up again as I did last week. I have new notes on it as I pointed out the potential for a big drop from last Fridays blog posting. Well, we did get the drop, now what. Go see the chart below and get the rest of the details of what we could expect.

In today’s trading, since the price action was so slow, I did not push it. I only had a few trades and called it a day. I had a little over 3 points gain and just 2 ticks of lose. It wasn’t to exciting, but trying to make something where there is little, is usually not a good idea. I could have went into scalp mode and tried to pick up a few more points, but when the prices are moving so slow and there is little volume, I really don’t like it. I would rather wait. My trades are below.

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Trading for a living is a traders dreams and at times dreams do come true. For this dream to come true, one needs to have a trading plan and a back up trading plan from the first one. Things do not always work out the way we would like, but having a trading plan to begin with, puts you miles ahead of other traders who have none.  Finding the best trading instrument is also something one needs to contend with. I find that trading individual stocks are easier to trade than the S&P emini’s in a general sense, but I enjoy the trading leverage that comes with futures trading.

I find that trading for income is much easier than trying to trade all day for the sake of trading. If its the money we pursue, than trading discipline and patients is going to be in high demand. Without a high degree of trading discipline and the patients to go with it, you will end up working against yourself.

Traders do not realize that they themselves are there biggest obstacle to overcome. Read that last line again. That is right, we end up derailing our efforts to often by our lack of discipline and need for action. If a trader trades for income, then he gets what came for and leaves to enjoy the freedom that day trading was supposed to offer, or that is how it is supposed to work.

With the high degree of trading leverage that emini futures trading offers, you really don’t need to trade all day. Consistency in capturing 2-4 points per day on most days, with windfall days 2-3 times a month, should do the trick nicely. If a higher income is what you want, mastering the daily goal is the first place to start with small trading size. After that goal has been reached, then slowly increasing your size to the desired income level is next.

If an emini trader could master the 2-4 points a day average, highs and lows, including loosing days, which is 60 S&P points per month, x that by $50 dollars per contract traded and you have $ 3,000 per month. That is your minimum profit for one contract traded for the whole month. It not a lot of money, but increasing that slowly over the course of a year, could easily take you to 20 contracts. Now that is serious money, 20 x $3,000 or $60 K a month.

Increasing is an option and has its own set of psychological problems, but those limitations are usually our own inability to allow us to earn more. Our own self worth needs to be evaluated and we need to give ourselves permission to reach all of our financial goals as our plan calls for.

To day trade 20 lots in the emini market a trader really only needs about 20k in his account to put on a trade with that size, based on the trading leverage that is available to him. Each S&P point is then worth $1,000 dollars. That is a lot of bread, but that works against you just the same. Trading with that kind of leverage is definitely not advisable, but for every 3-4 thousand dollars of increased profits, one could over 3-4 months find themselves at that 20 lot level. Even averaging 2 points a day (40 points a month) will get you their in 5-6 months and give you the ability to take money out of the market each week.

It first starts with us and our mental attitude. Controlling greed and our emotions, while we trade for income. This is a marathon, not a sprint. Keep your trading funds safe until you truly posses the trading edge, then live your trading dream. (Part coming next posting)