Posts Tagged ‘trading edge’

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Scalp Trading the Emini

Tuesday, January 31st, 2012

Today’s Trades are below;

Here in this last day of January 2012, scalp trading the emini markets has grown in overall interest the last several years. There are new players coming into this market all time as the opposite is also true with players leaving in defeat.

What does it take to find your way to profitability? It is usually harder than most believe as they are drawn to the often fast action and allure of financial freedom. Sniper Day Trading will attempt to bring some of this into perspective.

Scalp trading is a way to participate in a very large leveraged market with limited trading risk. With margins as lucrative as 50:1  or more for pure day trading margin, it is easy to see why so many feel the lure of participation. That leverage will work for you and against you just the same if you don’t know what you are doing.  Using excessive day trading margin is also another reason why traders struggle, as they always trade to their margin limits and increase their losses all at the wrong time.

Knowledge is power and those who have it, can leverage the knowledge to obtain their trading goals. Without a working knowledge of how price action takes place in the course of a day, you will get whipped around and be left for dead when its all said and done.

Limiting your trading risk down to a very small window is in my estimation is a big key to success and stretching out gains when it is appropriate is also important. The key here is, when it is appropriate. How are traders to know when that is?  To answer that, it takes us back to knowing how to read the price action charts as you take in time, energy and space as it relates to support and resistance, which is often misunderstood.

Support and resistance in trading is often applied in a way that will cause the average trader to lose on his position because the market has a way to get you in, only to take you out and then on in the original direction, but without you in it. This again has to do with knowing all of this ahead of time and waiting for those false moves for the real move, the one with the limited risk and high reward.

Scalp trading at key energy points will yield you fast acting trading results combined with low risk, giving you the best of both worlds. Knowing when to cover your trade is also just as important as knowing when to enter. You can have large profit in a position only to quickly see it disappear as you are looking for more. That often leads to frustration and more bad entries.

Which brings us to the mental side of trading and that is a whole other issue that keeps traders from gaining traction. You need the trading edge in mind and method. Most do not realize it, but they are the problem, not the market, to achieving the results they seek. The market is there and it will always be there with the participants coming and going, but not having a solid mental strategy in addition to a solid trading strategy or method is where the separation begins.

To many traders become “feeders” for the professional traders and institution as they strip newbies of there capital. The best strategy to not let this happen is take your time and triple the amount of time you think you need before going live in the markets. Get your mental game down and don’t become reactive but proactive in stalking trades as you wait and let them come to you. This is the approach of Sniper Day Trading and reason all of this works. One needs to take into consideration all the points mentioned above and then the playing field can not only be leveled but tilted to your favor, giving you the trading edge.

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Each Trading Day is New Beginning

Tuesday, November 8th, 2011

See bottom of the article for last weeks trades: I have been having computer virus issues on my desktop and lap tops and had to resort to a third computer. Hope to get back on track with daily postings very soon. Thanks for your patients.  Below is an article I did last week and could not get it posted until today. Hope you enjoy it. Vince

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As a trader, each day is a new beginning. If we have the ability to separate the past from the present and then remain neutral on into the future, than that is a great statement. That is usually not that easy for most people, no matter the profession, but is it possible?

The answer to that is a big “Yes”.  It may not be that way for most people and thus traders, but it still remains a very strong possibility for those who can find within them the ability they need in order to do just that.

This is internal strength of mind to follow through with what YOU KNOW to be true. We may think many things but when we know something is true, that is were conviction comes from and when it is found.

The reason that is so, you act without hesitation and act knowing that the likely future outcome will take place as foresaw. That is a gift for those who get that far, but its not going to automatically take you where you want to end up.

Getting to where you want to go as a trader takes a little more. You need to act on only that which you KNOW TO BE TRUE and just leave the rest for the speculators. That is then what they do, but not us. The stock market is not random as some would suggest. It is a living and breathing entity and is made up of the collective minds of millions of people across the entire globe.

If you were to catch a closer look inside and see what they were thinking and planing well in advance, would that not be worth the price of admission. Traders leave a trail behind them as they make there way through the arena. Those worthy of interest, will rise to the top of the list. Where some gather, more are drawn and then you have a fully invested market filled with a multitude of idea’s.  Those idea’s that rise to the top are the ones that control the field.

Trading is a very interesting world. It has a strong allure, but its rewards are reserved for those that can go beyond the masses. What does it take to arrive at a place that sets you apart from the rest of the world?  It takes the ability to see things not as they are, but as they will be. You need to be a bit of a visionary in that, seeing where the price is likely to go, based on very similar conditions from the past. The past will always lend insight into the future. Those who fail to learn from the past are doomed to repeat it. Where have we heard that line before?

This can all be summed up with what is called a trading method. If you don’t have one, you need one. You can not leave your action up to random events, as they will only influence you to and fro, leaving you lost and confused. If you are new to trading and have not found that place yet, it may be coming soon. No one gets untouched from the sting of the markets as you learn.

Maintaining mental control as it relates to ones trading plan is the key for continual trading profits. If you are not sure, and have doubts, don’t trade. You should practice longer and apply the continual trading lessons that are sure to come your way. In time, your exposure can give insight, but not having the mental fortitude to follow through will just as well leave you as helpless as the one who does not know.

Get with the mental side of the game and gird up yourself to be worthy of the challenge, as not doing so will only leave you morally defeated. It all starts with a thought. You have the power to control your mind and make it follow your lead. If you leave yourself open to every inviting suggestion, then you will be sunk.

We as humans are predictable just the same as successful traders who are collectively able to move the markets, we have the ability to think as the masses think and look to do the opposite. Those results are often very duplicatable and what successful traders look for, thus giving them the undeniable trading edge.

Look for the trading edge as a large part of it is within you.  Trade well, trade committed !

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Below is last weeks trades missed and today’s late trades, no trading yesterday.

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E-Mini Nasdaq Trading

Tuesday, June 28th, 2011

Today, I again traded the emini Nasdaq market but it only lasted about 10 minutes. I only had two trades one very small stop out, and a reversal long for about 8 points. There was no need to keep trading as the easy and obvious came quickly and that was enough for the day. I posted the early morning screen shot below as I usually do on the days trades. I have been doing this for about a year and half daily and I think those that look on, like it. It gives them an idea of what is possible, even if they are trying to figure things out for themselves, which is OK as long as you are making progress. My trades below.

Trading is definitely a process where you will be tested in many more area’s than you thought was possible. It is imperative that you have a plan of action and it is clearly defined and not open for interpretation. This is so important as you need to have a way to measure the things you do so that you can do them consistently in the future. If you are all over the map and trading by the way you see and feel things shaping up, you are going to be in trouble and it won’t take long.

You can not guess in this business and if you do or find yourself doing that, you should just stop. Don’t take a trade where you don’t have the trading edge. You need to feel and know with a certain degree of confidence that you will come out on top each individual trade. When you have the lost the trading edge, you really should exit. Hitting the close button is just as good as any measure, but you can try to exit on a limit order if you think you can get out. Many times if things are heating up, it can pay to exit at the market but every situation is different and that is where some discression and market intuition can come in.

As far as your entries and exits, you need to have that ironed out and it needs to be clear as stated. If you have not done the work to get there, do it before you trade live and risk your capital. It is the responsible thing to do and that is the only way you can expect to ever get a bead on this trading venture you started.

Work on your mental outlook as well. If you are feeling overconfident, you will likely be setting yourself up for a humbling event soon to visit you. Your confidence needs to be based on your ability to execute the method that you have come up with. It is in the execution where you need to focus your discipline in on and exercise your trading patients to wait for those special moments.

Many times you will have to be willing to let the trade go by even if it hurts, as that extra time may be needed to really let the trade get into its most opportune time to get in. So, to get it, you have to be willing to let it go and not get it. At times, you won’t have the luxury to wait, as those moments can come and go quickly. It is designed that way many times on purpose so you can’t or won’t get it, but again, some of those moments will only come with time invested in the markets.

In the mean time, you will have your trading plan/method to fall back on until you build the screen time you need to get to where you want to be. That is also very valuable time invested as that is where you will see the nuances the market throws off and how to best play those based on your overall method to trade. So be patient and don’t be in a hurry. You will best serve yourself as you learn and slowly earn.

Good Trading to all.

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Narrow Trading Range-Before Next Move

Thursday, March 31st, 2011

Thursday, 3-31-11;  Today we saw another very narrow range in the markets, as the major index’s pulled slightly back from its ongoing advance.

The trend is still up and we are not far from an all time yearly high. With the last two days basically sideways, giving time to digest previous gains, we could be ready for another move. The question is, will it continue up or reverse back down. The market has made it this far, and those who were trying to short this market are getting creamed. All the latest news says the market should go down, but it seems to just ignore the news and march on to its own agenda.

In today’s trading, I did not stay to long at it, taking just two trades. I was in the first one for about 45 minutes, which is long time for me, but that is what I had to do. It was during the New York lunch time, where things are known for being notoriously slow 12-2 p.m. The second trade I was in for only a few minutes and was just a very small scalp. That was all the market was giving and I did not want to sit around waiting through the rest of the day, so what I had was fine.

We only saw a 5 point trading range in the S&P emini’s today. That has to be the smallest trading range I have seen in a long time. It makes it hard for many traders to make money in this environment, but not those who know how to scalp trade there way through the day. A little here and there adds up. If I started earlier, there were some pretty good trades to be had. The screen shot of the better portion of the day is below along with my trades.

The market is very predictable if you know what you are looking for.  I have been sick lately with a head cold. Its not enough to make me stop trading, but it is harder to wait the market out when you are not up to your best.  Overall, this week I am 4 for 4 positive days and hope to start a new streak.

I use different charts in my trading and seem to only show this one chart. This is the smallest size chart I watch, with this fitting inside a larger chart with the same signals on them. I use a few more trading indicators on the screen, but don’t really need any, as the the method is price action driven. It is always important to point that out, because new traders may come on and see this as the Holy Grail of trading. It is not. You need to work at this, even though it may look easy.

With that said, you can go back and look at dozens and dozens or even hundreds of post and screen shots and you will virtually see the same type of charts with very similar reads to them as above.  The indicators only reflect what the price is doing and can be a tool, but you need to know how to swim in these waters before you jump in.

Money and trade management are vital to your success. If you allow greed to take hold you are cooked. The same can be said about fear, with a lack of conviction to pull the trigger can get  you left behind.

Outside of knowing how to trade, you are your biggest asset or liability. You can make this happen, if you are consistant with yourself. If you go outside of your rules and do what feels good, you may be in for some pain. We as traders don’t like to be wrong, and ego to often gets in the way. Are you going to bend and just allow yourself to be tossed around? If you do, you then become your biggest liability and reaching your trading goals will become more distant.

Get a trading method that works, stick to it, and discipline yourself to wait for it’s signals, either price driven or indicator, if that is all you can see, its better than relying on what your feelings.

Traders need to make moves on what they know about the market and its behaviors. If you don’t know, then you need to put in some extra screen time.

Most important, don’t risk your money until you have the trading edge. Without the trading edge, you then are reduced to just guessing and that is not going to help you.

That’s it for now.     P.S.  I will get back to the follow up from yesterdays post over the weekend. It seems like the right time to follow up with that. Good trading to all.

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Day Trading against other Traders

Wednesday, December 15th, 2010

Today is Wednesday December 15th and the market pulled back a bit today with the Dow off -19 and the S&P -5 points.

Today we saw a little more action with the trading range expanding from the tight range of the past few days. That is welcomed by many I am sure. It can be hard to make money when the market moves are so restricted, but having a short term scalp model that offers small risk tied with small rewards works just fine.

If your trading model is only as such that you need the big swings to make money, what do you do when things quiet down. You can trade other markets and that is an option, but many traders prefer to trade what they know and will stay with it. I would say, if your trading model is not equipt to make money on small moves, you either need to stop trading until it changes, or trade something else that is moving. If you force trades in a low volatility environment, you will only loose money.

Knowing how to trade in any condition, trending  with nice multiple point swings, or short choppy moves you can make money in either condition. Many traders do not like to scalp trade, as they say that is too hard. I would say that it can be harder at first, but after one knows how to handle the market by understanding who is moving the market, he can retake the trading edge.

What I mean by that is, traders trade against other traders. They are not trading against indicators. If you know how other traders will react under certain conditions, that is the first step in getting that trading edge. Knowledge is power and those that possess that knowledge have the power or trading advantage. That is what every trader needs, otherwise, you are entering a game with other professionals that feast on those who only think that they are ready to do battle.

That is not meant to put anyone down, by no mean, but to build you up so that you are ready to handle the challenges.

Their are four levels when looking at a market. Traders first are trading against other traders. Knowing what is their likely next move ahead of time and positioning yourself in front of them is first. There reactions is what causes the price to move, so you know ahead of time what they are thinking and their likely reactions will put you in the right position. The price only moves as a reaction to their actions.

That all translates into the price moves that we see on the screen and would be the second level. Again this is a reaction to the first. With that said, based off of these price adjustments we see follow through, played out onto the screen. That follow through with price, causes trading indicators to move and adjust. On time indicators will be the closest thing to price and that would be the third level. The last level is lagging indicators and those are behind price, sometimes significantly. This often is the one most traders are following to help them interpret the market and its direction.

In my opinion, traders need to be looking at the first level, which quickly moves into the second level to help give them the trading advantage. There are ways that traders can know with a pretty high degree of certainty, that price is going to react in a predictable fashion. This is first understanding the first level. We are not born knowing this and will have to be taught it. Some traders can stumble upon it, but it could take several years and or never to find.

There are ways to project where prices will go after you have entered, giving you a road map to follow, if in-fact you can hold on for the full trip. If not, scaling out along the way is a great way to reduce risk and lock in profits. When conditions say, just take 1 point, you can do that, knowing that you are not really risking any more than 1 point, a one to one ratio.

Most people who try and scalp trade any market can not find the lowest risk entry points to give them that low risk entry. One that will not come back against them, causing painful draw downs and stop outs. That is why I have called my trading method, Sniper Day Trading. I have been able to identify the low risk area’s where 1,2,3 points or more can be captured. The key is low risk. Their is a way, to not only find the low risk entries but project where prices will move too, very often. I have a few unique things that I do, that I have never really seen anywhere else.

I have never bought a trading method or system or service of any kind since I have been following the markets back in the early 1980’s.  I can’t say why, but I just never did. I discovered some unique things about the markets that most traders are never able to uncover and have put them all together to make up Sniper Day Trading.

I am proud of my accomplishments, but I am working towards a much bigger trading goal and know that I can do better. When I feel I am ready, I do plan on trading a significantly larger amount of contracts, but that can be a topic for another day.

I will pick this up form here in tomorrows post. Until then, Good Trading to all.

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Dow Jones Industrial In Position for New Highs on Year

Saturday, October 23rd, 2010

Today’s post is for Friday’s market 10-22-10, as we saw the market put in an inside day as it gets into position for new highs on the year.

Well, that is how I see it and the markets resilience in not letting up its bullish tone which has been impressive. I am sure it is making a lasting impression on the “Bears” who thought this market was done. The last eight weeks have all but took that crash and burn scenario to the grave, at least for now.

The Dow is sitting within striking distance on setting new highs for the year. Some will call it Alice and Wonderland, while others just don’t argue with fact. Price tells all, even if it defies all logic. Under all the news releases, their has not really been a lot of good news to push this market higher. This is truly the wall of worry, because I know their is much to worry about.

We all need to keep our minds open at all times. Many months ago, I called and seen the March 09 bottom, and by April had confirmation that the market was going to move up to exactly where it did. The first target was a little lower at S&P 1120, but later called for the new push to new highs. We did all of that and completed the move more or less as I thought. Once completed, I had in mind that the market would take some time to put in a top and we would then go down to retest the lows or lower. I am sure that is what a lot of people thought, but they did not keep an open mind as to the current environment. They likely only saw what they thought would happen and was not ready for what did actually happen. I could see in early July that the market was not likely to fulfill my early layout and adjusted my mind to see  and call the market rally at that time. Again, in late August was the big move that we are still in and I was waving a bull flag for some time right their at the bottom. The market could have tanked as many were calling for, but that was not the likely outcome.

The moral of the story is not to say that I am so smart, I could have been wrong, but to always look at both sides of isle. If we get so convinced that we are right about a market direction, it can embolden you to trade out of character. Risking to much on any one trade and over extending yourself can work, but it usually leads to a wipe out of some sort.

Market psychology can be a hard thing to understand, but it often plays a bigger part in market direction than most realize.  This ties in with the above, as at most all of the daily market turning points the majority have always been wrong. How do you not become the majority and think independently. Their are many ways, but understanding how market rhythm plays into the flow of prices is one way. Another way is think in the opposite way of the majority as market extremes are met.

I often report on “Investors Intelligence” weekly market survey of “Market Timing Newsletters”. We have been seeing a steady rise from a market extreme as of late August. This is one way that showed me that the majority was wrong about a large sell-off. I mentioned in Tuesdays blog writing that since Tuesdays market was a real downer, it was likely to take steam out of the continual bullish rise in the sentiment numbers. I was right, as that was the first decrease in market sentiment since late August. Every week since then has increased by just a little. Last week we were at 47%+ bullish and after Tuesdays close and the new poll taken, moved down to 45%, a neutral reading. This is going to give more room for an upside advance if the market co-operates.

With the Dow just under new highs for the year, a push up to reach that level is very likely. The thing about that is, the S&P is trailing and will likely offer some additional room their as well. From the way it seems to me, we continue the advance up and make slightly new highs in both index’s before we slow down and reverse back off this move. A new high in both index’s will get headline attention and all those who waited, will be kicking themselves for not getting in at lower levels. They won’t be able to handle a continued advance without them in it and will buy in at the very top, only to see the market drop and a whole new set of pain develop. So that is what I see and what I saw from the bottom. If things change, I will have to adjust that, but so far so good.

Today’s article is mostly about the daily markets, but the lesson in that is, don’t follow the crowd. Learn to think on your own and try and understand why and how the market moves. This is same for smaller time frame trading, which is what I do. I am a scalp trader by nature and like to not overexpose myself to the markets. Getting in at low risk spots to take what the market will freely give is what I like best. I do often scale out on some trades, but the power and momentum is on my side. When I loose the edge, I get out. If after entry, I start to loose the trading edge, I get out. Sometimes the trade still works out, but the price has to prove it before I re-enter.

Below is an equity chart of my trades from Thursday and Friday. I did struggle a bit on Thursday, but came back before I hit my daily loss limit and Friday was much easier.                                    Enjoy the rest of the weekend !

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Learn to Scalp Trade and thrive in an kind of Market

Monday, September 27th, 2010

Monday:  September 27th, 2010

The market pulled back slightly today as we moved sideways digesting some of Friday’s gains. We saw new highs in the Dow on Friday as the bulk of that days gains came early on. Today was very quiet as we only had about a 7 point trading range for the day. I do see some additional weakness early on in tomorrow’s session down to at least 1130 to 1133 on the S&P futures. Currently we are at 1139 as the evening Globex Market moves on.

If the general market were to fail, this is the area that it would do it in, but I don’t believe we are done on the upside as of yet. Fridays rally was good, but we will need one more just like it to really get the shorts to throw in the towel.

The market sentiment suggests that the rally can continue as we did move up away from the bullish signal generated weeks ago. Currently I believe we are at 41% bulls. A neutral reading could be considered 45% and an extreme on the other side would be 55% bullish. We are a ways off from that, right now, which suggests that their is more room to run. As I wrote about in my last post on Thursday, the market was at strong resistance and its still really their. One more strong day will get a massive short covering rally and some general buying interest I am sure.

We are coming into the elections soon and that does have some bearing on the direction of the market for many reason’s of which their are to many to go into, but I do believe history would suggest that the stock market will do well leading up to the elections.

Some are calling for an October Surprise and I have heard of the an interesting date of 10-10-10. That surprise could be almost anything, but it will likely help the current elected officials to stay in power and negate the ground swell of political unrest that is going on in the country. I am not sure on its effects on the market, but I could only speculate that it would not be good. So, maybe we quickly go higher and then shake out all the build up ?  Its just to soon to know. What we do know is the trend is up and until proven otherwise we have to give the market the benefit of the doubt. The market will break down if prices get past 1160 on the S&P cash, so we have lot of room right now as we are pushing the other end of the envelope so to speak.

In today’s trading, things went OK as I had a few scalp trades early on with a few small losses after that. I took 8 trades in total as some were scaled out and one of my losses were two fold as I added on and soon their after got out. Today I did much better than Friday, as that day was just a scalp day for sure. If you missed the early move in the market which I did, all that was left was the small crumbs the market left behind, which is fine for me as if you know how to scalp trade, you can trade any kind of market any time. You see, a scalper can always trade for more of the move as a swing trader is not able to scalp a narrow market, so he is out of luck. He may end up several days underwater and unless he has a good self image about himself and his trading he is going to have a hard time overcoming the mental side of his trading.

Some of a traders biggest problems are in their mind. If they could only stop the self sabotoge that goes on at times and learn to be patient to wait for good method trades, they could do better. But that is easier said than done. A scalp trader knows how to pinpoint his entries to a very small entry area. If the trade does not perform as it should, a good scalp trader will get out and wait for another opportunity. You always have to have the advantage and or trading edge.  With out that, you will only be waiting for what the market will do you instead of what you will do to it. The thing is you don’t want to get hit or banged around. Like a running back in football. He tries to slide in and out of defenders without getting hit and or tackled. Being evasive is a strategy and one that works the same for the  experienced scalp trader. You want to get in and out with a quick easy profit. One point on the S&P is a good starting point. This should give you about at a minimum a one to one trade ratio, win/loss. Their are not a lot of traders who can trade the S&P with only a one point stop and be successful on a regular basis.

My stops are about that or less as I get the move going my way and move up my stops and or get out before I take a hard stop of more ticks. The key is getting in at good entries that go your way right away, that way your trade management is easier to stay on top of. I believe if a trader wants to be well rounded he needs to be able to scalp trade his way through his market. Doing so, will put the odds in your favor and allow you to maintain the trading edge. If the market starts to swing large point moves, you can roll with it while its their. See the forest through the tree’s and learn how to scalp trade your way to your dreams and goals. This is the hardest type of trading to master, but for those who can, you will never look back.

Best trading to all my readers,  Vince

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Market Rally Feels & Looks Strong

Sunday, September 5th, 2010

This post is for Friday’s market September 3rd, 2010 as the market closes strong into the close and sits on major resistance.

That is how it is right now, as the market is sitting on big resistance in the 1100 area.  This is like a self fulfilling prophecy, as this was the likely target area we were to trade to from last weeks markets lows. This was clearly defined in my blog postings with a few warnings to help us keep our eyes open.

We have come all way up to this temporary resistance level and now what?  In Thursdays posting, I had said it would be natural and normal for us to trade back down for just a spell, until a likely breakout above the 1100 area gets taken out. I wrote that just before I saw the new readings on investor sentiment, with my alert at the bottom of the post. Given that development and the fact that the market closed strong into the close for a second day, I would have to give a bias to the breakout occurring right here from this level without the pull back. If that happens and it is looking likely, the next area of major resistance is about 400 Dow points higher and a bit more for the S&P to around 1160. It could be a few points more or less, but this area is where we will likely go to very quickly if the 1100 area is broken to the upside. I would have to give it about 80% likely it is going to happen from here. Either case, if we pull back to the middle of last weeks trading range, I still believe that we are going to see higher prices and that likelihood is +90%.

So, either way, I think we are going higher, which is good news for the bulls and those who want to try and get a better price on their equities. I don’t think we are in a long term hold here, but again, all of this is just my opinion and take it with a grain of salt, so to speak. Their is another level I do see as the next level of resistance and could then be the ultimate trade to level. This could take several months to complete and do believe we do have a pretty good chance for this to occur. For right now, I see it as the most reasonable and likely place for prices to travel and that would be, S&P 1245 or so. It could be a little higher, but this is just a touch light, just in case it comes up short.

Over the weekend I showed my students how I had come up with all of these price targets and projections as so many of them have been right in the past. They may not be right in the future but we can only base our price projections from where we are today and given the current trading environment.

I had showed how I came up with the short term top in the S&P in May of this year and how we were able to spot the March 2009 lows in the Dow exactly. There is nothing out there that is absolute, but we use what we have to give us the best possible projections and go with it until proven wrong.

That is how we are to look to the short term swings within  the trading day. Each day, the market gives us clues as to what it will do next. We need to be able to read the signs and clues and exploit those readings, thus giving us the advantage. We need to have the advantage or trading edge so when we put on the trade, it is not a gamble, but a very high percentage trade. If you don’t poses a consistent statistical advantage, placing a trade long or short then just becomes a gamble.

If a trader does not have a set established trading method that posses a statistical advantage, he is just gambling. That was a hard one for me to deal with at one time, as it brings into play many other moral aspects or trading at all. The only way around it, is to be one of the “investors”, (is a better word) who has done the hard work to bring him or herself to the point that they consistently are able to posses the trading advantage over the other traders who do not see what you see or have done the work.  Having a proven trading method that looks at all of these things is what is needed.

I am a firm believer that all traders need to learn and understand how and why the price moves, or better stated, price action. It is there that all of this comes together. Knowing and having a solid and often unconventional way of looking at support and resistance that is not obvious to the masses, is essential. With that, you will see things that you never knew existed and come to be able to trade any trading instrument in any time frame with a trading advantage.

I don’t often show much of any of this in my blog writings, but on occasion I do show just a little. The market posses a natural rhythm that we all need to be in tune with. Its all found in the price structure of each instrument. I remember a movie called “National Treasure” with Nicolas Cage. In that movie their were clues and signs that lead them and their pursers in the direction of the treasure. The things that were obvious were really of no value, but the unconventional idea’s or signs that kept them thinking and expanding their minds is what lead them to the treasure.

Trading successfully is similar to this. The answer is not always so easily seen. If it is, it will probably not be of very much value. So, we need to look beyond what knowledge you now may hold, to help unlock the secret of profitability. Do not forget we can often be our worst enemy from reaching our goals, so controlling things like greed is essential. That is a hard one for many of us, but we need to ask ourselves, what we want from the markets. To make a steady income or try and get rich as fast we as we can. This is a process that first starts with that question.  What do you say?

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Fridays trading below. I had an OK day, but I did struggle just a little as I got caught up in some slow chop, which caused a few small losses. This could have been avoided by trading the early open, which we saw some easy and obvious trades with good moves tied to them. I was getting a bit tired as the session carried on and did have a bit of indecision on a few trades but I snapped out of it and did pretty good overall. It wasn’t a perfect day, but that is how it turned out, the good the bad the ugly. That is trading. Enjoy the rest of the long weekend.

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Monster Move Up On Wall Street, will it last ?

Monday, May 10th, 2010

Today is Monday May 10th and the market took investors for a ride back up.

That’s right, in a blog that I wrote but never got uploaded, (glitch), I said in that post that we had a very good chance to go yet higher as the retracement back up closed near the high of the day. That is always a good little clue as to the next move. Fridays market action settled us back into the range where today we took off. The actual number I saw us getting to initially was 1145.

Today we saw the market trade past my number by a little, which was good. As things have settled from today’s session with the S&P up close to 50 points and the Dow up over 400 points, where do we go from here?

This is only an observation as the market has with today’s run settled into a 62% retracement from top, bottom and now back to the middle at 62%.  High 1217 low of this move 1056, 62% at current price)  At 50 -62 %, a common retracement point for all trading instruments in all fractal time frames, but in the daily chart the S&P is now again looking at 62% retracement from the top.

It seems the market got excited about the prospects for a European bail out of 1 Trillion dollars. That is a lot of money. It may help in the short run, but I can’t see exactly how this is going to make all the problems in Europe go away. Many countries are in bad shape and this may just push off the “Day of Reckoning”.  I do think that day is coming when the market won’t come back but just keep going in the direction of last Thursdays market. That day may be pushed off in the future for now.

It is a good thing that as a day trader, you start each day new, with no concerns or worry’s of previous positions. I could see the market pull back off of its run up initially in tomorrows session, but we will have to see how things turn out. I would not rule out a move all the way back up to the previous high, it is possible. At that point, I think you would have to be open minded about the possibility of a new downturn? I think the market sentiment will give us a very good clue as to what is the next move. I will be looking at the new numbers coming out this week to see how much market euphoria we were able to release. It is really hard to tell right now. One thing is for sure, if you know how to day trade, you can do very well. The opposite is true just the same. Here are some things to remember.

Don’t get greedy, and don’t be controlled by fear. Both of those emotions will cause you to place trades that you wish you could take back. Place trades only if they meet your criteria. You will stand to loose a lot more than trading capital if you allow yourself to be gripped by these two emotions. Be sure to never pull your stops, ever, for any reason. If you did not enter right, don’t try and compensate your position for a wider stop. you will often times only be making a bad thing worst. If you do this and it works out, it will only cause you to do it again thinking too that this time it will work out and you will loose more than than you bargained for. Your first loss is your best. If the markets are showing a much wider trading range, you may have to move your stop to a larger position, but this will all be done ahead of time, not as the trade is getting under way. I did this last week. I usually have only a 4 tick stop while trading the S&P and with the increased volatility I moved it up to 6 ticks. That was a preset position that gets entered every time I put on a position. I feel all traders should have the same. Don’t put on a position and then go and place your stop after that. Things move to fast at times and it only takes one time for a position to move against you by several points in a blink of eye, at which time you may be shocked. That shock can cause you to freeze and before you know it, you are reeling with a huge loss.

Lastly don’t trade in fear. Fear of lose and fear of missing a big move. Both can cause you to enter the market at times that do not reflect your trading plan. It is not worth it, you need to tell yourself that now. Be disciplined. If I can’t get filled in the area that my method or plan tells me to, then I need to let it go. Don’t look at all the money you could have had. That will only cause you to enter at the top or bottom only to be stopped out. You need the trading edge, if you don’t have it over other traders, they will have it over you. Which do you want to be? If you don’t have the edge or advantage, don’t put on the position. Much of this has to do with seeing the trade ahead of time. Do not get confused with seeing what you want to see. That will hurt you as well. Being and staying objective is the name of the game. Don’t make up your mind and say that you are sure this or that is going to happen. If conditions change and you do not stay open minded, you will become blind and start forcing trades where you have no business to do so.

Be humble and trade with confidence and exercise trading discipline. If you don’t have confidence, build on it, then it will come.

Below is a video of some of today’s trades, I called the last trade pretty nicely but I did not trade it. Overall a rough start with three small losses then some nice trades to end the day in the green.

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Trading Exercise – Read the Price Charts

Tuesday, April 20th, 2010

Today is Tuesday April 20th and the market continued in its reaction rally up from Fridays sell-off.

I did not look at any news that may have drove the market today, but there seemed to be some good reason for the market to drive higher. The pure technical picture said to play the momentum as the market turned higher at 7:40 am West Coast. Just before that it had come under a little pressure as the night trading had follow through from yesterdays close. The move at 7:40 was a clear take off point. I was not trading at that time, but wish I was because the price action was dismal after 9 am (12 noon New York time). A slow grind for the next two hours as volume dried up and traders patience was tested. Unfortunately I was one of them. I did OK but it took forever. Why I say to myself do I even trade that stuff. I guess it is because I did not get prepared for the early open.

I came up a little short of my daily goal. I did basically have it, but gave it one last trade and that put me under. Only trading small but I have time and room to give myself a break after last weeks monster gains from Thursdays session.

To be successful, we most often have to be our own coaches and talk ourselves through difficult situations. All traders should analyze there “Self Talk” to see if it lines up with there trading plan and objectives. If you find yourself not sure what you are looking for, that is a sign that you need to practice more and become familiar with what is going to take you to your goals and objectives. You do not have the luxury to get it wrong. On the job training is very expensive. If you pay for a course or become self taught, it is still going to cost you. If you go the self taught way, it is going to take you a lot longer to learn what you will need to bring it all together. It is possible and it is a option. I am a product of being self taught. I never bought a program, course or any other trading vehicle to get me where I am today. I may have been able to speed that up if I had, but maybe not. All trading courses are not the same, and the ones that don’t teach you how to actually read price action, but be dependent on indicators or any other thing, is going to slow you down.

All traders need to learn how to read supply and demand just by looking at a chart and be crystal clear on what it is saying without any doubt.  A trading course that falls short of accomplishing that is not the best route. There are times the market is right in between making up its mind on which direction it wants to go and that is when you need to pay special attention and listen to it.

Being a good trader, is knowing in advance what makes up good price structure and what does not. The stuff that looks like market noise, is what you leave alone. You don’t have to trade every twist and turn. Let the market set itself up to give you the trading edge . If you don’t have it, don’t try and trade it. You need to be at least 80% sure that if you put a trade on, that it is likely to go your way. If you don’t feel that you have that kind of a trading edge, leave it alone until you do. It is not worth it, for those who are trying to figure all of this out.

Often, the market is going to suck you in long, just when you think you got it, only to take you down. At those times, you can not afford or allow yourself to give up a lot of room. You will need to learn where the market is breaking away from you so that you can cut your loses short. If you don’t, you will be looking at 2-3 point loses in moments, which will be the next guys gains. Don’t do that.

Look at a chart and if you are a day trader, I would say a tick chart or volume chart. You will have the benefit of hindsight here, but this is good exercise for those who want to get better at timing. Forget about indicators and just look at the price bars. Since you have the benefit of looking at the chart after the fact, where do you think would be a reasonable spot to go long and short based on what you see. You probably will not want to place your marks at the very highs for short or the very lows for long, but within a reasonable margin, where would you like to have placed your order to capture a piece of the move. Don’t be greedy with the exercise, but be reasonable. Tomorrow I will give you an example of what I mean on the charts.

Ask yourself, how can I know the next time I see this set of price conditions that the movement will be similar?  There is a way to do that. It can be done with stocks, for daily price bars, futures emini contract or any trading instrument in any time frame. This is one way of teaching yourself. It will take a lot of practice and you will have to invest a great deal of yourself to find the patterns that will bring it in.

If you can afford it and want to jump start your training, I have just the tools, framework and structure to point you in the right direction to speed up the process. If you want to continue to go it alone, I offer small tips and hint of what you can do here in my blog, but never really get into the technical nuts and bolt of my trading method. You will hear me talk a lot about market psychology and how to overcome one of our biggest obstacles, us. So stay tuned or drop me a line, I am hear to help for those who want it.

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Posted in Day Trading Course | No Comments »

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