Posts Tagged ‘trading markets’

Price Action Rules When Trading the Markets

Friday, November 13th, 2009

Hello, Vince here from Sniper-Day-Trading and today is Thursday November 12th and we got a little pull back today in the markets.

To be expected, we were right up against resistance and a pull back is quite normal. Next week we will see a lot of economic news coming out. If there are any surprises, it could exacerbate the moves in the index’s one way or another.

Let me help you keep your eyes open to both sides of this market. I don’t have television (by choice) and I don’t watch CNBC, but I could only imagine what the street is saying about this run up. Sell- Sell-Short- Short. They may be right.

Seven months ago, I had said that the natural move of this market should take us to Dow 10,300, again, that was 7 months ago. I had been saying that off and on all along the way. During that time I was actually pretty bearish after that objective would have been reached and commented on it good and plenty. Well, we reached the objective and I have to remain open-minded and not have my mind made up about where we go from here.

That is what a lot of traders do in short-term situations. They make a decision as to where prices are going to go, but do so with a sort of conviction that damages their ability to stay open-minded to the current price action. If you do that, let me tell you exactly what is going to happen, without a doubt. You will become blind. You may still see with your eyes, but you will not allow yourself to see the changing price action as it takes place right before you.

You may think I am exaggerating to the idea that you will become blind, but I am not kidding. If you tell yourself, “This Market is Going Down”, and for a brief moment is does. All of the sudden, things start to change and buyers come in for what ever reason and pull prices up. You rationalize with yourself saying, “It is only a temporary spike” it will come back down. Seeing that you have already gotten stopped out, you are only looking for a place to get back in short, so you enter. The move shoots up against you and again, Stopped Out.  You are still so sure that this was only temporary and you try and short again at what you think is a safe spot, it looks like it is going to go and suddenly, turns quickly and Stopped Out, again.

Is this scenario familiar to you, well, it has happen to all of us one time or another, so don’t feel to bad, but, you need to understand why that happened to you and how are you not going to let it happen again, or at least not as easily.

Understanding price action is the first key. I won’t go into it all here, but I will tell you that the current price at any given moment reflects everything that is happening within a company when compared to earnings, revenue, etc. It is constantly being adjusted to reflect the value at that specific moment. It is all built in. So what come first, the cart or the horse, the chicken or the egg.

Some may disagree, and that is ok. This is America, but everyone’s decisions are based on hundreds of variables and there is no way for anyone person to know what all of those are. So it makes more sence to look at everyone’s decisions collectively and draw your own conclusions to future direction. That is the way I see it and it works for me.

Buying and selling are based on emotions. How you feel about all of those variables, which cause you to draw a certain perspective and outlook on future direction. You may be wrong, but at the time you do not think you are. It compels you to make a buying decision and away you go. Other traders and investor are drawing different conclusions on the same subject matter and now you have a conflict.

The struggle begins, like a tug of war. Prices move higher as the optimistic view wins out for that moment, then met with selling as the current price no longer represents value. All along the way highs and lows are established, creating support and resistance. We see it everyday the markets are open. A trader NEEDS TO KNOW HOW TO READ SUPPORT AND RESISTANCE LEVELS while he is trying to pull points out of the market. If you only rely on indicators you will always be at a disadvantage to those traders who do know. That is the first and most important things to know and remember if you are going to be consistently successful at a trading career.

I will continue with the subject in the coming days as I become inspired to share.

Before I run out of time and room, I did want to mention that Bullish Sentiment has decreased by another 4% this week, incredible and bearish sentiment went up about the same %.

More traders and investors become increasingly bullish at the top of a market. That is not what I am seeing right now. It is currently under the middle range of the extreme. That tells me, there is FUEL left in the engine to push this market higher. Like I said yesterday, if in fact that happens it would take everyone by surprise. We may see a little more pull back to get the short sellers to commit, but I do say, keep your eyes open, it could come real fast and big to the upside. Next week could tell us all we need to know.

That is how markets work, dont be convinced about anything, learn to read price action and don’t depend on others. It takes time, but the sooner you start, the better off you will become.

I have a video of todays turning points with no explanation, why or how, but I have the screen marked. Later in the video, I have my live trades I took posted.

Good Trading

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Freedom comes in many forms

Saturday, October 17th, 2009

Today is Friday October 16th and the market pulled back at the close of the session, off yesterdays highs.

Well, we did pull back, but not before the future’s market pushed higher by 5 S&P points. That was just about the amount I saw, in higher prices. The thing is, the move was made in the future’s market not the cash market. We trade out of the future’s market, so the call was some what right. The point to that was the pull back off the last push higher. Smart money saw what I saw and said, I am not going to wait for tomorrows open to cover my position and take my profit, I am going to do it right now. They sure did and prices pulled back until the open and then just continued to fall. The cash market caught up to the futures and fell with it. As mentioned before, the cash market very often will follow the futures prices and move accordingly.

I think this move may be marking a little time, moving over in the chart to create more room, so that prices can go higher and not run into resistance. That process, may take a few days and slightly down is OK. If the index drops more than about 3 points on the S&P, it is going to bring in some additional selling and we may see a drop of 20 points or so. Currently we are sitting on some key support in the hourly cash chart. That is the next move. If this, then that. The break first, then the drop.

Just a reminder, It was two years and a week now that the all time high was reached in October 11th, 2007. Everyone is just remembering the big drop from last October, but we were in the process of dropping a whole year before that. WHERE DO WE GO FROM HERE. I remember a song titled like that, I think it was from the 80’s, O well. That is the question?

I recently spoke to a few people who thought the market was going to continue higher over the next couple of years and had to disagree with them. To many things to say exactly why, but is this time different? That is alway the age old question. Every time the market has dropped, we have always pulled back up. The answer to that is yes and no. Yes before and possibly no now?

It has been 11 years since the first time the markets saw this price. That is a long time. Eleven years ago, in 1998 October, we briefly brushed up against a recession and quickly bounced back to soon there after bolt to the all time high a couple of years later. The market has not made any progress for all that time. If someone was wanting to retire and needed the money, he may or may not have gotten out at a good time. We have gone up, down, all the way back up and all the way back down since that time. As of late, another attempt for higher prices, but will this attempt be met with stiff opposition or not.

The P/E ratio’s are priced as such looking forward to earings of the future and they are very optimistic in reflecting a robust outlook, because currently by all measure of historical standards, we are way overpriced.

If anything happens to disrupt this rosy earnings rebound we will be met with a violent, fast adjustment down. Only after the market starts to interpret the news and reallocate its opinion, will it be able to tell us its next move. A move back down to the middle of this rally range, will be the best case scenario if this break and adjustment happen. Lets hope for that. If the drop does not stop, it will be because of serious problems we can not control.

The dollar is on the edge of its seat right now. The pressure coming against it is very strong. I believe I have written about it before. If anyone is interested I can give you a few articles explaining in great detail what may be about to happen. vinnie@sniperdaytrading.com  This is not a theory, but it is fact and can not be hide forever. There are some serious problems in the country, don’t be surprised if things go sour once again. There is a giant band-aid on an open wound. Is it going to stop the bleeding? No one really knows but all we can do is look at the signs.

The time to make money is still at hand, so let us not roll up in a ball of fear, but face our fears. I have met a lot of people who can not handle the possibility that things may not always be as they were in this country. For them, not knowing is the best way they can coup. I guess if I had limited knowledge I may be inclined to think that way, but I am glad I see life clearly, the world clearly, the trading markets clearly and many other areas. I am not afraid of the future but look at it through the eyes of opportunity and not only for myself, but for others.

We have the ability to make choice everyday. Sometimes we make good ones and other times not so good. It is not where you were that counts, but it’s WHERE ARE YOU GOING, that matters. We only go around this globe once and I think we should make it count. It is time for all those who aspire to live and experience there dreams to do so now.

That is what I have decided and I am investing myself into the things that will take me there. Financial freedom is just one of those area’s. Not having to worry about money is a worthy goal, but how you get there does make a difference. Day Trading the S&P E-Mini Futures is just one of the ways I am able to live my dreams. It is a means to an end, not the end.

http://www.screencast.com/t/WyQNJoc8vmj             Turning points in “Scalp Mode” Fridays session

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Are Trading Markets getting ready?

Wednesday, June 10th, 2009

Today is Tuesday, June 8th and the markets tried to rally again, but no go. NOT YET !

Well, it’s only a matter of time until the indexes get going again. I see the market marking a little time by moving sideways. As I said yesterday, the momentum is still up and you have to give it to the bulls. If there is one big down day, that may change things, but it still looks good for a continued move up That is just how I see it at this time.

The day’s trading went well with over 3 times daily goal, not too bad for a couple of hours. Not many losses at all. I will have to say, that I need to work on my first trade of the day. It looks like I am a little off on the open. I think I am still adjusting to the new schedule – or I may never get used to it. I am not a morning person! I guess it will work itself out, but I do have to give this some thought. It is much better to have your first trade right. It sets the stage for a smoother morning.

One thing I did a little differently today was pick the top of the market just right and still only work with a 1 point stop. I had three ticks of heat, but not 4. Still alive and made it to the other side where I picked up 5 solid points. I closed up the computer after I placed the trade and said that if my stop holds, great. When I opened it back up an hour later, I may have a nice surprise. Well I did, with a 5 point gain right to the bottom of range on the close.

I like it when that happens.  I only put one contract on so it was not a huge $ gain but it still counts. My stop will cover me even if the computor is off. Again, I don’t do this often but I felt I saw the very top of today’s market and did not have time to sit and wait for it to do its thing. So that’s why I went the way I did on that.

Quick post today, I will return tomorrow with the latest !

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Posted in Market Consolidation | No Comments »

Trading Ideas to Consider

Wednesday, June 3rd, 2009

Today is Tuesday, June 3rd and indexes trade in a narrow range off their highs.

Today’s market showed 4 directional changes to it, up twice and down twice. The swings were not very large but large enough to make some good trades. Unlike yesterday’s market, which had a strong upward bias most of the day. In that kind of market it is hard to take trades in both directions. You need to get on the right side of the trend to catch anything meaningful. Small trades work, but they are short lived with no follow through.

Today was more typical of an average day, good moves in both directions. You will see days like yesterday, three times a month on average, and days like today most often. Late in the day, the market tried to make a run for the highs again, but it came up just a little shy.

Today was a good day for me, hitting over 4 times daily goal. With all the swings I saw today, even though they were not massive, I could not help but take the trades for a little longer play. Not too much scalping today and that is OK as long as the price action supports the moves, that is just fine. I took a few breaks today and came back in here and there. Some of the guys in my group did well today, catching several swings with me, a nice day.

This might be a good time to tell anyone who is following me, that I do not run a call room. I help teach and educate the interested trader on how to spot the daily swings in the market that are before all of us each day. Each trader is responsible for his or her trades, but getting insight into what is happening and how to exploit that towards profitability is the order of the day.

There is a way to do that and be consistent at it, which comes by doing the same things over and over again, when the conditions warrant. Consistency is the name of the game and knowing what to do and when. That is not easy to do, if you don’t know how. People are not born with the knowledge of out flanking the trading markets but it is attainable to those who are dedicated to mastering the process.

Notice that I said process. That is because that is exactly what it is. You can try and figure it out on your own and that is fine, just know and be prepared to pay your dues, because we all pay them or have paid them one way or another. If you want to cut down the tuition you need to practice and put the time and energy in. It is not going to come natural to most people.

Successful trading is not a natural process and there is more to it than meets the eye. If it were, more people would be doing it. So, put all of this in perspective and keep at it. If you work hard, you can achieve your goals, but you have to not only want it but as I have said, be willing to make sacrifices and remain open minded.

If I have been a help to any of my readers, that’s great. I do enjoy seeing more people understand what only a very small few have come to know about the markets. Please feel free to email me with any questions you might have, I will be more than happy to help out where I can. It’s not all about the money for me. I can make what I need there from the markets and plan to ramp that process up to a much larger degree, but timing for taking a bigger stake is very important, all the while exercising discipline and repetitive behaviors.

This is what it’s all about. In trading, if your timing is off, what do you think is going to happen? You got it, Boom, Bust, Kaput, Nada. Trading discipline is so important and that cannot be over-emphasized. Being in control of your account and not letting your account control you, is a big difference. Unfortunately many people let day trading turn into a form of compulsive behavior that gets beyond their ability to maintain control, thus the blow ups. Don’t let that be you.

I recommend that if it is possible to get with a trading partner to help create a sense of accountability. Some people will not like that, but do you know why? Because you cannot hide your mistakes and it is now open for others or your trading partner to see. Do you know what that will do for you?  It can force you to take a more disciplined approach and not lose control. If you have more than two losses in a row, you had better stop for a while and take a break, even if you are up a lot on the day. Do you have the discipline to do that on your own? If you do, that’s great.  Most people don’t. You have to self-regulate yourself and that can be hard.

I am not saying all of that to steer you to me, it really does not matter, but I say that to tell you all how you will get the best results for your efforts. I find that it is better to trade with support as opposed to doing it alone. So find a trading partner and commit to helping each other, you will all be glad you did in the end.

As promised some of the trades I took today.

http://www.screencast.com/t/Ae4Gl25i

http://www.screencast.com/t/yLSonUcgPn

http://www.screencast.com/t/kTyiTohj0

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Posted in Trader Coaching | No Comments »

Instilling Confidence as a Day Trader

Wednesday, May 6th, 2009

Today is Wednesday, May 6th and  we have new highs on all the Indexes.

Well, I was wrong on the overall pull back call yesterday, because we did see new highs before we saw new session lows come in. I did mention that the overall trend is still up and we are working off of a previous call I made of two weeks ago, that the market was going to likely drift higher because everyone was expecting a big pull back. It did not come. The sentiment changed last week strongly in favor for a rally, because there were so few people that were bullish. That’s just the ingredients you need for a continuation of this move.

I have included a daily chart of the S&P Cash market below. It is just a pure chart and you can see that the current trend is still intact. We do have a rising wedge in an uptrend and usually when a formation like that is broken, you see some pretty good movement in the opposite direction. It is still pushing itself higher towards what I have identified as serious overhead resistance. If it pushes up to the purple line over the next week or so, LOOK FOR PRICE REJECTION at around that point. It also happens to be a double top from some time ago and the two are about at the same level.

The extra move to the upside will probably cause traders to start believing in this rally and start buying at the top. This may only be a short term top. A  pull back of some significance should take place, but we will have to watch price action to determine how much it will actually pull back. If good news keeps coming in over the next few months, it may break through that purple line and continue its climb up. I will be able to see, either way by the current price action, but until then we will have to wait and see.

To sum this part up. If the Wedge gets taken out to downside, we will see some heavy down days, but until then the trend is up with a short term potential target of 950 or so, (the outside purple line). It interesting to note that the Dow has broken it’s outside trend-line already a couple of days ago and is pushing higher. The Dow’s  resistance area is still about the same percentage moves as the S&P.

In today’s trading I did very well picking up about 4 times daily goal with only a few trades. I had some big gainers. My first trade was a loss, but the rest of them were all positive trades. Funny thing, I moved my stop up a little after my first trade entry and that is what took me out. The next trade I pick up a nice move short. I almost got stopped out, it was close, but I made it through a rough spot without moving my stop and it worked out real well.

I have been taking my time this week before placing my first trade and that’s OK. I have been trading on open this whole week and that is something I have not been doing. Getting up earlier is an adjustment for me, but I am sure I will get used to it. By the time I usually start, I have the benefit of seeing ongoing market action for some time. I get to see if we have been trending or in the Chop.

Again, it is not bad to trade on the open, it just takes a little adjustment. Many times the market does not like to telegraph the early morning direction and make it easy for traders to find the trend so they can get on the Bus for a ride. Head fakes are often what you see in the beginning of the open, until the real first move of the day takes hold.

Instilling Confidence as a Day Trader:

What is it that most struggling day traders lack? Well, let me answer that in two ways. As the title above states, instilling confidence. Most traders lack a REAL SENSE of confidence when they trade. That is understandable, because the things that you need to do to be successful are not natural, they usually go against the grain of conventional wisdom. But one of the things needed is confidence in your ability to get it done. Put the trades on as part of your planned out strategy and complete the trade.

Notice that I said planned out strategy. Not every trader placing an order has a plan and even if they do, it is likely flawed as it is tested over time. It is not easy to even know what to do and how, let alone be consistent at it. That is why you need a trading method and plan to follow it. You need goals to strive for that are modest. You need the ability to overcome obsticles when faced with it. These are all things I have talked about before, but bear repeating. You need to identify what you are doing right as well as what you are doing wrong. Take steps to overcome your bad habits and develop new habits of SUCCESS as you learn.

Doing all of this will establish confidence in yourself. Making small attainable trading goals each day will take fear away and replace it with what you need. Many traders think that they have a trading plan and they would also claim to have confidence, but this can be FALSE CONFIDENCE and ultimately lead you to an empty trading account.

You need to be honest with yourself, you are responsible for your trades. When your trading plan hits the rocks and you are struggling, do you know how and what you are going to do? Are you going to allow frustration to creep into your mind and start a round of REVENGE TRADING, or are you going to continue to follow your plan? All things that need to be addressed before they happen, if you wait, it could be too late.

Too many traders seem to be in a hurry. Slow down and take your time. The trading markets are going to be around for a long time. Allow yourself to absorb your new trading habits and keep building on the positive ones.

http://www.screencast.com/t/LG8C6TFWv Daily Chart

http://www.screencast.com/t/mk1PMH4TM Today’s Equity Chart

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Posted in Trading Psychology | No Comments »