Posts Tagged ‘trading plan’

« Older Entries
Newer Entries »

Stock Index Support Comes In As Called !

Friday, October 30th, 2009

This is Thursday, October 29th and I did not post yesterday, got a little behind.

In Tuesdays post, I mentioned that I was a little suspect that the support I identified would give way, because of the divergence present in the Dow. In Mondays post, I had said that if the Tuesday support numbers failed, that the next area of support was around the 1045-46 area in the cash S&P. In yesterdays market, the Tuesday support did break and we went just a few points past my support numbers at 1042-1043, really pretty close.

That support area held beautifully in todays session and as I write this update at 12:03 pm West Coast time, the cash S&P market is up over 23 points off of that support call. The market is likely to drift sideways to slightly up over the next couple of days, but the new very clear line in the sand will be yesterdays pivot low of 1042.56. If we break that, we are going to see some additional selling. 

The Dow is still outperforming the other index’s and that still poses a problem. Until the Dow can do its thing and correct to the right balances, it becomes a little harder to get a good read on direction looking out over the next week. I do see the potential for a S&P futures retracement up to 1068+ which is really not that far away from where we are now. Currently we are attempting to break yesterdays high around 1063 in the futures, we will see.

Today was a classic trend day up. They don’t happen that often, but it usually pays to have small targets if trading counter trend. While trading with the dominant trend, you have much more opportunity for multiple points.

Yesterday was a trend day down and today the opposite. This in a way, has created a V bottom and is usually retested sometime later. In addition we did have a gap day as well. I like to look at the symbol “SPY”. This is a tracking stock for the S&P 500. People trade this very heavily. The volume on this today came in at 200 million shares, with the shares being priced at 106.64. If you add a zero to the 4 at the end and move the decimal over to the right by one, you will get a price of 1066.40 and that is the same price as the Index.

The reason why I point that out is because, you can get a better idea what the opening gap was for a day like today. Opening gaps have a whole strategy to themselves, that I won’t go into right now, but it clearly defines the opening and any gaps that are present.

Below, I have a screen shot of a few trades I took late in the session. I have not been trading the open or the slow mid day time, but just the later half of the session. That is going to change pretty soon. This mornings open was pretty clear for some nice scalp trades and often the price action is a lot heavier and faster. I don’t mind the speed of the action, I usually have plenty of time to get the price I want, but the best part is after an entry, the order is filled to the target in a blink. That is because of order placement. If you put the order in the right place, the stop pressure and regular buying or selling pressure pushes it in your direction in a flash.

I prefer scalp trading overall, because you are not in the market for a very long time and it only takes about 3 little trades to get my goal for the day and thats it. I never cry about what I could have had or should have had, that thinking will only take you down, out and left for dead. Every trader needs to keep their expectation under control and not let greed take root. There are a lot of people who talk about greed and lets through in fear to boot. But translate that into something everyday traders can sink their teeth into. Let me do that right now.

First, you need to know that trading and taking profit out of the markets is not natural or easy. You need to do the things that only the very few every find out about. A lot of what I am saying is not the actual trading but the mental side of trading. Being satisfied with hitting your target, what ever that is. If you start second guessing yourself, you only work against you. We trade against other traders, but we often end up beating ourselves. Do not let greed take root. I believe every trader should have an area of profit in mind for the day. If you don’t, you leave yourself open to wanting more and more.

Most traders blow their account up pretty fast, because of two reasons. They don’t manage there losses well and that could be attributed to not finishing the day with a gain, reason being, they did not make enough. Ask yourself, how much is enough for a day’s profits?  You will get a lot of different answers to that question I am sure. We may come up with different figures and when we hit that figure during the trading day, somehow, all of the sudden, it no longer seems to be enough. That is where the problem is. Discipline yourself and stay in control. Follow your trading plan. You should be hitting your daily goal 4 out of 5 days at a minimum.

If you are struggling, tell yourself, that you will not take any trades during your session, at all and mean it. But, in the case that you happen to see a trade that is a “screaming buy”, you can take it.  That takes the pressure off from feeling that you have to trade. I call this “Trading by Exception”. I talk about it in my trading course and it can bring the trading advantage back on your side of the fence.  You end up taking less trades this way which is good and you make them count.        vinnie@sniperdaytrading.com

 http://www.screencast.com/t/ZvGKpNkd

Tags: , , , , ,
Posted in Market Call | No Comments »

Investors Intelligence suggest higher prices ?

Friday, October 23rd, 2009

Today is Thursday, October 22nd and what a rebound we had today.

I have some interesting insight into today’s market action. There was no following through to the sell off from yesterday and that does not surprise me. I tried not to form a opinion about direction today, because I thought it could go either way. initially the market continued its sell off, but found support and started its come back, up about 12 S&P points for the day, more than most people thought would happen, I am sure. The shorts tried to establish a foothold and got slammed hard. They ran for cover as the buying came back into the market pretty much all day long.

This is the volatility I thought was going to show up and it has not disappointed. There is a lot of uncertainty and money managers don’t want to underperform. They are being forced to make a decision to hang in there or start lightening up. If they don’t start scaling out of there positions as the rally continues, there is going to be a mass exit for the door once we run out of gas, but that could be from higher levels.

In the past I have mentioned the Investors’s Intelligence weekly survey of market timers. They give their opinion on market directing in there newsletters they write. They, as a whole are usually wrong and the numbers prove it, time and time again. Very interesting developments here. The sentiment numbers have been going down for the last 3 weeks as the market has been making slightly higher ground. What do you think that is saying?  Well, I will tell you what I think. These guys are getting nervous and are expecting a drop and so they have become more bearish. That is really good news for the bulls because that says that there is still GAS IN THE TANK, for higher prices. Usually, you will find the numbers at bullish extremes right at the top. If this were the top, these guys for sure as a group, would get it wrong. That leads me to conclude higher prices on the index’s for at least a little while, what do you think?

I know we will be coming into some important resistance pretty soon, (10,300 Dow / 1122 S&P ) but that is just the first area of resistance. If the market can get through that the 62% retracement area would be the next major area of resistance. I only entertain the idea and say it is possible, but we will need more time for the chart to move a little sideways, this will clear a path for higher prices if  the support holds.

I will say the next move for tomorrows open to me looks like it will start off to the downside. The S&P support should     come in at 1084 or 85 and the Dow around 10,000. “If” we get a pull back to the middle of the todays range then we will then again have a couple of key turning points established for the next move, which ever way it comes. A break of todays low and or todays high, will see big moves in the directions of the break. We may consolidate inside this range for a day or two which will only add to the built up pressure that will form. Strong positions will be established on both sides. Now all we have to do is wait.

For those playing the smaller swings inside these ranges, as I do, we will have no problem seeing which way to trade, we let the market decide and ride the emotion that builds on both sides. There were a lot of nice trades in todays market action. Some for 6-8 points if you rode any out. It is days like today and yesterday, that can get a trader to abandon his trading plan. He see’s so many available points ripe for the picking and gets anxious, saying, that today is payday. ”DON’T SAY THAT”, that is a no-no. You only create more problems for yourself.

You need to enter the day, calm and relaxed, confident but cautious. The way you start your trading session is very important. The days I rush into it, I notice I tend to stray from my own trading method. It is clear as day, but we all at times can be deceived into thinking beyond our trading plan, call it human nature. I strongly encourage you to take some extra time to get yourself in tune with the markets. Do not form to strong of a bias and just read the price action against your trading plans or method. If you do this, you will not have to fight the markets or yourself. You will be flowing with the rhythm of the price action. We see it every day.

The markets move and they rest. After the rest, often comes an assault on the move to take it down. After the assault, it to will rest, until either more troops come to continue the assault or it is overtaken by a whole new army of buyers that decimates the attackers and new high ground is taken. Be sure you are on the winning side.

Within every chart, no matter the time frame there is an equilibrium, a center point. Traders need to find the center and trade in the direction of the winning side. There are very clear and precise turning points where this happens each day. Once the decision has been made by the winning side, prices often move quickly away from that center point. These points are constantly being adjusted through out the day and battles are won and lost in these areas.

More on this another day.

http://www.screencast.com/t/GicDJVFb9H8                     Today’s turning points in a higher time frame, no sound

Tags: , , , , ,
Posted in Trading Turning Points | No Comments »

Market Moves to New Highs !

Tuesday, October 13th, 2009

Today is Monday October 12th and the day was very slow and can be attributed to in being Columbus Day, a Holiday for many services, although the market was open.

The Dow pushed up to the high for the year or just equal to it. The same for the S&P, plus 4 points for the session. I think there is going to be a push higher, but the upside is going to be limited. Last week, I said what I thought was going to happen and so, we will have to wait and see.

The daily charts are to slow for me to trade off of. If it was my only trading time frame, I would die. I do not do well in holding on to positions for very long. It took me years to realize that the trading I not only enjoy, but am good at is the very short term stuff. That is usually the absolute opposite for most traders. When they shorten the time frame down, they start to lose control. In a longer time frame chart and trading model, you have much more time to react and analyze your trade. Your stop is always going to be higher as your time frame goes up.

That is one reason why I like the short stuff. My risk is very limited to 1 S&P point or less. I know some people would say, that is to small of a stop, how do you do that. Well, I do and am doing just fine with it. I have 3 models to trade from and they are dependent on market conditions. If you have short swings and limited trending action, you would do better to enter all of your position at once and exit it all for your fill. If the swings are longer and for multiple points, you would be better off holding on for longer point values.

Some like to use computer models for their trading and I can tell you, that I don’t think they are going to do as good as a human can. But it all depends on which human you are talking about. I can tell you now, that most traders are not going to make it at this and will end up in defeat. It is not that they do not want it bad enough, or try hard enough, but that they do not have the right mindset for coming out on top.

To be successful at short term trading, you will need two essential things. One is tangible and the other is intangible. First a solid plan on how to approach the market with clearly defined objectives. Many get caught up in ratio’s, I do not. I get caught up with getting my daily goal for the day. That is what is needed to be consistent. A steady modest point value each day. I hear a lot of traders and people in the industry say that is not possible. I beg to differ. It may be impossible for them, but not for everyone.

You need to be different from everyone else or you will get the same results as everyone else. So what is the second thing that is essential besides a trading method and plan. Well, it is the mental side of trading that so many forget about. Trading is emotional, in that it involves making decisions that have a direct effect on the individual’s pocket book, always difficult. That is what moves the market, the emotional decisions of others. Unless you are prepared to overcome the normal mind games that come with the territory, you will fail like most people do.

Trading is a net zero sum game. Yes, you are providing something to the market place by helping to create liquidity, but I am sure you would like to see some of that liquidity end up in your account. It will not happen unless you have an ability to see what you are doing and control your emotions. No revenge trading OK. Don’t try and get your losses back all in one trade. Making decisions like that are only the start to a downward spiral. Relax, stick to your plan. You need to be your own coach. Talk to yourself while you are trading and see what you are doing matches your trading plan and method. If it does not, do one of two things, STOP FOR THE DAY, or follow your plan and wait for the trades to come to you. Don’t go out looking for them. I have a saying, if I get in trouble, “TRADE BY EXCEPTION”. Don’t take a trade just because you think or feel you have to. Wait for the trade to come to you, most often you will be glad you did.

I at times get in to soon and only after see that I could have waited a moment or two more. Then the trade is just right in front of you to take and its a good one. The point to all of this is stay in control and be sure that you are doing the right thing. Sounds simple, but you would be surprised how many people change their plans once the trading day begins. Trade for a modest goal and stop for the day. Go do something else. Get outside, help someone else with what they are doing. We all need to have things that go beyond the trading ventures that we wish to pursue.

That is it for now, I had no idea I was going to carry on about this subject. It just comes to me as I start typing. Tomorrow, we will see what I continue with, until then, I wish you all a good day.

Tomorrow I will post the turning points or something else of value.

Tags: , , ,
Posted in Bull Market | No Comments »

Up Up and Away, as Called

Thursday, July 16th, 2009

Today is Wednesday and the markets are continuing their move.

We did continue the up move as I posted in yesterday’s blog. Hopefully you were able to take advantage of the up trades as they were presented. If your timing was good on your entries you probably had some nice gains. Getting the direction right is half the battle, then the timing is your next focal point.

Most days you get moves in both directions, but when you see the trend clearly up and move after move adding to gains, don’t fight the trend. If the market does reverse it’s overall direction, you will know about it, but until then, it pays to stay with the dominant trend.

Trying to tell yourself that this market has to back down and being proven wrong is not the right mind set. Stay with the overall move until it no longer provides opportunities. I have another chart below with a 4 trades on it, 3 were good for gains and 1 was a break even.

Would you have placed orders where I have it marked?  The last one was short, but there was no follow through there. The market did then reverse back to long side and it continued for the rest of the day to close substantially higher. There were a lot more trades to the upside. Once the market showed that there was no follow through on the down side break, you cut your gain or loss short and see what the price action is telling you.

In this case, after the last trade, it was telling you it wants to go higher. The question is, will you have the resolve to listen or will you try and impose your will on the market. This is again where biases come into the picture. Don’t let your opinion or ego get in the way of what the market is telling you. It can be hard, but that is why I point it out. You or any trader needs to be aware of it, so you have the ability to counter balance yourself and stay grounded. Listen to yourself think and try and talk it out. If you listen to yourself and balance your reasoning with what is actually happening, you can catch yourself forming directional biases and “Stop It”. I think that is good advice, but to each his own. Trading is not easy and I plan on talking a lot about the part of the game that is between your ears.

Still not back trading yet, but soon. I dislocated my shoulder on Sunday and I have been in a lot of pain. I had planned to get things going this week, but have not had the ability to focus off of the pain. It’s my right arm and I use the mouse with that arm, a bit difficult.

Stay tuned, I am going to continue to discuss the potential hold ups traders face while trying to bring their trading into the black. This is an ongoing venture for all traders, you do not have the ability to let your guard down and get cocky. You are really trading against yourself. Many think they are trading against other traders and in reality they are, but when it comes down to it, you are really trading against yourself. Reason being, if you follow base trade setups as outlined in your trading plan, you will be doing what you are supposed to be doing and that is great. But when you venture off and take trades that you have no business taking, who do you have to blame and who are you trading against then? You cannot expect the desired outcome when you do the wrong thing and if in fact that trade does work out when you go beyond your planned set up, you will only be re-enforcing negative behavior and setting yourself up for only more problems down the road. Stick to your plan, hopefully you have one, and take only those high percentage trades and hit your profit target for the day and give it a rest. Food for thought.

Talk to everyone tomorrow, until then.

http://www.screencast.com/t/kzm744pdhkL A few potential trades after the open

Tags: , ,
Posted in Bull Market | No Comments »

Trading Lesson: Part Four

Saturday, June 27th, 2009

Today is Saturday and as I promised, I have a little more meat for you to chew on over the week-end. Give this some serious thought for those who are motivated to excellence and victory. I am sure this stuff will help many.

I will do a recap of what I have been discussing over the last few days. These are some of the most common reasons why traders fail to take the trading efforts to the next level. It can mean the difference to actually being profitable at a minimum, weekly, if not daily basis. With modest targets a solid methodology and the self discipline to follow through with your plan, a trader with the vision and will can overcome and make it to the other side. Do you believe that you are one of those who can, or are you one that only hopes he can one day? That is the question, how bad do you want it and are you willing to make changes and sacrifices along the way to get there?

Many would be traders want the money and time freedom that trading can offer, but are unwilling to address personal blockages that hold them back. You may say you will go the extra mile, but in reality it often times is only words. All one has to do is check your actions and attitudes, if they seem to overall be the same, it may be good intentions but no real action behind it, which will result in the same outcome, struggles and frustration. It is during these times that you have an opportunity to get going with the things that will turn your struggle around. Don’t look at it as failure, but as opportunity to overcome.

If you set a daily loss limit, like you should do as previously discussed, you are immediately taking the pressure off of you. The very worst that can happen to me today is “X” amount of dollar or point loss. I use double my daily goal as my stopping point. You must resolve in your mind that you will stop for the day and come back tomorrow with a fresh start and chip away at your goal for the day. The market will give you opportunities to get more in any one day, say double, triple or better your daily goal, but you do not know which days those are, so you trade with your daily goal only in mind until it is clear that today may be a great opportunity to pick up more and you make up easily your previous losses in the week.

It is really an excellent approach to systematically handle your trading venture. Identify in yourself NOW, do you have the resolve to stop trading for the day if you have hit this point. The risk if you don’t is a massive blow to your trading account, that most up and coming traders can not afford to absorb. So, “JUST SAY NO”. You need to go over it again and again in your mind that you are going to be responsible and do just as you say. Come back tomorrow and you will be fresh with a new perspective and approach.

Trading is not a sprint, it is a marathon and you need to pace yourself or you will get burnt out and fade right out of the picture, only having memories of “should of – could of – would of “. The time is now to create what you do not have and file it away, bring it up on demand when necessary. Again, if you are able to stop trading for the day after you hit a modest daily loss limit, you will have scored a HUGE VICTORY in your trading ventures.

You may say, “What is so victorious about walking away with a loosing day”. All the reason’s I mentioned above is why. You will prove to yourself that you can do this one thing and in doing so, know that if you find yourself in that position again, you will be able to take the appropriate actions as your plan calls for yet once again. This is going to establish confidence in yourself that you are not going to blow your account up and will remain in control at all times.

Going through the process and having one day where you are able to stop at this predefined point is going to possibly be a turning point for many in and of it self. This will be a big victory for many traders who struggle to limit the real bad days that seem to come out of nowhere. The market has a way of purging the system of weak traders who struggle with this lack of control, even if you have a solid trading plan and know what it is that you are doing. If you don’t limit your losses on bad days, you will never make it. The market has a way of only letting the cream rise to the top, don’t be one of the ones that settles to the bottom.

I got off on a whole new tangent there, but all of these ideas just came to me and felt I needed to roll with the subject for  while, before I run out of room for this posting.

I see that I have so much more I can say and will just go back over Friday’s posting and touch on that one point again. Look at both sides of the market and keep your biases to a minimum as far as short term direction.

This is so important. Don’t find yourself taking stop after stop and wonder what the heck is going on. If you take two stops in any one directional move, you are out of sync. If the market is going to break and you enter, you may be off on your timing or the market may push you out by a tick or so, but the direction is still right and you believe the move is ready, so you re-enter again and take your position, only to find out that you were wrong again and the market is just toying with you and many others to create doubt and take your capital.

Don’t give a third opportunity to do it again. Wait it out and give it some time, get up and doing something to get the blood flowing and re-access the situation after you see what is really happening. Often times the market will just go into a chop zone and start swinging high to low knocking out stops in both directions, step back after your second stop and wait it out. Once the dust clears you will see the real trade develop and it may be a 4 or 5 point gainer, easily making up for your earlier mishap, but you won’t be in that position if you don’t stop and wait it out. SELF DISCIPLINE, find it with-in yourself before you continue to trade and you will be glad you did.

Lastly, just think about this. When you cross the street at a busy intersection, you may be waiting for the light to turn green, we all do that, but when the light changes do you just start walking without looking hoping that others will obey the rules or do you look both ways before crossing. I always do, and you should too, if you value your life. Looking both ways says you see the cars coming in both directions and you know the risks. The same is true with trading. Waiting for the light to turn green would equate with just following indicators and going when it says to go. If you fail to look both ways you are taking a chance with your life and assuming all is well. Don’t take that chance, “ALWAYS LOOK AT BOTH SIDES OF THE MARKET AND KEEP AN OPEN MIND”.

Trade on, fellow travelers.

Tags: , , , , ,
Posted in Trading Lesson | No Comments »

Video of Today’s Results with 9 to 1 profit/loss Ratio

Wednesday, May 13th, 2009

Today is Wednesday, May 13th and I decided to do something a little different from the start.

Today’s session was a little different in that I traded my bread and butter scalp trade setups – mostly. I took only a few trades for more, one I remember was for 3 1/2 points and a couple others were for two points or so. But the bulk of my trades were for only 1/2 point. I only had that mind set from the start. I wanted to show how I can scalp trade and only run a 2-3 tick stop for most trades.

In fact, since I am having a problem getting my equity chart to come up on Tradestation  (just not working?), I have a 5 minute video of the trades that I took below. Most all of the trades go past my target and that is fine, I was not worried about leaving points on the table, that was not what I was there for. There were some trades that I could not get filled in time at my price and that was ok as well. I show a few of them in the video. I have some of the trades identified as potential trades and that is all that they are, potential trades that I could have taken, but some of them are the ones that I could not get filled at my price.

Keep in mind, to get to my basic daily goal of 2 points, I only need 3 or 4 of those little trades to get it. That being said, my stats for this type of trading this morning is 24 gains and only 4 losses with a few even trades. The stops that I took were -2 ticks, -2 ticks, -1 tick, and -4 ticks but this one was only on 1 contract, the other half of the trade was a gain.

This did not happen by accident and it is repeatable. So many people cannot bring themselves to only trade for such a small amount, that they miss the possibilities. I am not saying that this type of trading is what everyone should do and not even myself for that matter. You need to be able to pull out different tools in order to build a house. If you only have a hammer and nails, that’s good, but you may not get the house you are looking for if you only have those tools in your bag. There is more that may be needed. Anyway, this is part of the method that got me out of trouble yesterday and I am giving you a glimpse of that type of market action today.

There is a set of conditions that are met every time to get these results and it most certainly is repeatable. If done right, you should be able to hit 80+ percent of your trades and still run a very small stop. Those are good odds, how ever you look at it. Now, as far as size is concerned, I dropped it down to only 3 contracts. I did not have to, but I did. With this high percentage trade, I could have been trading 10 contracts, easily.

Today’s results produced about $ 600 dollars profit per contract traded, in 3 hours and that is after commissions. So, since I was only running 3 small contracts, I added $1,800 with today’s results. If I had been trading the 5 contracts that I usually trade everyday, that would be 5 contracts x $ 600 per contract net  $ 3,000.  Ten contracts would be, $6,000 and 20 contracts brings it to $ 12,000 for the day. A few weeks ago I was trading at 10, but I brought it down to mostly 5 lately.

Anyway, that is pretty darn good. I was getting tired after 3 hours of this and that is why I stopped. It is a lot more than I usually do, but I was on a roll. I could feel that my concentration was slipping, so I took that clue as my sign to stop. I could come back after lunch and do it again, or trade sparingly for higher point returns, if the market is rolling, but either way, to be able to trade profitably at will is a great feeling and a nice boost of trading confidence.

We all need to remember to stay humble and I am speaking to myself right here. If I, or anyone else gets sloppy or trades without discipline, the market will bring you back in line or take you out. The second part is what usually happens. If anyone trades without a plan or method, you will most certainly be one of the ones that gets taken out, that is for sure.

You cannot think that you have greater trading knowledge than the traders on Wall Street, who do this for a living, and still come out ahead of them without a trading plan and or method. That is the problem with the small independent trader who thinks he has a handle on it. It takes time and without help, it could take years and a lot of money and you may still never get it. There are very few services out there that are of any real benefit to the small would be trader. Most never show you actually how the markets work and it can be confusing and frustrating for many. I never learned from anyone but myself and it took me a long time, but I am happy to say that this is a compilation of years of experience that has been tested over time. It works.

The great thing as I have said before is that this method can be traded on any instrument on any time frame. Mutual Funds, Stocks, Commodities, Forex, Futures, all of them work the same. In fact it is easier to trade higher time frames because it is very slow to develop and you have a lot of time to see things take shape. The downside of that is, you need a much bigger stop.  If daily charts are your thing, then by learning how to trade small time frames, you are exposing yourself to so many screen shots, over and over again. As time passes, you will get very familiar to what a good set-up is supposed to look like and then apply that knowledge to the daily’s.

Consider trading for income and a modest daily goal. It just could be what the Doctor ordered !

http://www.screencast.com/t/xMmWZHiAmI 5 minute video, to replace today’s equity chart

Tags: , , , ,
Posted in Screencast Trading Videos | No Comments »

Trading Success, Take What the Market is Safely Offering

Friday, May 8th, 2009

Today is Friday, May 8th and the markets as of now, 9 am West Coast time are making a come back from earlier losses.

Today’s market action was interesting. We saw a gap opening up of about 8 points on the S&P, it pushed a little higher, formed a nice top and sold off, good and plenty. It moved back to the middle where it found support and later rallied to near session highs. That is when I stopped watching. I will look later tonight to see how it all finished for the day.

My trading went well, nice and smooth, hitting double daily goal, just at $1,000 with only one losing trade in about 1 hour. I think I put on 9 trades with a couple of split trades in there. That is what I like to see, but it all depends on me. I know that I can always do better and I strive to do that each day. Many of the stops that I take can be avoided and some can not. I don’t worry about the ones I can’t avoid, but only the ones that human error comes into play. I have rules and sometimes I break them, as we all do. When I stay as close to the rules as I can, it usually works out pretty well.

Today, I was short at the top for a split trade, got 1 point early and put myself in a no loss trade. The second half continued to work lower and all was well. I moved my stop down, but got a little distracted and got high ticked out. I was one tick too tight, still made 6 ticks on the trade, but that move kept on going. I had a tentative target of several points on the second half of the trade.

Often, traders can become frustrated when they don’t get the amount that they were looking for and start to abandon their trading plan. Here is where controlling your emotions is vital. You can get frustrated on a winning trade as well as a losing trade and self control needs to be called on. If you have in your mind that your trading goal can and will be met, it is going to happen by taking one trade at a time. If you look at the big picture, it can be overwhelming and that can throw you off. We are only targeting at a minimum, 2-3 points per day. Most often I double that, but I always have in my mind, that if I can get to 2-3 points and the price action is good, I can get to 4-5 points. I never think of hitting 5 points as my goal right away.  It’s always 2-3, and if things still look good, I can continue, often times with smaller contract size. This takes the pressure off of having the thought of giving back your hard earned points.

That is what I did today and I was happy with it. I had some frustration coming in when I got high ticked out.  I knew that the market was going to hit a bigger target, which I pointed out on the screen. I looked for a re-entry point, but there really was nothing that looked good.

The action on the way down was a little strange. Usually you have some resting points, a few small pivot points then a break. I did not see anything like that, so I had to stay out. It ended up dropping a lot more without a bounce and I chose to just wait it all out. After that move ran out of steam,I put on a few small moves on in the CHOP,  it worked out well.

After a large move up or down, you tend to get tradable formations for small moves. Some of those moves went farther and as I always say, that is just fine. I never cry about taking a small move if that is what I planned on ahead of time. If it goes for several points, no  problem. Some times I elect only to take all trades for 3 or 4 ticks no matter what.

I remember one day not long ago, I did that, I had like 40 winning trades in a row. I said that I was going to stop when I get my next loss, it never came.  It was a very large day for me. Other times I take  split trades or what I call a “T-2 setup”. While I am at it, I will explain the three the basic setups that I use.

The first is a “T-1 setup” which is a scalp trade of no less than 1/2 point but usually not more than 1 point to meet the definition. The next is a “T-2 setup”, which is a split trade where after the entry, the first half of the order comes off at around 1 point and the second half comes off where ever I feel that I can safely get the second target without getting too greedy. I have the second target usually preset at 2 points, but I move it to where ever I can get a larger fill. The third is what I call a “T-3 setup” and that is when I see a pyramid situation. I won’t go into what all that is but I think you may be able to figure it out.

If I see different market condition, I am ready for what the market can give me. Like I have said before, you cannot tell the market to give you what you want, you have to be willing to take what it will give you. So being flexible is very important. If you know how to scalp trade for small targets and hit those targets about 75-80% of the time and often a lot higher, then you have a base to build off of. When the conditions are right for RUNNERS, the T-2 is a great way to go to capture more of what the market is offering. When you have those days that you get long extended moves in one direction, the  T-3 can bring you windfall profits.

If you always keep your sights set on just getting your modest daily goal, when the opportunities present themselves for more, you will not have any hangups to hold you back from receiving them.   If the markets ever started to trade in a quit narrow range like it did some time ago, many S&P systems traders would get chopped to pieces. If it stayed like that for a while, many traders would be out of business.

The market is designed to make you fail and it will do everything in its power to make that happen. You need to ask yourself this question: if that is true, then what are you going to do about it?

http://www.screencast.com/t/en4uOjUTvh6          Today’s equity chart

Tags: , , , ,
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

Tags: , , , ,
Posted in Trading Psychology | No Comments »

The Perfect Trading Day

Wednesday, April 29th, 2009

Today is Tuesday April 28th, and the markets are still holding on to support. Which way will they break?

Today, trading went quick and easy, not a bad way to handle the day. I was only in the market 17 minutes from my first trade, to my last and only 4 minutes of actual, in trade time. I picked up some nice easy short trades at 8:05 and around 8:12 am, followed up by a small half point trade and I will tell you a 1 tick trade that I took on purpose for only 1 tick. I just wanted to get to $ 1,000 and close it up and I only needed one more tick to do that and cover commissions. Some of you might not think that was a smart trade, well, “I beg to differ”.

I was going to hit that trade and the 1/2 point trade before it, at 90% plus success rate. You see, I could have gotten more on that trade, but I disciplined myself not to be greedy and to follow what I said earlier in the session – that I wanted to get to my dollar goal and finish.

I did exactly what I wanted to do. I could have traded for more and I could have probably traded to double what I hit today, but that is not the point. You have to be able to follow your trading plan for the day as well as your trading execution as best you can. If you know that you are in control of your trading, you can stop when you say stop and start when its time to start. For some people, trading can turn into obsessive behavior and the trader can experience a lack of self control. That is why I put out the little challenge last week, on exercising self discipline.

The bottom line is I hit my trading goal for the day and I did it in quick fashion. I often think that is the perfect day. Very little struggle. That is what you are looking for, believe me. It is no fun to be down and struggling to come back up. That is where you have to find all that is within you to mentally keep it together.

But to avoid overly large losing days and blow up days that can take weeks to come back from, I have a safety net. My daily loss limit. I know that if the very worst thing happens, I will only be down two times my daily goal. It’s not the end of the world and it does take a lot of pressure off when you are in the thick of it. All important points to remember when you are in the “Eye of the Needle”.

http://www.screencast.com/t/km18o33jxb Today’s equity chart

Tags: ,
Posted in Day Trading | No Comments »

Trading Discipline, Part 4

Friday, April 17th, 2009

Today is Thursday April 16th, and I have a valuable trading lesson below.

I started my day on the wrong foot, that was for sure. I know the potential always exists to mess up a bit, but I also know that I have enough discipline to stop trading if I am having a bad day. We all need to know at what point you will stop trading for the day if you hit your daily loss limit.

This is a discipline question that needs to be known before you start the trading session. I always know what that point is and I feel other traders in the business should also, but everyone trades differently and there are almost no two styles alike. You may mirror yourself after a successful trader and that can work well, but you will eventually need to OWN IT for long term success to take hold.

This would be whatever you learn that seems to work and slowly adopt it as your own, because everyone will see things at least a little differently. The bottom line is, did you follow the “base method setups” to get your points. If you did, then your results are duplicatable for future profits and that is what we want – daily positive results.

Today, I came up to my daily loss limit, which for me is always two times my minimum daily goal. My daily goal has been one thousand dollars, so my maximum loss for the day can be no larger than two thousand dollars. My first couple of trades were small, then went to double positions. If I click 5 contracts twice, that is a double position, but it shows up as two separate orders when taking losses and gains.

I was using double positions and not hitting my targets – not a good thing. I usually lighten up until I get a better footing for the day, but I did not, which pushed me down right above my limit. Funny thing is, when the chips were really down, I know I had to hit the next trade or I was going to have my first losing day in months.

I finally got it together and waited for a very good runner and followed it up with another one almost just like it. I put one last trade on to top off those two large gains for a total profit for the day of $ 2,600 dollars – over double daily goal. WOW, that was close.

I was not feeling well this whole week and it finally showed up. I noticed I did not have any focus and patience to wait and look for my basic trade setups and it showed. I almost was not going to trade this morning, but I reasoned with myself and went ahead.  I did not like the feeling of having a string of losses like I did (remember I took several double positions, which makes it look worst), but how I handled the emotions is what I am going to talk about today. This is the exact topic I had planned to discuss, no kidding. Is that not ironic?

Trading Discipline: Part 4

Trading Discipline has many aspects to it and I could write many more articles on the subject, but the one I will discuss today is how to handle your emotions after having multiple losses in a row. The easy answer is to just tell yourself not to get anxious and wait the move out for a directional change.

Easier said than done. We have all been there and will likely be there again at some point, but you really need to rehearse this scenario in your mind to pre-plan how you are going to deal with it when it happens. If you don’t do the work now, you will certainly do it later, but under different circumstances, which could cost you big dollars.

This is a very serious matter, more than you may realize, because it is at this point that many traders can just LOSE IT.  What I mean is, you get to a point where you can no longer handle the pain of loss and if you don’t pull it together quickly, you will self destruct. No kidding. Everything you do will be wrong, not matter what. Your trading plan will get tossed right out the window and you will go into survival mode, which is better classified as SELF DESTRUCT MODE and you really don’t want that.  So the very first thing is:

* Take a deep breath, get some oxygen in your body, so you can think clearly and take at least 30 minutes off.

* Go back over your contingency plans you thought of before this whole thing started.

* Imagine what you did when you rehearsed this scenario in your mind, see yourself confidently putting on a positive trade, while imagining hitting your target or your expected outcome.

* Be sure you do not trade past your daily loss limit.

* If you still have room to trade, plan it out, just like a sniper would pick his target. You may only have 1 or 2 bullets. Make it count.

* Have next to your computer a script of positive self talk, that will help you change your negative state of mind, this should be something you read often for this scenario.

If after doing the above, you still have a loss or even hit your daily loss limit, don’t beat yourself up. One of the reasons for a daily loss limit is it takes the pressure off. If you already know ahead of time that this is the very worst that can happen today and you accept that, how much easier can it be in relieving the stress and pressure.

One double daily goal loss is not bad, when you consider that there will eventually be days that you hit double daily goals. I do it all the time. In fact, most days are at least double daily goal. That gives me plenty of room to come back the very next day and still stay on target of at least hitting a daily goal average for the week.

Never let your trading account losses get away from you. As “Day Traders”, we need to stay alive and our life blood is trading capital. Keep the trading capital in your account, so you can trade again. If we lose our blood, we die. Don’t let this happen to you!

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

Tags: , , , , , , , , , , , , , , , ,
Posted in Trading Discipline | No Comments »

« Older Entries
Newer Entries »