Tuesday October 4th, 2011; Hello this is Vince and want to give a quick up date on today’s action. I traded for around 1 hour, picked up a modest daily goal and went deer hunting. I did not bag a deer yet this season, but I still have about 2 weeks.
We did have that market reversal I quietly was expecting, today Tuesday and not yesterday, but did give out a number that the S&P should stay above, 1120 and it broke it in yesterdays market. I did mention yesterday that the Dow should then stay above 10,600 and can see that we did do that today nicely, on a strong close.
Let me keep this part short as I have other good things to share in today’s post as described yesterday. Many think that this market is going to crack and break down. I personally don’t think it is going to happen now. It will come, but just don’t think it is going to come now, when most expect it. The negativity is so thick, I can feel it in the financial airwaves and I don’t even have cable TV, (by choice). Things don’t happen when everyone is expecting them to happen and everyone expects this market to crash. We will see in the days ahead.
Above, I have a still shot of the day’s trades I took and below that, a video of the whole days turning points and some of the continuation points. These are just the raw signals and some are better than others. Certainly all of of them are not meant to be traded, as all you really need is a couple of trades to come out nicely most days. The key is keeping your gains and adding to them. Said many times, the trading signals are not the method, but only a nice reflection of it. The reasoning and rational behind it is where the power to act comes from and we all know the adage, “Knowledge is Power”. It is true in this case as well.
Let me shift gears into what I will be covering in the days and even weeks to come. It is something that traders need so badly and intently that it can not be overlooked. Feeding the mind of traders is just as important as feeding the stomach of a trader. Without food, you will die, I don’t need to convince anyone of that, but the same is true in trading. If you don’t feed your mind with the right mental food and thoughts, your account will die, and that is just as real as the other example given.
Let me first lay some ground work to base some of this on. Psychology is a topic that is often talked about in many fields and it is one that can not be overlooked by traders especially.
The word psychology comes from from the Greek word “psyche”, translated, soul and so the term can be described as the study of the soul.
Man has been created in three parts, the body, the soul and the spirit. We will be discussing the soul and which is also made up of three parts. One of these parts is the emotion as it is the emotion that we love, desire, hate, and have joy or sorrow. Another part of the soul is the mind where we have thoughts, considerations, idea’s and concepts. The third part of the soul is the will, through which we make decisions. Our joy or sorrow is something of the emotion.
When we consider or reason, we are using the mind and when we make a decision to do a certain thing, the will is in operation. The mind, the will and the emotions then are the three parts of the soul. By the mind we think, by the will we choose, and by the emotions we like or dislike, love or hate.
The above will lay a ground work for us to best lay a foundation to build upon. It is in understanding who we are and why we do what we do that we can uncover our weaknesses and strengths. In uncovering our weakness, we can then take responsibility for our trades and not lend to the theory that the markets are out to get us. That is flawed thinking and can be a simple example of how we get what we most often are afraid of.
In uncovering something as so simple as our thoughts and taking them captive, we have to face ourselves and do something about those flawed thoughts. Left untouched, it can wreck havoc on our ability to reach our goals.
So many traders can not understand themselves and why they do what they do, only to see what they have done after the dust settles in horror.
When traders pull stops because they can not accept the fact that they might be wrong, there are underlying problems in his or her thinking that is at the root of those actions. Again, left untouched a trader will only see looses in his account as an end result and have no idea why.
To often, traders give up there current trading method, thinking that the method is flawed, instead of looking within themselves as described above.
This is what I want to uncover in laying the ground work above. Some may not agree with my assessments of what we are made up of and my description of the soul and that is OK. It is not the spirit I will be discussing, but the soul, THE MIND, THE WILL, THE EMOTIONS.
My source for all the above is the Bible as all of what I said is back up with numerous scriptures. I did not give them as a specific references, but if anyone wants them I can provide that.
As we continue to study this topic and come up with practical applications on what we can do as traders to improve our overall performances, it will become clear that this is an area that is overlooked and in great need of discussion and training.
More to come in the next sessions. Trade well, trade committed. Vince
Today is Thursday, December 30th and we saw the market back off early and close down slightly for the day.
The market is still in the doldrums with low volume and movement in the major index’s. Look for things to get back to normal after the second week of January. No trading for me until after the New Year, but am posting the low risk market turns as shown in the chart below.
As we approach a new year, traders will be looking for answers to there personal trading performance. Many times, they will be looking for new trading methods and or trading systems to solve their problems and that could be the answer for many, but their could be other solutions to look at first. Trading psychology is best not overlooked.
One of the first things we need to look at when assessing our trading performance is “ourselves”. I will agree first of all, if you don’t have a solid trading method that you follow, with rules for entry and exit, that is clearly defined and in writing, you are going to have a hard time. Having it in writing, is important, as it defines exactly why, where and when you are to enter a trade. Then can define, when you should exit a trade. All of that said, to say this; If you have that and things are not working out, many times, it is the unseen things withing ourselves that we are overlooking that is holding you back.
I know for sure that their are traders who have a good trading method that they themselves have come up with and or, purchased from the outside but have failed to make it work. The first order of business is to examine ourselves and see if something has been overlooked within ourselves that is holding us back from hitting our trading goals.
Many times it is these hidden things that if uncovered, will set us straight and put us on the road towards our long term trading goals. Let me expose just a few of them which may help jar some memories.
Do you move your stop after entry? Do you second guess yourself after pulling the trade trigger? Do you find yourself over-trading? Do you find yourself always cutting your gains off early? Are you taking bigger stops than you should be? Do you have blow out days?
All of the above are things related to “US” as traders and many times not the trading method. We need to be able to follow the method and not our emotions while trading. That can be easier said than done, but if you identify the possible problems, then you are better able to do something about it. Ignoring these issues will not make you a better trader and looking for the Holy Grail of trading systems or methods will not do it either.
This may sound a little harsh, but it is intended to help only. We need to be totally honest with ourselves if we are going to see the lasting change we desire.
Go back over the list of questions above and ask yourself to answer those question to see if you are doing any of them. No one will see your answers but you. You need to come clean with yourself and if you find that you are doing some of those things above, ask yourself why? Then ask, what can I do to stop? Often the answers are found much deeper within you and can be difficult to extract, but is possible.
Fear, is all to often a reason for some of the above. Fear of loss can get you out of a good trade and force you into a bad trade. Both are motivated by a very strong emotion. Eliminating or getting control of that emotion is essential and must start with asking what am I afraid of. Is it fear of being wrong? If so, then it could be your ego is getting in the way. To often we don’t like to be wrong and will force trades and or re-enter a trade to quickly because we so want to be right.
Their is no room for large Ego’s in being successful in this business. The market will humble any trader who sports this attitude before to long. Humility is the opposite of this and is what is needed. If its not within your character to be this way, then you know the first thing you have to change.
Greed is another strong emotion that often goes together with trading fear, kind of like, peanut butter and jelly (lol). Trading greed can make you do things that you will question long after the trade has been made. You will say, “why did I do that, I knew better”. Well, these are only some of the obvious factors that can hold us back at traders. I am not immune to all of this myself. Writing about it, helps me maintain the right attitude and hopefully helps a few along the way.
Not trading with true risk capital can bring in additional pressures that not need be present, which can be traced back to a lack of patients, to wait until your financial situation is best suited to take on this risk. So here risk capital is traced back to lack of patients to wait. What do you think will get transferred to your trading screen and account if you lacked patients before in pushing to trade sooner than your situation properly allowed? That is right, a lack of patients to wait for the right setups and a lack of patients to wait for the trade to develop once in. Both are going to give you less than optimal results.
I can continue, and may pick this up from here tomorrow, but you can see, the traders who engage in some of these things may have perfectly good trading methods, but the problem is within themselves. It is not always the case, but it can be. Every trader needs a written plan for their trading and it needs to cover everything, whether it is self done or purchased from the outside.
Examine your self and trading behavior to best see the results you desire this coming year, 2011.
Good Trading to all, Vince. P.S. Please feel free to comment on the above !
If you have 60 to 90 minutes a day, a computer, risk capital, the Internet, mental discipline and “Sniper Day Trading”, I believe you may have what it takes to attain financial and time freedom by Day Trading the E-Mini Futures.
Emini Course and Mentoring Program
In my Emini Trading Course, I show you how to utilize a “Sniper Trading” type approach using my tested method to earn at least 2 points per day from the markets. You could learn how to make consistent profits in good or bad markets. Our method focuses on high probability trading, delivering you your points for the day. Day trading for a living does not have to be hard, if you have the right method, plan, course of action and someone to explain it to you in a live market trading environment.
Price action, is driven by emotional buying and selling decisions for a variety of reasons, all of which are present in the current price at any given moment. Our job, is to find the turning points that exist in each session through precision market timing. These turning points are present every day the markets are open. Sniper Day trading will teach you to clearly spot where these turning points are, using a trading mastery type approach. These points show up like consistent “Sniper” shots on your trading screen and are clearly defined by using the custom tools I have created.
We strive to teach our students to learn price action apart from indicators or tools, but they are helpful to point out what may not be seen in the beginning. I am sure what I have in full is not being taught by anyone and is unique to me and the many years I have spent developing and now clearly defining the “Sniper Day Trading Method”. The signals generated by my method will produce the same signals to anyone who is following it, there is really no gray area, only which trades you decide to take and which you let go by.
Sniper Day Trading Method
We trade with tick data and use multiple time frames in timing our trade entries. I have three different styles I trade and bring them up as the price action dictates. One is a “Scalp Trading Method”, (T-1 Trade) that is very accurate in picking up 2,3 or 4 ticks on the S&P. My stops are such, that this approach averages a one to one risk/reward ratio, but enjoys a very high percentage “Win/Loss” ratio. This is bread and butter for me.
The second style enjoys the benefit of my “Precision Turning Points” model, (T-2 Trade) and is usually traded with multiple contracts. The first part is scaled out around 1 point, which quickly brings me to a no loose position and the second half is usually allowed to run. I have four incredible ways to get out, all of which act independently of each other, but are uncannily similar in their results.
The last, is a “Pyramid Trading Method”, that when conditions are right, you are able to keep your first risk small but scale into the trade, adding positions in the direction of the trend, but only at very low risk entry points, keeping your stops down to 1 S&P point. Each one of these methods are very clearly explained in my 80 page trading manual and followed up in the DVD training part of my course. They will also be gone over in our live trading sessions.
While only needing to pull 2 points after commission per day out of the market, (8 ticks) catching a few scalp trades or a T-2 trade, is really all you need to hit your daily goal. I believe in setting realistic goals, which increase your chances to meet them. By having a clear mind, a solid trading plan, with position sizing risk limits and rock solid money management, you come that much closer to trade your way to financial and time freedom.
Examples of two typical trading days back to back, applying the Sniper Day Trading Method. It only took about 20 minutes to get my daily goal plus on both of these days.
Mental Discipline and Trading Psychology. I have told you what I can offer to you, but this is not all you will need for success. I am convinced that my method, custom indicators and complete approach could make the aspiring trader profitable on a regular basis, but do you have what it takes? Trading psychology plays a huge roll in all traders, whether they know it or not. You have forces constantly working against you. Success is only going to become a reality to you, if you have the qualities needed to pull this off. What you are going to need is * Discipline * Patience * Ability to follow rules * Control your fears * Get a grip on personal greed. Frequently, I talk about this in my daily blog, because they are too often why traders fail to reach their goals.
I offer a lot of support in this area as well, if you are a struggling trader and want to change, I have the tools, method and know how to likely turn you around, so that you can create the consistent income, free up your time and fulfill your dreams in becoming a successful day trader.
Mental Exercises
In my program I address some of these issues in a series of “Mental Training Exercises” that I have put together. They are designed to get your mind thinking and believing that trading for a living and meeting your daily trading goal is normal, natural and the only outcome you will accept. The titles in the first series are; * Financial Freedom * Positive Risk Taking * Holding your concentration while trading * Achieving your Trading Goals. The titles in the second series are; * Overcoming Trading Obstacles * Controlling Emotions while Trading * Overcoming the Fear of Failure * Creating Hope & Success.
These I believe are very powerful and are in, “the first person” and will become personal to you. They are a form of Neuro-Linguistic programming that can take you farther and bring you closer to meeting your trading goals. They are, in written form and in audio CD and created by me. My plans are to continue to expand these in the future and make any new additions available to students who come on board, all at no extra charge. These training series are specific to traders and cover issues they face.
Solutions for traders, Sniper Day Trading
I realize that not everyone is born with all the qualities a successful trader will need, but I feel it can be learned if you want it bad enough. Ask yourself, how much do you want to become a consistent successful trader ? The answer to that is going to make all the difference in the world.
I know personally the things that hold traders back from bringing it all together and I know exactly what to do to help them change. I believe I can help the struggling trader as well as the trader who has never done this before.
I can set you on a course that is tailored to your experience level and walk you through everything needed and expected. The good part is, you won’t have to go it along. If you have any question, I can not only answer it, but help you apply it, to get the results you will need. Our daily goal is not to hard to hit, 2 points + per day. We can take a conservative approach to help you get that goal regularly.
If you are honest and know you need help and are willing to work hard and change what ever you have to, then I am sure I can help. Trading for a living is possible, but you need to do different, be different and think different from the majority of other traders. If you first commit to yourself these things, then I will commit to you, which will bring you one step closer to the success that we all strive for. Lastly, I want to assure anyone with doubts, my method, straight up works. The only question that remains is, will you move forward and decide to make it work for “YOU”.
Price Action Day Trading
“Price Action Day Trading”, is the key to your long term success. The markets do something everyday that is consistent since they began trading, over one hundred years ago. It exists in all time frames and gets played out on trading screens across the globe each day. It is important to understand and learn, “good price structure” and how it is built. That is what I teach and that is what students get when they partner with me at Sniper Day Trading. The key is learning what to do and when to do it and why. If you don’t know the answers to those questions you will eventually fall short. Many traders use indicators to help them and that is OK. I have them and use them also, but I do not base my trading decisions on the indicators. I base it on good price structure and trade setups that happen over and over, day after day. Traders and investors are very predictable, they base many of there trading decisions on emotion. Knowing slightly ahead, how they will react when certain prices are reached and breached, give us the trading edge we look for. With that said, the indicators magically line up with our trading decisions which can give us the added confidence to put our money on the line.
Below is a typical trading day where you will see the trading, “Turning Point”. I have stripped away everything from the screen except two things. There is much more, but I just want to show you that the indicators line up with our turning points. Which came first the chicken or the egg. The chicken and that is price. Price is always first and the indicators are second. That being said, the indicators can help traders see what is already on the trading screen. I hope this explanation helps clarify in the minds of seeking traders that what we have and do is real and works.
What You Get With Sniper Day Trading
My E-Mini Trading Manual (hard copy 80 full pages) with future updates. (very nicely done)
Complete DVD video training package in very nice hard cover locking case / extra: will include method applied to stock trading.
Method explained throughout the week, with full screen video and audio illustration in both the T-1 and T-2 screens, “Turning Points”. Very powerful part of ongoing training. (This service will be included ongoing all at no extra charge)
All custom chart settings to build your trading platform and help by me if needed to set it up.
All of my custom and modified indicators I created, that will unmistakably identify my “TURNING POINTS” for the T-1 and T-2 trades, when applied to the method.
Method checklist work-sheet ( for examining trades against method).
Laminated 8×11 “Method Overview”, to pin up over trading screen. Laminated 8×11 “Mental Exercise Overview” pin up over screen.
Mental Training Exercises: eight titles – audio CD and in written form. On-going future title releases no extra charge.
Leather bound “Trading Journal”, to help you keep your thoughts, progress, questions and answers.
I will personally work with each trader by screen sharing technology and voice of I.P. through SKYPE, in a live trading environment. After you go through the material, we will set appointments for our personal sessions together. We will apply live market data to the method and I will show you exactly what to do and how to do it. The manual and video’s will give you a head start, but working with me personally will undoubtedly bring it all together. I will spend as much time as needed with each trader who comes on board until he or she understands the complete trading method.
If in the future if you have questions, I will always be here to discuss them and go over your charts to help point you in the right direction. I am not just selling my trading method, but offering much more, mentoring and getting you profitable. Traders often face mental barriers that hold them back, but they do not know exactly what it is or why they consistently make the same mistakes over and over again. I can uncover the problems here, find the solutions and set you on your new course.
My goal is to get each trader that joins with Sniper Day Trading to book at least 2 points per day and gradually increasing contract size to a desired income goal. I will do my part as stated above, will you do yours?
Futures Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any e mini trading system or methodology is not necessarily indicative of future results.
Daytrading Involves High Risks and You Can Lose A Lot of Money.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under or over-compensated for the impact, if any, certain market factors, such as lack of liquidity. Simulated e mini trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Additional Cautions
There are no guarantees or certainties in trading. Reliability of trading signals for mechanical systems are in probabilities only. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during the methods off times (and all methods or systems have off times) – If you are looking for guarantees, trading is not for you. Most people lose trading. One of the reasons is that they are not consistent and lack discipline. A method of system can help you become consistent, BUT you have to stick to the method like a formula. The ability to be disciplined and control your emotions is even more important than any technical indicators a trader may use. Worrying about the money aspect of trades (which is an emotion) can contribute to and cause a trader to make errors. It is important to trade only with true risk capital. You can find further information at: www.sec.gov
This post is for Fridays session, where the Major Market Index’s closed on Key Market Support.
This is going to be a very important week to watch. We are currently resting on key market support that goes a long way back. This support has many times proven itself as a point of interest. Each time the price has moved higher, but will it happen again? That is the 64,000 dollar question that everyone wants to know. Well, anyone who trades for longer swing moves and those that may be trading stocks. The general market trend, accounts for the majority of a stocks overall movement. I don’t remember the actual percentage, but it is very high. So this kind of information is key, to those traders for sure.
Day trading the S&P E-Mini’s for daily income, is very different. We look for the short-term direction and move with it, at low risk entry points along the way. It is different for everyone, most traders trade differently. Almost like snow flakes, no two are the same. Well, maybe not that extreme, but you get the point.
It is vital to have a set strategy as you approach any market. Trading stocks is really no different from trading the Index Futures, because the index consists of stocks. Often, it is much easier to trade the emini index futures, because you do not have to look for what to trade. Each stock does have a certain personality to it and learning the many nuances of each, can be time-consuming. Trading the E-Mini’s you don’t have to hunt or look for what you are going to trade and you do have the leverage to go with it.
OK, I don’t want to get side-tracked and promised to talk about Fear and Greed and how it relates to trading in the way that I see it. Everyone has a perspective on this topic and many things have been said regaurding these two trading emotions. It effects everyone differently and many learn different lessons as they have dealt with this in there past and continue to deal with it at times in the future. It is not something that goes away. You have to manage it and put it in its place. By managing it, I mean, not letting it take root in you, effecting your trading results. It can destroy any trader and humble the most arrogant, very quickly.
Nothing good comes from Fear based day trading. We often react to our positions with this strong emotion. It can make us do things that we would not normally do, only to regret it all at the close of the trading day. We may often ask ourselves, why did I do this or that. It may be, that we pulled our stops and tried to give the trading position more room, only to find out that our first small loss would be the only acceptable loss for us.
Now we find ourselves, not willing to take a loss that large and give it more room, only to find that the more room you give it, it just never seems like its enough. During a time like this, you are not reacting rationally, but out of fear. That fear, can be coming from many directions. One is as simple as not wanting to accept you may be wrong. We may feel at times that our ego and trading confidence are tied to winning trades and when we are not posting them, the thought of losing, just does not match our ideal.
Trading from a fear base, is only going to bring you down any way you look at it. All traders need to accept the fact that you will have losing trades. If you can not handle that simple fact, you may not be ready to trade. I know that I reacted last week to fear, in one trading scenario. I don’t remember which day it was, but, I saw the bottom of the market and felt we were going to go higher, I jumped in to soon and did not follow my entry method and it cost. I was reacting out of fear, but this fear was a little different. It was the fear of missing a move, that caused me to take action to soon and not wait for my base method entry.
It happens to all of us, but the best thing you can do as a trader is go back and write it down. This will cause you to remember why you did that and understanding that, you will have the basis for making changes. People move whole markets based on fear. Trading stops are often triggered by this emotion.
Traders who trade without a trading stop often react to the whims of the market, by getting out at the bottom, only to find the market move up again, but without them. As the price drops against them, they convince themselves that it will come back, it has too, is how it usually goes. Traders often talk to the price as if it can hear them. Fear based trading will produce adrenaline, but that is not what you want. Get that at the gym or some other form of exercise.
You want to have as little emotion as possible and want to remain level and in control. That goes for large gains and your loses. If you feel that you made a mistake, your first loss it best. Never pull your stops, never. Close the trade out right where it is, no matter what and re-evaluate after you are flat. Often, you will be more objective when you are out of the trade and see it more clearly.
Try and trade with as little of a market bias as you can. The danger is in establishing a strong mental opinion, where prices could and should go, only then trying to confirm your predisposed position. We need to follow the market not the other way around.
These are some short answers to help defend against getting in that fear based trading mode in the first place. The opposite of fear, to me, is peace. You are content and at ease with where you are. That is what every trader needs to find. There are many ways to help you get in that state of mind and we can explore them in the coming posts this week. I have many suggestion that I use and will be willing to share them with you, so check back Monday afternoon or early evening and I will continue. Until then, good trading.
Today is Friday, January 8th with early trading showing weakness.
As I write this early post, 9 a.m West Coast time, we are seeing a counter trend move back up, off of some early weakness. This is how yesterdays market started out and is what we will need to see in today’s market for us to hold on to the current momentum. It will be interesting to see how the market ends the day. Currently it is struggling with over-head resistence coming in at this mornings pre-market highs 1138 – 1139. At one attempt I did see a large cluster of sell orders positioned at 1137.50 the previous short-term high. From that point, the next three prices had 13,000 contracts to sell. That was some serious volume with the market attempting to attack it and swallow it up, but it was just too much to overcome and fell back. I was able to catch some of that drop as you can see in the second video I posted below.
The day started out good for me and I tried to catch some of the early moves. I knew the unemployment numbers would be something that traders were watching this morning, so I thought to participate. I have a video of my first two trades below, but I don’t think there is any volume to it, I had my wires crossed, in my mic, not my head, thank goodness. The trades we good and took only two ticks of heat after my entry. My method said buy and I did, both times exactly as I should have. I grabbed the high tick as well, I did not want to miss the move, it looked strong.
Both of these entries were at what I call my turning points, like I posted in yesterday’s blog. Then, I did not take any trades, but just pointed out what they were for the day. I thought we would have the volume back today and with all the talk, I thought something big might happen. It actually turned out a lot quieter than I thought, but it was a big enough move for me.
I took a break and came back for a few more trades. I split most of my trades up and they are as follows and are in ticks. +3 +4 +1 / +5 +10 / +3 +3 / -2 / +2 -1 / + 2 +5 /
I often judge how I did not only by the net ticks, but also by how much draw down I take on the trades. On most of these, it was only a couple of ticks. That is what I strive for. In the loss that I had, I could have made it through that with my standard 4 tick stop and looking back in hindsight, I can see that, but I did not know that with surety then and had to protect myself. After I saw support come in, I did re-enter long at the same price. Losses are a part of trading and you have to accept it without it negatively affecting your next trade. To often, we look to get back into a trade to recover the loss that we just may have taken. That is the wrong reason to enter a trade. One thing should have nothing to do with the other. You need to place your trades based on what ever your trading model says that you should. Trying to make up for losses, is the wrong mindset and will hurt your overall performance.
Take each trade on its own merit, don’t let human nature get the best of you, by following your emotions. One thing that helps me is to know that you have and live by a daily loss limit. In the case that you have a bad day, you must have a cut off point to your trading, that says, I quite for the day. Don’t look at it as a defeat, but in a way, it can still be a mild victory. What I mean by that is, if you exercise the Trading Discipline to stop trading, for what ever reason, (not feeling well, too much on your mind, poor entries or just trading in weak price action environment) you can consider that a victory, because you know you have a cut off point for the day and you stuck to it, no matter what. That is a victory, believe me.
To often traders start out on the wrong foot and get in a hole. What happens after that? Well, I think we all know, it can go from bad to worst. The worst, is what you are trying avoid, with bad being OK. I have a 4 point daily loss limit. If I go minus 4 S&P points for the day, I stop trading, I have to. If I am having a bad day and it happens to everyone, that is the worst thing that is going to happen to my account. It is a lose that I can live with and one that I can easily come back from the next day.
Let me say one more thing. I have mentioned this before a few months ago, but it bears repeating. When you are in trouble or even when you are not in trouble for that fact, “Trade by Exception”. What I mean is “Trade the easy and obvious”. Both of those are very important. We need to be relaxed when we trade and not tense or stressed. Try and calm yourself down before you begin and get into the right mindset. You can tell yourself, “I will not take any trades today unless they are easy and obvious trades. That will take the pressure off right away and give yourself permission to relax and just wait and watch price action along with what ever else your use to help you decide to take a trade. Price action does rule over all indicators,that does take time to grasp, but learnable.
Trading psychology and trading discipline are key ingredients along with knowing how to trade. You need all three of these vital components to be successful long-term. I will cover more of this in future posts.
So, there are some things for you to consider. It has more to do with how you approach the market, then anything else, but often this is exactly the kind of things that hold traders back from getting to the other side. Good Luck and Good Trading.
Today is Monday, April 20th and the markets are experiencing a deep pull back as I write this.
The S&P is off by 32 points and the Dow by 255 at 10:15 am West Coast time. I am posting before the end of trading today because I have things to do this afternoon. The daily trend is still up at this point, but it will be interesting to see what happens by day’s end. Will the market pull back up to the middle of the day’s range or will it continue the sell off or at best hold where it is? It would appear that with today’s action, the ascent of increase has slowed. Where we are right now is pretty critical, any further decline is going to be technically bad for the uptrend.
In today’s trading, I did well. By the time I came in, the market was not showing much. It was trying to bottom and was not sure what direction it wanted to go. In an environment like that, many times, I only reach for what I can be sure to grab. In this case, it was just a 1/2 point. It does not sound like much but if you hit it, again and again, it adds up. The general idea is to pick up a few points and call it a day. It has been working pretty nicely, without a lot of struggle.
I considered stopping after I picked up 5 small trades, but did not get to my desired $ goal, so I kept at it. I can tell you, I did get sloppy and paid for it with two losses that pulled me down. That is what I get. If I continued to trade with good focus, those would have been gains instead. It was really no different than what I was doing earlier. I just came in too late and I knew it, but thought I could get away with it.
I waited out the current cycle and did see some nice market action developing. Picked up a good runner for a few points, followed up by another one and a few more small 1 point and 5 tick trades to top it off. Took nine gains, two losses for $1600. I could have been 100% successful easily, but I guess I am crying over spilt milk.
Our focus needs to be at high levels at all times when we are trading. That is why I don’t elect to trade all day. If you trade with bigger time frames, you most definitely will have to trade for much longer, because you will have to wait for conditions to set themselves up. I could easily trade for bigger targets and catch large runs while keeping my exposure to a minimum, risking 4 or 5 ticks only. It would only be a slight adjustment for me and I could be catching 3, 4, 5 points or more while risking only one point. The thing is, I would have to wait and wait and wait. That is what I don’t like to do. It does not fit my personality and longer term goals.
TRADING SCENARIO: One thing that can happen to the person who finds himself only looking for higher risk/reward trading scenarios is you will be waiting and waiting for the perfect trade set up. When one comes, you hesitate and say, is this the one? You let it go and now your low risk entry has just passed you by. You become a little frustrated with yourself because you were waiting for one and half hours for that set up and you missed it.
You wait again for an hour to find that trade setup again and you are determined to not let it get away from you this time. So as it develops, you get in just a little too early and get stopped out – darn, I can’t believe that just happened. You think it was trying to shake you out, so you re-enter when you think it’s safe and find that you were wrong with your whole assessment of the trade to begin with and you take another loss.
Now you are coming up to the last part of the day and you have not got anything going yet. What to do? You wait and wait – THERE IT IS, a perfect set up. You enter the trade and it looks good, but you see that you are down quite a bit, three losses of 2 point each and you will need a big gainer here to come out on top for the day. As the market moves in your direction nicely, you move up your stop and things suddenly go bad and you get stopped out for only a small gain of 1 point. We are now in the last 30 minutes of trading and you are looking for redemption, you don’t see anything yet, but there, maybe that will do it.
In this scenario, you are trading your P & L (profit and loss) and it is affecting the decisions you are making. You say, this one has to work out, I am running out of time, and YOU TAKE IT. And suffer another loss. The trading day is now over. You end up with 7 points down for the day.
It took you the whole trading session to get yourself in a net loss position. It does not help your confidence when something like this happens to you. If you don’t shake it off, and get your head screwed on straight, you will take all of those negative emotions with you into the next trading session.
I will continue with this trading scenario tomorrow, so you can see where all of this is going.
Today is Friday April 18th and another lesson on trading discipline is below.
First, the markets put in another session of higher prices from their reactionary low of a few weeks ago. Very nice. The daily momentum is still up, so be careful on fighting the overall trend, for those who swing trade the S&P’s. I am not too concerned with the larger direction, because I trade a much smaller time frame and take trades in both directions, but look to identify the stronger side of the market so as not to fight it, somewhat relative.
In today’s trading I only traded for 12 minutes, start to finish. It was later in the day and was just trying to get back on my feet. I came into the trading market during the last 30 minutes of the day. It worked out fine. I took 4 trade entries, the first was a loss and the next three were gains, which included a few small runners of a couple of points each. I separated my exits today and took some off early and let the other half run a little. I picked up an even $ 1,000 dollars and shut it down. No struggles today, just picked it up and moved right along. The signals were very clear and the market had volume to push it around in my direction.
Today’s Trading lesson will continue in the area of “Trading Discipline”. This is an area that very few people tend to focus on, but is one of the most important. I could not say which one is more important. If you don’t know how to trade, trading discipline is not going to do you a lot of good, but once you have a solid approach and you know what you are doing, which is really not that easy for most people, you need to spend a lot of time in this area.
If you cut back in this area of training and spend more time in perfecting your method or trading style, it is not really going to make a difference, because you are going to add yourself to the ranks of people who thought they could, but couldn’t. I am just stating the facts on this one and trying to get your attention as well, because you need to spend as much time, or even more, in this area as you are spending right now in getting your actual trading execution in order.
Believe me on this one. All of your hard work can be lost if you cannot handle all of the outside factors that will be presented to you, regardless of trading know how, so that is why I feel so strongly about this. It was always my intention to start my blog and website with trading know how, then switch over to trading psychology and it’s related issues. There is a wealth of information that I will be discussing in the weeks ahead regarding this area. So stay tuned.
Yesterday, I discussed practical ways to slow down the sometimes impossible situations that we as traders find ourselves in – multiple losses in a row. I say it this way because slowing down the destructive mind set of self sabotage is sometimes the best we can do.
Others will truly see how dangerous this situation can really be and take very strong measures to stop it. It is the cause for most trading failures, in my opinion. Many people will have a fairly good idea on how to capture trading profits, but it is that one or two days a month that they give it all back and then some. This is really a fixable situation for the person who is willing to do what it takes to become successful on a monthly basis.
If you find that this is you, there is hope. If you still struggle in putting winning days together, then you have more work to do. But for the trader who finds himself in the above situation, you need to look for the answers in trading psychology and trading discipline. There are reasons for everything and nothing happens by its own merit. This is where you need to look within yourself and either self-analyze your trading problems or find a trading coach or mentor to help you through the unseen issues you face. If you see yourself as a winner and have always found the solution to whatever it was that was holding you back, then you have a great chance to make it.
Having the right mind set is one of the first things you can do to put yourself over the hump to profitable consistent day trading.
* How do you see yourself ?
* How and when do you see your future becoming a reality?
* What are the things in your control that are holding you back ?
* Are you willing to pay the price to overcome your stumbling block ?
If you are not sure what it is that causes you to lose control and have large losing days, then I would recommend you take some time off from trading altogether and explore deep into the root cause. You may not be able to do this on your own. If you do attempt this on your own, you need to be brutally honest with yourself. It is not going to do you any good if you don’t pull down all the barriers you may have put up. This is the only way to attack the problem and that is exactly what you need to do.
If you take a passive approach and say, “It will just eventually work itself out”, you are only kidding yourself. Very rarely do these things fix themselves, even if you seem to be doing better for a while, you can have a relapse and find yourself no better off than before. The key is, are you willing to change and pay the price? I will tell you right now, most people are not. That is the reason so few people are profitable on a consistent monthly basis, to the point where trading is their main source of income. This does not have to eventually be where you spend the majority of your time, but it produces the majority of your income.
If you see it, live it, work hard for it, you can have it. DO YOU BELIEVE ?
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