Posts Tagged ‘trend trading’

“How To Trade The Futures Market”

Thursday, July 8th, 2010

Today is Thursday July 8th and we will be discussing how to trade the futures market.

There are many ways to trade the futures market. One of those ways is to swing trade key positions that you hold on to for a week or longer. This requires holding your positions over night and does increase your risk. Many traders prefer to day trade the futures market, where the opportunities are endless.

There are many styles of day trading, with position trading, trend trading, scalp trading and counter trend trading, just to name a few. Each style has it advantages and disadvantages.

Every trader needs to do personal analysis to see which style best suits there personality. If you are very impatient, you probably would not do best holding your positions for long periods of time. Trading for smaller moves more often can be the way to go, as long as your risk is controlled and proportionate to your gains.

Many traders will not put a trade on unless they have a 2:1 profit / loss ratio or higher with emphasis on higher. There is nothing wrong with that and may be the way to go for most people. If this is your desired way to go, you will need patients to wait for the trade to come together. This also may mean that you need to trade a good part of the day or all of it, to get the high quality trades to come to you.

This brings us into trading time frames. What is the best trading time frame to use. This goes back to finding out what type of trading best suits you. If you have a limited amount of time to trade, say 90 minutes off the opening bell. You will need to bring your time frame down to the point that you will have several trading opportunities to get in and get out. If you only have limited trading opportunities, you may find yourself in a session draw down with no time or trading opportunities to come back.

If you are like me, I am able to find many trading opportunities trading a combination of scalp trading and trend trading. Both of these terms are relative to my trading method (Sniper Day Trading) and may mean something different to other traders.

Learning how to trade the futures market does not have to be hard. A person almost has to think in the opposite fashion as conventional wisdom. I have heard it said and would agree that futures trading is simple, but it is never easy. If you have a strategy that is easy to understand and has clear visual guidelines to follow, with modest objectives, a trader can get and keep the upper hand over a long period of time.

There are other factors that many futures traders do not take into account. Traders are human, and such they all have a human nature which is predicable. This human nature can be used to our advantage or it can be the “kiss of death”. Being successful in my estimation will require that every individual take steps to overcome all personal weaknesses, what ever they may be. If you procrastinate, you will need to work on that. If you are lazy, you will need to address that. If you are impatient, you will certainly be tested, and so. What ever personal weaknesses you have, the market has a way of uncovering them and bring it to the light.

My suggestion for anyone who wants to trade the futures market, do not open an account larger than $5,000. Bring personal discipline into your life. Exercise regularly, eat a balanced diet and get plenty of rest. That is just to start. You will notice there is nothing in there that has to do with actual trading at this point. The reason, if you are not together, your mind will not be together and thus your trading efforts will suffer.

The reason for the small opening cash balance, is to bring a moment of pause. If you are just starting out, you will likely loose the funds, no matter how large, in your trading account, you will be fighting human nature as well as other traders.  That is just the way it is. Most people are not going to be mentally and physically prepared to do battle and will fall victim. If you take the preemptive  action you will have an advantage. Having to refund your account will bring as I mentioned “a moment of pause”, to the picture. Giving you extra time to make changes and adjust yourself for the consistent gains you strive for.

Trading the futures market successfully takes time. Let me say that again, because it is very important. Being successful takes time. Far to many traders rush into live trading with only a few weeks if that under there belt. It takes longer than that for most people. The reason, most traders do not have a tested trading method that they follow, one that actually works.  They have read a few books, look online at different websites to see what can be extracted and feel that they are qualified to consistently make money.

It takes more than that, a lot more. Every trader needs to have set guidelines and or rules to follow. If you don’t, human nature will take over and you know the rest of the story there. If you try and come up with them on your own, it would or could take years. I am not kidding about that. I know, because I created all my own rules and method and it takes that long. For many who go that way, your rules and or method may just not be any good, so you could have and will likely waist a lot of time and money.

The answer is not always buying systems or trading methods. Some are good, most are not. Some are very expensive, 5K and up and others not so much. It is hard to know who to trust in the trading education business. You should be able to see consistent patterns in what ever they are offering. Is this trad-able, is it easy to follow, is it something you can see yourself doing?  I will continue with part two of this in tomorrows blog postings.

————————————————————————————————————————————————

In today’s trading, I had a good profit day. I did take a few trades that could have been avoided, but I was able to overcome it as I usually do. I had a great trade towards the end of the day that can be seen in the U-Tub video gallery, top right hand corner website, first in line. Other than that, my call yesterday was for the market to trade up to 1066 where it would find temporary resistance and back off, but then attempt another run for up to 1080. So far that is exactly what happened. Yesterdays market closed at 1059 and we traded up to 1067 (1 point over) and backed off 13 S&P points and made a run to close at the high for day, 1069. We should see higher prices on the open which could include the 1080 forecast. I would not be surprised if we did see a reversal after 1080 is hit. This is just something I will be looking for. Good Trading, and be safe.

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

Reduce Stress Associated with Trading Gains & Losses, Part 2

Saturday, May 22nd, 2010

This post is for Fridays market May 21st where the selling continued, but reversed at days end to close much higher.

The selling continued in the night trading Thursday evening and carried over into Fridays session where it started to pick up steam to the downside.  Buyers did come in before it got out of hand and salvaged the day for the bulls.

My last post I put up a single screen shot showing the support that was coming in from a couple of angles. That support if broken on a closing basis with conviction will likely kick in the next wave of selling to the area’s marked on the screen, 864 is the lower number. I do not rule out the possibility that it will keep going at some point, but one thing at a time. There will have to be some economic or world crisis to trip it into gear, but its to much to think about right now.

In my trading Friday I had a great day hitting another one of those mega days. I have a screen shot of my last trades of the day here. In this shot, I have only a striped down view of my screen only showing one chart of my main screen with only one indicator below.

By following the complete trading method, the timing of the buy and sell signals are really generated by something completely different, but the indicators do line up with trading method.  By learning how I trade, you will know why and when to go long or short, not only because an indicator says so. I use different models with different time frames for each model depending on the trading movement. With just a hint of a trending market, I will and can trade out out my T-2 screen of which I have a tiny portion shown above. If in a choppy market my T-1 screen works like a charm. You still need to know how to handle yourself on the board. You can have the best tools and still mess it up, if you act irrationally and become overly emotional.

One more point that I have been wanting to show for some time now, is how my trading method will work with stock trading. The only thing that you need in any trading instrument is movement. If it moves, it will work. It works in any time frame, as well as with tick charts,volume charts, range charts, minute charts, hourly charts, daily charts, weekly and monthly charts. There, I covered all of them. Not all traders are alike and each trader needs to find what time frame is best for there personality. For the trader who feels good about holding a position for several hours and even days at a time, may not be best suited for scalp trading where you may be in the move for only minutes. I have tried them all over the years and it took me a long time to find where I am best suited and that is scalp trading with my own version of trend trading tied to it.

The video below is on a stock, symbol FAZ in a 150 tick chart. This is fast especially on the open where the market gaps higher by a lot. You can always slow it down by just increasing the time frame to say 250 tick chart or higher.  It is a financial bear index and works in the opposite direction as the general market. This stock tracks the financial and banking stocks but will go up as the financial stocks go down. As a day trader, it really does not matter, as long as it moves and this one sure does. The point is, I am just showing one timing tool tied to this and how if you knew the complete trading method, you would be certainly be able to get in at or near these turning points and have a very small stop, .10 to .15 cents.

Continuing with Thursdays lesson: “Reduce Stress Associated with Trading Gains & Losses”

Continuing where I left off, I discussed reducing stress associated with trading gains and gave a few idea’s on how to bring that about. Most traders struggle with this one, “the losses”. There is usually an increased amount of stress as losses start to mount. To often, traders are thinking about the money and not trading there plan and trading method.

Try not to think about the money. I know that is easier said than done, but if you resolve in your mind the worst thing that is going to happen to me today is a loss of 3 S&P points and if you are trading stocks, say 30 cents. If you are trading one contract on the S&P’s, that is a $150 dollar total loss for the day and with stocks, trading 500 shares -.30 cents you are looking at about the same, -$150 dollars.  The idea is, you are not planing on losing for the day, but the stress associated with trading loses only add to the pressure you are under, so focus on following your plan of action. Expect and see yourself doing the right thing as called for and see the trade moving in your favor just after you enter. Don’t wish it or hope it moves, but let the stock do all the work. You are not going to help it along with your added emotions.

Ever heard the adage, less is more and more is less. That would apply here. Day trading is a mind strategy that gets played out on your trading screen. Do the right thing at the right time and you won’t have to try and help it along. It will  already know where to go, right to your target area or running as though it were in a marathon. Go along for the ride as a passenger but be sure you get off before it stops and goes the other way.

You will be reducing stress if you can accept your daily loss limit for which you should have. A maximum amount you will risk in any one trading day, (mine is 4 S&P points).  Then, don’t think or worry about the money and just trade with the rhythm of the market and let it tell you if you should be long or short.

Your feedback and comments are welcomed and appreciated. Enjoy the rest of the weekend, Vince.

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