Posts Tagged ‘two points per day’

Trade Lesson and Encouragement

Friday, November 26th, 2010

Saturday, November 26th, 2010. I will give an update to last weeks action on Sunday afternoon, but below is part of an email message I sent out to my group to help them stay focused and give a little encouragement. This is part only and felt I could share this much with my readers here today. It is a little long, but feel it has value enough to share with this group as well. Best wishes to all my readers,  Vince

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One of the reason’s traders have more problems than they should, is that they trade to long and have too high of an expectation. The odds for most traders to loose money greatly increase when they stay to long, that I am convinced of. Unless you have an unwavering ability to sit and wait, most will find themselves over-trading, looking for trades that don’t meet the criteria. It is in these times, frustration and revenge trading can also give birth to additional unwanted losses.

So, to meet a minimum base trade goal that is mixed with limited time to achieve it, small high percentage trades can get you there quickly and easily. When you have it, walk away and do not give it back. If you need screen time, switch to Sim Trading and do not go back to live trading no matter what for the day. When you feel comfortable with the method and find yourself reaching your goals day after day with limited time invested, enjoy some of the benefits traders voice by enjoying your free time. Most traders will say that they like trading and want to pursue the career because of “time freedom”.

Back to meeting our base goal. To hit two points per day all a trader needs to do is to hit two (2) one point trades, or one two point trade, or any small combination their of. The key is to hit those trades with a high degree of accuracy and with confidence. Using the method to Snipe off a few of these trades is not that hard, but if you reach your goal and continue to trade, you will and or can be met with unfavorable conditions, (slow market, choppy random moves, like Wednesday late afternnoon.) Having the ability to stay in control is essential. I hear many times that traders are hitting good point moves in the morning, but give it back in the afternoon. That is more common than many will like to admit. The easy solution is to stop trading.  Traders trade for the money, or that is what most will say, but often times trading fills some other need in our lives that we are often times not aware of. Each one of us needs to search ourselves to find out if that is true and if it is, what are we going to do about it?  This is where the hard work lies and it is the work that many traders are not willing to do. I encourage everyone to search themselves and see how if any of this applies to us, myself included.

A different way of looking at trading for such a small target is, that if we can get so good at hitting high percentage trades and get them quickly, you will never have to worry what kind of market you are in, as it will work in all market conditions, choppy or trending. As time goes on, your ability to see the bigger picture will improve and you will have the ability to stay with a trade for longer runs when the market show it to you, exiting with method rules. Again, getting so comfortable with the small stuff, will open doors for us to trade much larger contract size. Trading 20 contracts for one point is $ 1,000 dollars and can be had in a minute. Two points in an session is 2K for the day. That is a lot of money anyway you shake it.  The key is to look at this with a long term perspective. Becoming tops in any field always takes time, work, dedication, discipline, patience and the ability to stay focused.

Sniper Day Trading is basically a scalp trading method, but it can be “morphed’ into something more or combined with other trade principals to enhance or adapt it to your own style and or personality. With a scalp trading strategy, the emphasis is on high percentage short term moves. To get that, the entry is key. We don’t want the price to back fill or move against us much if any. To do that, precision entries are the key. Without precision entries, we will be risking to much on the trade when compared to the reward. Risking one point to make one point is called a 1:1 ratio and is the smallest ratio I like to see when I trade. There are other strategies out there that only put on higher ratio trades and that is fine, but it is not the basis for what we do. I have adjusted my trading habits a bit over the last year so as not to take many counter trend trades as per the method. This has given me more opportunities for larger point moves but it requires one to wait much longer for those set ups to develop. This has helped some traders to screen out some of the smaller trades, which was in part why I did the updated version.

The market is always changing and there is rarely two trades exactly alike, but they often will show very similar characteristic’s as I pointed out in the last video’s. In those last video’s I did, since I only focused on a small tick chart and no accompanying larger charts to create a clearer structure for us to follow, the emphasis was on the simple patterns only. One can not and should not only trade based on one small tick chart. You can not see what else is going on around you. So don’t get confused their with that. The next video’s will include everything up on the screen and will take you through the process and full method details. It may be good for some to go over the rules for entry and exit’s. The market consistently expresses itself on the screen each day. If we learn to listen to it and adapt ourselves to the price action we will be in tune with the market and will be able to see larger moves coming in advance. Trading for larger point returns requires a lot more from us as traders. You have to have the ability often times to trade for several hours to only take those trades that may meet say a 3:1 trade ratio. They don’t happen that often and you will be required to risk more on your entry/stop. Risking 6 ticks will require you to make 4.50 points on the trade. How many trades meet that criteria in a session, not that many, but they do exist, but not without putting in the extra time it will take to wait for the setup and then again to wait for it to come to fruition (come to pass).

This is where I find an advantage in trading the way I do. Successful traders will so often tell us that trading is more of an “Art” than a “Science” and I would agree with that. So we need to let the art of the trading method express itself out on the screen. Each one of us has the ability to do this, but we need to see the big picture and let your knowledge of this method express itself on the screen. There are rules to follow as per entry. There are rules to follow as per exits. If scalp trading, setting a 1 point target is fine, no matter what the environment, even if you see the move continue on up. No trade management is needed in that environment except possibly moving up your stop a tick or two as you approach your fill. If you see a large consolidation that is building and building, it will likely carry with it a much bigger return and taking a T-2 type trade with no targets but stops only, will work just fine. There is more work to manage the trade in this situation. If you scale with multiple contracts, taking off half at say one point or better on strength is something I often times like to do. This locks in profit and now you can not loose on the trade. You may be giving up what you could have had if you had not closed out half your trade, but that is trading with hindsight and not realistic. By taking half off early, you can often times hold on for a long move up, because you are more relaxed and in control. Ride the move up as per the method, their are many ways you could proceed…………………………….

Well, thanks for tuning in to part of this lesson, as the rest of it gets a bit more specific and am not able to share.

I wish all my readers the very best this Holiday Season.

Vince

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Day Trading and Power of the Mind – Free Book Offer -

Monday, February 22nd, 2010

Hello, Today is Monday February 23rd and the market is still trading while I write this, currently up 3 S&P points.

So far with 30 minutes to go, the market is holding up. The volume has been so slow, just now at 1 million contracts and 30 minutes to go. I can not remember a regular session being that slow, even back during the holidays. With low volume and movement, you have less opportunities to profit. That is why I feel it is important to be able to scalp a few points out of small trading ranges. Often, that is all the market is going to give you. You can always elect to sit it out and wait for things to improve but if you don’t have patience enough to do that, you may be tempted to trade in an environment that you are not trained for. The best course of action is getting trained for it, so that if you find yourself in it, you will know what to do and how to do it.

Scalp trading is not for everyone, that is true. It can be better for some to wait for moves that are for several points, but as I said, you don’t always know when they are coming. If you blow your opportunity, you may have to wait now for hours. Do you have the patience to do that. The answer for many is “No”. That was and is my answer too. I don’t want to wait for two hours to take one trade and wait another 2 hours for the next trade. I don’t need to hit a 3 to 5 point trade to come out on top. Three one point trades counts just the same and with the trading leverage tied to the emini’s, you really don’t need much. To me, two to four points per session is plenty. If you can average just the two points per day, that is 40 points in a trading month. Some days you will have more points and that can make up for the days you get stopped out for the day. I have a 4 S&P point daily stop out point. This ensures that if I am having a bad day, that I don’t do any really bad damage to my account. Getting the upper end of my daily trading goal, is always nice at times. This also protects me from any day that I may come up short.

I was working with someone earlier this morning who was having a little trouble. After our session, he saw things much clearer and had a new sence of confidence, always a good thing. His confidence reconfirmed in the method he had learned and trained on, but needed a little guidance and one on one time. After our session he took three trades for 3 points in an hour. I felt happy for him, but better than one days profits, he has a clear picture of what he is looking for and how to go about getting it.

In todays trading, I took a few trades, nothing earth shattering and could have done better, but it was enough. Trades are as follows; flat, +4 ticks/+5 ticks, -1 tick, +2 ticks/+2 ticks, +2 ticks/+1 tick. The last trade was the only counter trend trade that I took and am trying to take less of them these days. The bigger move came from just above my last trade short and was what I was seeing, but decided to not trade any more and let it go. Tomorrow is another day.

Just a reminder, it may still be a little while before I get the “Free Book on Concentration” up on my website. If anyone wants it now, just email me. It is very good. It pertains so much to trading and what we do, that I am sure it will help every trader who reads it with an open mind and applies its principles. When you start reading the first chapter alone, I believe you will be impressed.

Day Trading has much more to it than getting the entries down and knowing where to exit. You will discover so much more about yourself than you ever thought you could. Some of it good and some of it, not so good. It will bring to the surface all of your weaknesses and expose them, to yourself.  Unless you know what to do with that and how to adjust, you will eventually be working against yourself. Why would we allow ourselves to do this. Well, many traders do not realize how the mental side of trading is always at work here.  The path of least resistance is to do the wrong thing at the wrong time.

Having the mental clarity, focus and mind power to do what you should do and when you need to do it, is imperative while trying to trade the markets. If you find yourself listening to competing voices in your head, second guessing yourself about every trade, not allowing the market to work for you instead of against you, as so many traders end up doing, you will struggle. 

 I too have to watch myself in this area and need to be in the right state of mind when I trade. So, as I have stated before, I am often times talking to myself while I am sharing with my readers. I know what it is that I need to do and want to be sure not to go outside of that. If I am in the red, I am very confident that I will come back, but should not be looking at or dwelling on my past loss at that time. Traders to often, trade with their P&L in mind. It is hard to have the right perspective when money is on the line. The best place to be in when trading, is not having to need the money. If you need the money and the trade, you will be trading from a position of weakness, not strength. That is a mindset and often an economic reality for many. Try and get yourself out of that position and trade from a position of strength.

Mental preparation can make all the difference in the world. I strongly encourage any trader who is serious about making consistent income from the markets, to get my free book. If the book is all you want, that is all I will give you, if you want some advise, I can give that to you as well. (Free)

You have a lot to gain, if you have not considered the real impact, the power of your mind can have on your trading results. You have everything to gain and nothing to lose from asking for it. I have sent it out to some who have requested it and will report back here on how they liked it and how it has made a difference in there trading.  

So, until then, Good Trading.

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A Good Lesson for Day Traders Today

Monday, September 28th, 2009

Today is Monday, September 28th and the Index’s had a nice day back up. This is the price action reversal that I was talking about last week. We needed to see a day like this after the most recent sell off and it came right on time. The Dow bounced  right off support from Friday’s session and set the stage for today’s rally, very nice.

This last pivot low is going to be very critical, in my opinion. We will need to stay above this point to keep the trend intact. If it is broken, I will have to believe that others will see it as a sign of weakness and take profit off the table. That could cause a rush for the exits and we could get a much bigger pull back. Right now, no one knows which way it is going to turn, but you can have a conditional set-up. If this, then that. If pivot low is broken, look for a meaningful pull back. More work needs to be done to establish a continuation of the current up move before a long position can be taken, so we wait and see. This is all for the daily market, which I really don’t trade off of, but follow, because everyone else does.

I trade out of some very small time frame charts that aim to capture just a small piece of the days movements. Today was a very slow day. A lot of the price action came in the pre-market, but there was some nice trades to the upside, just after the open. A little later during the New York lunch time, 12: 00 pm to 2:00 pm, things slowed considerably. This happened to be right at the high of day at that time and the market virtually stopped. A little move up, a little move down, and so on. It can be hard to try and trade during this slow period, because it will many times not produce the gains that you are looking for and frustration will set in. When that happens, it never usually turns out well. You start forcing trades and not waiting for conditions to present themselves to you.

One rule or thing traders can remember that will be of great value when you find yourself struggling. “Trade by Exception”. What do you mean, someone may say? Well, by taking this advise, you will wait until your most favorable conditions are before you, but when they are, that is when you will not hesitate, but take action immediately. If you tell yourself that, you do not have to take a trade, if my conditions are not met. I will not trade, plain and simple.

This will take the pressure off of you to perform. Relax, and know that you are in control. Wall Street is banking on you loosing control as most traders do. If you are trying to trade out of the slow time of day, you had better know what you are doing and have great timing. If you don’t you will get spanked and sent to your room, without dinner,  (lol).  You will need to learn from those mistakes or you will do it again.

Trade with purpose and definition, know what you are doing and why it is that you are doing it. After it’s all said and done, you will have the ability to go back over your trades and see which one’s were done right and which one were a mis-trade. A loss is not considered a mis-trade to me. A loss is the cost of doing business, if you are trading with focus and purpose. A mis-trade is when you force the trade, trying to make something happen. I still do this on occasion myself, but I know what I did wrong and why. I go back over the trade and see that I did not wait for the trade to shift overwhelmingly in my favor. Even if the trade is for a small target, you still need to wait. Your percentage win/loss ratio needs to be high when trading for small targets only. In a choppy market, this may be all you have available and need to adjust your thinking for very modest returns.

Today, I choose to trade at a slow direction-less time and area. It would have been better to trade the open or wait until after the lunch period, but I adjusted my expectations on direction and took what the market gave me. I was not imposing my will on the market, but taking what the market could safely give me at that time. If I was not willing to accept these conditions, my only option would be to wait the period out for more favorable conditions or not trade at all, both of which is quite alright. Remember, you live to trade another day when conditions are favorable.

Maintaining control and knowing your limitations are very important. Every trader should not think more of themselves than they ought to. Having a humble attitude towards trading is essential to a winning mindset. That does not mean you should not feel confident, you should, but your confidence should be in following your method and not solely in yourself. You will let yourself down, when you think you know better than your method. If you take a non method trade, the best thing that can happen is for you to get stopped out. This way it will force you to trade correctly and stay with what you know. Going outside, can often produce bad habits that are hard to break, only instilling a more difficult journey for you overall.

The moral of the story, know what your abilities are and try and stay with what you know. No sence in pushing yourself to become the trader that you are not. This process take a long time. It may be that you need to focus only one setup and condition and trade that. The rest will come over time. A modest daily goal of two points per day is a great place to start and finish, I might add.

http://www.screencast.com/t/IZjv1ndi                Today’s turning points and few small trades

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Have You Ever Asked Yourself, What Are You Trading For?

Wednesday, May 27th, 2009

Today is Tuesday, May 26th and the markets reacted off that now famous 880 support level once again.

Very interesting day today and I would have to say that I am not surprised. I have been leaving the door open for moves in either direction as long as the 880 S&P support is holding. What is happening now is evidence to base future direction on.

With today’s action, we are putting in what I call a “W” pattern. I have never heard or seen anyone use that term and rarely even reference the pattern. I don’t know why, actually don’t really care, because I seem to have very good success from reading these patterns in the smaller micro moves that happen all day long.

This pattern happens to be  very big, in looking at it from a 60 minute bar chart. The bigger the pattern the bigger the move, is usually how it works. I am keeping an open mind as to overall direction. We are close to the top of the “W” pattern, with maybe 10 points of potential upside. If the market gets over 925-930, that would be a significant development.

I don’t think that is going to happen right now. We should be contained to the upside around 920. Once hit, a reactionary move back down would be a normal price move, but there is a good possibility that it will be contained. What I mean is no big sell offs. There is a parallel channel based from the recent tops, bringing support back in around 847-850 or so. I don’t know if that will hold but it will probably bounce off that number. We’ll have to look at price action at that time if, in fact, that plays out.

My last post I had talked about how the open can set the tone for the rest of the day. Today, we had a sell off early, setting the stage for a break out after the hook was set. An early morning spike down to catch up with the futures and a great looking upside break with a lot of pressure built up over the holiday, good for over 20 points.

I did not get a chance to see that set up today. I started a little late, but that is one move I would like to think I would have been in. I did not enter on the way up, my data stream has been acting a little slow. I tried to enter a couple of times as a continuation pattern was developing, but I could not get the execution done. I am running SKYPE conference line and a screen sharing program and TRADESTATION with several charts up on two screens.  When the action slowed down, it seemed to be a bit better, but I missed some big moves there.

After all of that, I know that when you get a sustained move with velocity to it, at the top, it usually moves into the CHOP ZONE, that is what I call it. I love the chop, it usually works well for me when I switch to my scalping mode, 1/2 to 1 point trades with targets. The issue was, I was in what I call T-2 trade setups. That is when you have split targets, the first comes off early, the second comes off later at  higher levels.

If you are in the chop zone, you will often only get one target and not the other. This helps to offset your losses, but it does not take your equity up very fast if at all. Needless to say, I switched to my T-1 trades (Scalp) and picked up some nice little moves here and there that added up quickly. I have included a small screen shot of some of these trades below.

There are no indicators attached to them, but I do use them, just not showing you here. I do have one tool up, that helps spot directional changes to the price action. I can trade without any indicators and at times I do, just so that I do not depend on them in the future. Indicators are usually lagging behind price, that is why you want to be able to train your eyes to spot the moves independent of anything else. You will become a better trader if you start that process. In the mean time you can use some of these tools to help you see what is present in the chart that you are not able to see on your own, at least for now.

The trades that I am showing you below, are all timed to some of my custom indicators. Some are pretty standard that have adjustments made to them and others are used in conjunction with the first. They all work together to give you market reads that you may not be able to see alone. But remember what I said about these tools, its very important that any person who wants to excel as a professional day trader, learn how price action works in relation to all the other factors.

For anyone interested in trading, I have always said that if you are well rounded and can trade differently for different conditions, you will have an advantage. I do like to take trades that I can get 5 points plus in, but it usually starts out as a scalp. My stops are small,  (at times I start out at 4 ticks, but move it to 3 – 2) .

Have you ever asked yourself what you are trading for?  Many people will say, “for the money”.  Another question: Are you willing to leave your EGO aside to reach this goal?  Many people will not. If they are being brutally honest, they want to be right and have this conquering feeling of, “I outsmarted the market”.

If you are trading for income, that puts a different perspective on the whole thing. A modest daily goal of 2-4 points per day. Reaching for too much too fast, just because you think you can, will leave you with nothing. It is hard to take a 1 point profit on a trade and watch the thing go to the moon without you, but if you are trading for income, does it really matter? You only need one more good trade for a point and a little topper of  say a 1/2 point to make a daily wage. Trade 5 contracts and you have $500 for the day. That is $ 130,000 per year at only two points per day net. If it’s 3 points that puts you at $ 200,000 a year. I would say that 2-3 percent of traders make that kind of money. How’s that for perspective?

By learning how to scalp with very high percentage fills 80% or so, you have the ability to pick that up in less than an hour a day. You can always spot special set-ups that can give you the big moves on occasion. That is just the way I see it, how about you!

http://www.screencast.com/t/0nAW1ajnZ Some of today’s trades, still shot

http://www.screencast.com/t/drQHtn1lSG Today’s equity chart

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