Happy New Year! The next blog is part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior seven posts, you can find them here. 

Brokerage risk is rare but real. Ask anyone who had money with FTX. Keeping your trading accounts with reputable brand name brokers regulated in the USA is the safest decision. If you’re comfortable with offshore and unregulated brokers then start with a very small account and regularly take money out of it. That should give you some comfort that you’ll get your money when you want it, but it won’t guarantee that when you want a large distribution you’ll get it. 

Market risk is unavoidable. Major catalysts happen with no notice. Think about the reaction to the pandemic. Your best protection against market risk is a personal financial plan that is diversified among uncorrelated assets. Stocks, bonds, precious metals, real estate, cryptos, art, etc. Your best protection is having multiple income streams from ...

Newbies Only Part 7

Happy New Year! The next few blogs are part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior six posts, you can find them here. 

There are more risks in trading than the loss on any given trade. Here’s a few to consider. 

Liquidity risk. You’re buying and selling. That means someone needs to be your counterparty at a fair price. The difference between the bid (buyers) and ask (sellers) is called the spread. If this is wide enough it will ruin the edge your strategy has. 

Spread changes not only with the asset itself, but during changes in volatility. For example, the spread on the most popular ETF, the S&P Index (SPY) is less than 1% in the options market. Similarly priced stocks can have spreads of 10% to 20%. The spread is your cost of doing business with that asset. Avoid assets with a wide bid/ask spread.

Furthermore, the spread of any assets can increase during volatile markets. Consider the FOMC relea...

Happy New Year! The next several blogs are part of a multi-part process to tune up your trading plan for the coming year.

Yesterday you determined your starting and subsequent risk capital contributions. Along with your prior choice of time horizon (day, swing, or position) you’re ready to find the perfect asset to trade. 

Best choices… 

Position Traders: Stocks (high capital requirement) and Forex (low capital).

Swing Traders: Stocks (moderate capital), options, Forex, and futures (all low capital).

Day Traders: Stocks (moderate capital), options, and futures (low capital). 

You can now see that finding the market you’re best suited for is a combination of your time commitment and your risk capital. 

You’ll also notice that trading stocks require more capital. The reason is leverage, or lack thereof. Disciplined use of leverage is critical for trading success. 

The stock market offers you 2:1 leverage, and you’ll pay interest on the borrowed amount. Not as attractive as option...

When this blog was launched on July 29, 2021, the focus was on day trading the S&P Futures using a version of Volume Profile for strategy. Over time the content has broadened to include other strategies, stocks, options, swing trading, trade planning, and psychology. This new format should better reflect these changes. Thanks for reading and comments for improvement are always welcome.  

Newbies Only Part 3

Happy New Year! The next several blogs are part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior two posts, you can find them here.

Yesterday you chose a time horizon to trade within and created a “calendar” with times blocked out for your trading tasks, research, execution, and review. 

It’s time to decide how much starting capital you’re contributing to your new “business.” This should be risk capital, meaning money you can afford to lose both financially and psychologically. 

Don’t fool yourself with this decision. Make ...

Thursday’s results: No trades suggested.

Today’s Best S&P Futures Turning Points: Buy 6023.75 stop 6018.00. Short 6097.25 stop 6100.75. 

The World Index: (+100/-100) dips from +29 to +14 with sentiment mixed but leaning Bullish on falling volatility. 

Catalysts: International Trade @ 8:30. Crude Oil Inventories @ 13:00. 

Quick Tip: Risk/Reward

You must have a risk management section built into your trade plan. Without it you’ll fail at trading sooner or later. Many traders think their chosen stop loss order is their risk management plan. That’s not enough. Here’s a list of all the risks you need to cover in your plan: 

1. Trade

2. Psychological

3. Market

4. Liquidity

5. Strategy

6. Brokerage

This game suddenly looks riskier! How do you balance concern over all the risks with a focus on a positive expectation? Target asymmetrical results.

For example, our swing trading team executes a powerful strategy that had a phenomenal 2024. For most of the team, the number of losing t...

Tuesday’s results: No trades suggested.

Today’s Best S&P Futures Turning Points: Buy 6023.75 stop 6018.00. Short 6134.25 stop 6138.50. 

The World Index: (+100/-100) remains at +29 with sentiment mixed but leaning Bullish on rising volatility. 

Catalysts: Jobless Claims @ 8:30. 

Quick Tip: Volume Leads Price

For as complex and chaotic as the markets can be, price chart traders only have 3 variables to analyze. Price, volume, and time. Most technical traders agree that volume leads price. 

Price moving up with volume increasing is very bullish. It’s hard evidence there is plenty of buying interest. Conversely, price moving up with decreasing volume is not as bullish. The buying interest is waning. 

Price moving down with volume increasing is very bearish. The selling interest is strong. Conversely, price moving down with decreasing volume is not as bearish. The sellers are weakening. 

How can you use this data? For tuning your entries and exits. 

If you’re a breakout trader and ...