Trade Aptitude
Results of Tuesday’s Best S&P Turning Points: The suggested buy @ 4029.75 offered 10.50 points.
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Buy 3990.00 stop 3985.75. Short 4050.25 stop 4053.75.
The World Sentiment Index: (+100/-100) EASES up from -57 to -43 with all major world markets Bearish except the S&P Globex seeing an early morning rally to positive.
Catalysts: FOMC Minutes @ 14:00. G20 Meetings begin (ending Saturday).
Quick Tip: Sizing
New traders are usually focused on finding great entry signals. Clearly, we don’t want to enter randomly but the more important decision you have is WHEN and HOW to exit. That’s where the money is made or lost.
The worst situation to be in trading futures or options is having one contract. Fortunately, with so many micro contracts in futures to select from even smaller account holders can trade multiples. This gives you the flexibility to “scale out” of the trade one contract (or more) at a time.
Ultimately, your size is a function of your acceptable risk. How much you’re willing to lose when stopped out will determine your size. Trading micro contracts, if you’re willing to lose $120 on a trade and the per-contract risk is $30, then your size is obviously 4 contracts.
The challenge you have with day trading is market noise. The bigger picture trend may look smoother than the trading timeframe chart. One way to mitigate this is to set a high probability profit target as your first exit. Call it a “risk management profit target.” It gives you a little win, reduces your risk substantially and leaves you with more contracts to make a better return on.
Yesterday’s trade only offered 10.50 S&P points favorable. By expecting a longer run and not taking a quick profit on a portion of your position you likely saw a winning or breakeven trade become a loser.
Instead of deciding when to exit while in a potentially emotional state, it’s better to select those exits in advance. Chart features, market geometry, technical indicators and more are all viable ideas where price may stall or turn against you. Take a few minutes before your entry gets filled and visualize where you’ll exit and place those orders. You can always adjust for changing market conditions but starting with a decision and “known” reward/risk is important.
Our team day-trades multiple strategies with edge in a live online environment. Selecting proper exits is always done prior to entry. Join our team, learn the strategies, and trade live with us daily for 30 days. Money back if you’re not blown away!
Trade Fearlessly,
Mike Siewruk