Friday’s Results: Neither suggested level triggered.
Quick Tip: Power in confluence.
You have a trade plan with specific rules of entry and exit that produce a positive expectation (if not, get one or quit trading). If EVERY trader used the same plan and followed it precisely there would be no one to trade against.
You WANT and NEED traders to do something different than you. This is a good thing. Now if you want to step up your performance you’ll learn OTHER popular trading strategies. Not necessarily to trade them, but to consider what OTHERS may be doing at the same time.
Here's a simple example: the 20-period moving average is a popular technical indicator. You may not use it because it is a lagging indicator or you haven’t been taught HOW to make it work. Regardless, there are traders who use it. Put it on your chart.
Why? Because if your strategy is getting a signal to enter around there you might be finding some confluence (with other trade plans). If...
Thursday’s Results: Buying 3875.50 ran for 40.75 points. Shorting 3950.00 offered 7.50 points.
Quick Tip: A Different View
In technical trading there are only a few variables to consider: price, volume, and time. Every technical indicator or method is derived from variations of these variables.
Most traders look at volume within a time interval. Your chart will display a histogram at the bottom showing the varying volumes traded. Good to know.
A different view would be the volume on the price axis of the chart. Now you see the volume at specific prices. Much better to know.
Why? Large lot traders approach buying and selling different than small lot traders. When we want to buy or sell we click a mouse and it’s done. Our position size is small.
Large lot traders can’t do that. They need to accumulate and distribute their positions in their chosen price ranges. Why would you NOT want to know where the value price is in the eyes of the traders...
Wednesday’s Results: The suggested buy at 3932.75 triggered late and bounced for 4.75 points before failing.
Quick Tip: Time Filters
One easy and excellent filter you should apply to your strategies is “time-of-day.” Your broker should have a download available to you with time stamps on all your trades. Import this to a spreadsheet and sort the trades by time of day. If you have enough trades you may see a pattern.
Going forward, its’ better to capture more information about each trade to fine-tune your filter. For example, one strategy here offers both reversal and breakout trades. With that appended to the time-of-day data, you can see if there is an edge for either of those trades. Obviously, you’ll customize your data captured to fit your rules. Remember to document all trade setups, not just the trades you took.
Here’s how this can be helpful: Yesterday’s buy suggestion triggered at 3:45 PM ET. Not much time left in the session. It was...
Tuesday’s Results: Neither suggested level triggered.
Quick Tip: Proactive Waiting
Plenty of time in trading is spent waiting. Waiting for a setup, waiting for an economic release, waiting for a profit target. Lots of waiting.
Here’s how to make this “downtime” productive: Get proactive. Get in the habit of asking “What if…?” questions. Answer them. In doing so you’ll be making decisions in advance and be able to act on the spot. No wondering, guessing, procrastinating or flat-out missing the trade. You’ve committed with foresight.
Here's a simple example: Price is slowly moving sideways. Your entry price to buy is far enough away that you don’t expect to see it trigger soon. Suddenly price plunges. The speed candle down is looking powerful.
Now is the time to anticipate, be proactive. Will it continue or reverse? Do you see any other chart features that could stall it? Accelerate it? What are the likely outcomes?
Monday’s Results: Buying 4002.00 stopped.
Quick Tip: Reframing
As you review your trades from yesterday you’ll likely pause at the suggested buy at 4002. It was stopped out by only 3 ticks and then ran for more than 40 points.
Was the stop too tight? Was the entry too soon? You’re thinking about how you could have gotten into the trade.
Now if you’re a discretionary trader with no evidence of edge, just intuition and experience, that may be the correct review process.
Our team is rule-based. We work with statistically relevant evidence to make trading decisions. Pondering the reasons how we could have “made” it a winner is a waste of time. Specifically, we know that our entry and stop were correct probability-wise.
The review process then becomes “reframing.” Taking a negative and making it positive. Ask yourself, “More or less, did that volume level work?” Yes! It picked an intraday “V” bottom and triggered a...
Thursday’s Results: Buying 4181.50 only offered a quick 6.75-point bounce.
Quick Tip: Parabolic Moves
Trending price moves in impulses and corrections in both directions. Three steps forward, one back. The trend continues until price moves sideways in a range. Eventually a new trend starts. Look at plenty of charts and notice this repetitive pattern.
Sometimes the trend portion of the pattern doesn’t move in impulses and corrections. It’s a smooth series of vertical candles Like Wednesday afternoon. This is a fabulous “tell” that price may move in the opposite direction just as fast. We don’t know when. This week it was the very next day! Other times you’ll find a range form before the reverse move.
Get in the habit of marking these parabolic moves on your charts. It will prepare you for a potentially sizable winner when the reversal occurs, or the new range breaks out.
Tuesday’s Results: Neither suggested level triggered on pre-FOMC trading.
Quick Tip: Rich & Quick Don’t Mix
A favorite book of mine is “The Road Less Stupid” from esteemed business manager Keith Cunningham. I bought it before knowing what it was about because the title was all I needed to read. You absolutely MUST get something beneficial from a book with that name!
It ends up being great advice on starting and running a business. Some of the advice is applicable to other areas of life as well. His writing style is easy-to-read, direct, and fun. Go buy it.
The industry of trader education is packed with “Kool-Aid” vendors. You know, the “How to Work only 4 Hours a Week and Retire a Millionaire by Next Year!” authors. Cunningham shares a fact that you should know which I found very interesting. Warren Buffet invested full-time in the stock market for 9 years before he made his first million. Ha! Not a great name for a book is it?...
Monday’s Results: Price fell below our buy level before the open killing the trade. No entry on the short idea.
Quick Tip: Set Your Payday
If you’re like most retail traders you are focused on growing your trading account so you can increase your risk and ultimately your expected reward. Taking a “paycheck” from your trading account seems like taking a step backward.
The trading account is intangible. The figures on the statement don’t mean the same to you as a tangible reward. Psychologically, you NEED to be rewarded for a job well done. Make those wins REAL.
Here’s a simple formula for getting paid, growing your account, and improving your trading skills simultaneously:
If you’re more interested in growing the...
Friday’s Results: The suggested long entry stopped out for a 4.75-point loss (per contract).
Quick Tip: Thought Journal
Documenting all your trade setups, taken or not, is critical to improving results. It’s quick and easy to do. With many strategies the information can be downloaded directly from your trading platform. There is no excuse NOT to have this valuable data.
Then there is the more important information most traders ignore… their thoughts and feelings. Trader psychology author and trainer Dr. Woody Johnson suggests that 80% of trading success is based on your personal psychology. If that figure is anywhere near accurate then you should be keeping what he calls a “Thought Journal.”
Start with the trades you take. You want to make this habit easy to acquire. Immediately after you place the trade log your mental condition. Sharp? Alert? Foggy? Fearful? Describe your feelings. Did you follow ALL the rules? Log the results of the trade afterward....
Thursday’s Results: Neither trade triggered.
Quick Tip: Expectations
“What are you struggling with?” was the question I asked a group of traders recently. One woman said she had expectation challenges. She felt she needed to acknowledge that every trade cannot be a home run, or “10 to 1” as she phrased it.
I respect her self-awareness. Expectations is not a commonly voiced trading challenge. But it is real. You can expect too much and foster disappointment. You can expect too little and minimize your profits. Neither view is healthy for your ultimate results.
If you are documenting all the trades of your strategies (taken or not) then you will have hard evidence and know what to expect most of the time. The challenge arises when the market changes character and you are still “expecting” something different to happen.
In “The Disciplined Trader” by the late Mark Douglas, he identifies nine critical trading skills.
#6 - Learning...