Trade Aptitude

Results of Tuesday’s Best S&P Futures Turning Points: Shorting 4492.50 stopped out. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets, which saved yesterday’s buy): 

Buy 4475.25 stop 4471.00. Short 4543.75 stop 4548.25.

The World Sentiment Index: (+100/-100) plummets from +64 to Zero in a world of mixed low-volatility sentiment. 

Catalysts: ADP Payrolls @ 8:15. GDP & Trade Balance @ 8:30. Pending Home Sales @ 10:00. Crude Oil Inventories @ 10:30. 

Quick Tip: How You Doing? 

We all have financial goals we’re working toward. The retirement “number” which eliminates our dependence on a shaky social security system. The short-term trading cash flow profits that pay for the fun stuff. 

When you progress toward these goals you’ll notice that it’s not a smooth result. You’ll have ups and downs. The downs are...

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Trade Aptitude

Results of Monday’s Best S&P Futures Turning Points: Neither suggested level triggered in a choppy narrow range session. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets, which saved yesterday’s buy): 

Buy 4405.00 stop 4400.25. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) eases up from +50 to +64 with all major world markets Bullish except the S&P futures (flat). 

Catalysts: Home Price Index @ 9:00. Consumer Confidence & JOLTS @ 10:00. With the Fed focused on data for interest rate decisions it’s likely that reactions to economic releases will be heightened. 

Quick Tip: What is a Big Risk?

A big risk is not in the trade itself. It’s in the losing streak. 

Billionaire hedge fund founder Bruce Kovner said “Novice traders trade 5 to 10 times too big. They are taking 5 to 10% risks on a trade they...

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Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: Neither suggested level triggered. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets, which saved yesterday’s buy): 

Buy 4364.25 stop 4360.75. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) jumps from zero to +50 with all major world markets neutral to Bullish. 

Catalysts: Nothing on the economic calendar. Higher interest rates appear here to stay for a while = strong USD, tougher on stocks.

Quick Tip: Today’s Edge

All-star trader Larry Williams in his book Long-Term Secrets to Short-Term Trading loves to analyze trading from a seasonal perspective. Seasonality in this case is a general term for segmenting times, not just the four seasons. Times can be measured many ways, 15-minute duration, days, weeks, etc. The combinations are nearly endless. 

One powerful...

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Trade Aptitude

Results of Thursday’s Best S&P Futures Turning Points: Buying 4411.25 stopped out (maybe). 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets, which saved yesterday’s buy): 

Buy 4307.50 stop 4303.25. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) plummets to zero from +57 with Asia Bearish and the west mildly Bullish. 

Catalysts: Revised UofM Consumer/Inflation Sentiment @ 10:00. Powell speaks @ 10:05. Jackson Hole updates. 

Quick Tip: Adjusting Targets & Stops

Yesterday’s buy level stopped out with the suggested stop but given the speed (volatility) of the approach to entry you might have used a wider stop with less size. That turned a small loser into a decent winner (see chart). 

As market conditions change so should your expectations. Your trade plan has entry and exit rules (for both loss and profit) but if those rules...

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Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: The short @ 4457.50 did trigger (and stop) in the post market but was cancelled due to market volatility from NVDA earnings release. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4411.25 stop 4407.50. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) rises from +36 to +57 with all major world markets Bullish. 

Catalysts: Jobless Claims & Durable Goods @ 8:30. NVDA motivates a risk-on mood. 

Quick Tip: Strategy Diversification

Given enough capital diversification becomes mandatory. You’re unlikely to have one asset in your 401K. You have a basket of uncorrelated assets to smooth your equity curve. 

But what about strategy? You’ve probably never heard of a hedge fund that ran “one” strategy. Diversifying by strategy makes sense when you consider the...

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Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: Neither trade triggered. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4388.75 stop 4383.00. Short 4457.50 stop 4462.25. 

The World Sentiment Index: (+100/-100) eases from +64 to +36 with most major world markets Bullish. 

Catalysts: MFG & Services PMI Flash @ 9:45. New Home Sales @ 10:00. Nvidia earnings will be the pivot (trend trade the Globex tonight?).

Quick Tip: History of Trend

You know it all when you don't. My sons reminded me of that. As they approached their teens I noticed they were all smarter than me. Or so they thought.

This made me recall how I was as a teen. Yup. Dad was wrong and I was right. In my infinite "wisdom" back then I decided history was a waste of time. I barely passed those classes.

A couple of decades later I became regretful. History is vitally important. It's...

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Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: Neither trade triggered. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4364.25 stop 4359.25. Short 4457.50 stop 4462.25. 

The World Sentiment Index: (+100/-100) jumps from +14 to +64 with all major world markets Bullish. 

Catalysts: Existing Home Sales & Richmond MFG Index @ 10:00. Fed-Speak from 13:40 to 15:30. More bank downgrades. 

Quick Tip: Take the Profit?

Rule-based trading is essential for any trader who doesn’t have extensive experience and success already. Eventually you can get to a discretionary state, relying on your intuition and experience, but not at first. 

There is a middle ground, though. A level of intuition and experience where you start to be slightly flexible with your rules. 

A good example of this is open trade management. Let’s say...

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Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: Neither trade triggered. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4357.50 stop 4353.25 Short 4457.50 stop 4462.25. 

The World Sentiment Index: (+100/-100) soars from -64 to +14 with China firmly Bearish and the west Bullish. 

Catalysts: Nothing on the economic calendar. China continues to struggle. 

Quick Tip: Math Meets Psychology 

Much has been said about the similarities between trading and gambling. Much is true. All is not. A fabulous book you should read about this topic is A Man for All Markets by Edward O. Thorp, an accomplished mathematician, author of Beat the Dealer, and acclaimed hedge fund manager. 

When Thorp tested his blackjack card counting system in the real world, financed by two wealthy (and greedy) millionaire businessmen, he uncovered a significant...

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Trade Aptitude

Results of Thursday’s Best S&P Futures Turning Points: Buying 4387.00 stopped out.

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4339.25 stop 4334.00. Short 4421.75 stop 4427.50. 

The World Sentiment Index: (+100/-100) drops from -7 to -64 with all major world markets Bearish on rising volatility. 

Catalysts: Nothing on the economic calendar. China continues to struggle. Bond yields are staying high. Risk off. 

Quick Tip: Leftovers

Once you exit your winning trade there are only two outcomes. 

1. You left money on the table. 

2. You got out just in time.

Which do you suppose happens more often? 

The point is wherever we decide to exit, much if not most of the time you’ll leave money on the table. Knowing this in advance should alleviate some emotional reaction to being “wrong on that one.” 

There is benefit in...

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Trade Aptitude

Results of Wednesday’s Best S&P Futures Turning Points: Buying 4412.50 filled in the Globex session last night and ran for 18+ points so far, still open. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4387.00 stop 4382.25. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) advances from -43 to -7 in a world of mixed sentiment and very low volatility.  

Catalysts: Jobless Claims & Philly Fed MFG Index @ 8:30. Bond yields jump on Fed Minutes. 

Quick Tip: Why Day Trade?

If you have a long-only portfolio, IRA, and/or 401-K you’re probably happy with your 2023 performance so far. You’re also concerned about the recent slide. With September and October having some history of trouble, you may consider hedging your longer-term investments. 

You could buy index put options as insurance. That’s an expense,...

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