Wednesday’s Blog Results: Neither suggested entry triggered.
Quick Tip: Change is good.
Today’s Lesson: Keep an open mind.
Pandemic. War. Earthquake. I guess it’s over. Bad news comes in three’s right? I thought about an article I read a while back. Five Wall Street traders were commenting on how to deal with disruption in the markets. There were plenty of differences between them including chosen asset class, style, strategy, all the typical things.
There was one huge commonality, though. They all stressed keeping an open mind. Be willing to change. Markets change. Technologies change. Laws change.
Change is not always easy, though. We can get into a comfort zone and not want to leave. But we must if we’re going to grow our trading skills.
Here’s an example of why it’s so important. About 2 years ago, I launched The Daily Market Forecast. We started trading the S&P futures using one strategy with a fixed rule set.
Tuesday’s Blog Results: The suggested short @ 4204.75 ran for 26.25 points.
Quick Tip: Trade Plan Part 7
You’ve made six trade plan decisions so far, time devotion, style, capital investment, asset class, strategy selection, and risk management.
Here’s the icing on the cake. The magical component that most traders miss. The easy way to gain edge in any market, timeframe, or style. The insurance policy that you’ll always get better over time.
Documentation and review.
You should be building a database of information about every trade setup whether you took the trade or not. This trade plan component alone could fill a book. Better you learn it live. Join me on Saturday March 19 @ 10 AM ET for a free mini-course, “Ultimate Trade Plan.” We’ll dive deep into each of the 7 components and answer all your questions. Click here to register.
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4356.75 stop 4362.50 (consider...
Monday’s Blog Results: The long level ran for +46.50 points but the tight stop ended it @ +9.00.
Quick Tip: Growing Up.
You should have a rules-based trading plan with proven edge. If not, stop trading and get one.
Your trade plan is not a static document. It starts that way then grows with you and the changes in the markets you trade. As you gain experience you’ll tweak your trading plan. Some of the rules you have will be dependent on present time market conditions. Think of them as “If – Then” statements.
Yesterday’s winner is a great example. Looking at the chart you’ll see that the volume level held all morning and offered a 46.50-point runner. The suggested stop had you out with something less than 9 points. No bueno.
Your plan may have a stop placement rule that is ineffective when market volatility is extreme. Like now. Our team adjusts the maximum stop distance based on present time volatility. We used data going back several years...
Friday’s Blog Results: Friday’s Blog Results: The buy was only good for 5.75 pts. Prior level worked for 15.75.
Quick Tip: Multi beats binary.
Trading one strategy is a binary approach. You win or lose on each trade. Since all trading strategies have their winning streaks and drawdowns, trading one strategy can be difficult to handle psychologically when the losses pile up.
Last week our Volume Profile strategy had a very rough time. The binary trader will blame the war causing a character change in the market. True enough. But knowing the cause of your losses is not enough.
If the cause was you, changing your behavior is the solution. If the cause was out of your control, like the war, all you can do is quit or book losses.
Seasoned traders understand that markets regularly change character. Trading multiple uncorrelated strategies is a balanced approach. Last week, while one strategy we trade was a sizable net loser, the other...
Thursday’s Blog Results: Neither suggested level triggered.
Quick Tip: Second Place Rocks!
The volume levels suggested in this blog are two of the many on our charts. They are chosen for you, and I think they are the “best” for that day. But I’m not always right. In fact, I’m probably wrong half the time. Kind of like trades.
Which is why Second Place Rocks! The level that produced the winner shorting 4257.25 was a “tertiary” volume level. They represent a significant spike in volume but the minimum for our trading purposes. They work fine, though. Yesterday’s ran for 10-points.
Here’s how this helps you: Create a “grading” system for your trade setups. Make it simple so you can instantly decide. Capture the results data for all trades, even those you didn’t take. One of the data points you’ll keep is the “grade.” Once you have at least 100 trade results for each “grade” you can...
Wednesday’s Blog Results: Neither suggested trade triggered.
Quick Tip: You need therapy.
Trading is more psychology than math. Greed, fear, hope, and other emotions negatively affect our performance. Dr. Woody Johnson, trader psychologist, is our guest blogger today (next post). Enjoy!
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4274.25 stop 4280.50.
Long Level: Buy 4193.50 stop 4187.75 (same as yesterday).
P.S. Tired of trading alone? Need more quality setups? Join our team of great traders and accelerate your performance. Copy down this coupon code WINTER2022 and save 100 per month for life on your membership. Click here for FREE video training and details.
By Dr. Woody Johnson
Paulo breathed a heavy sigh as he thought about the next day’s preparation. He was still attempting to recover from today’s session, which was emotionally whipping him as my grandfather used to say, “…like he stole something!” He felt fragmented and frustrated. He knew that his research and preparation for tomorrow’s trading was crucial. Paulo also knew that his state of mind was not conducive to the sharp focus of his A-Game, which was required for preparation that was not distorted by poor judgment or distracted by noisy thinking.
He had several mental/emotional tools that he could use when his emotional temperature was too extreme for making prudent decisions. But he was so disgusted with his results from this day’s trading, which included several losses, two rule violations and a premature exit that left him at break-even only to watch the price action move decidedly in his direction...
Tuesday’s Blog Results: The suggested short @ 4263.75 stopped out. The Globex session prior was “perfect” (see chart).
Quick Tip: Trade at night.
Taking a break from the Trade Plan today to show why it’s so important to trade futures if you’re a day worker.
Most futures markets are open 23 hours. They start at 6 PM ET. This gives day workers the opportunity to reap the benefits of day trading. The evening session is called the Globex. It trades differently than the day session. Different players, less volume, easier trading. Every afternoon at 5:15 PM ET our team gets a detailed trade plan for the upcoming Globex session.
The chart above shows what a “perfect” Globex session can look like. Four trades were triggered and they collectively produced 148.25 points. What’s even more impressive is how little price moved against each of these trades.
Reality: You didn’t get all 148.25 points. Why not?...
Monday’s Blog Results: The suggested short level @ 4322.00 caught the top of the market and ran for 124.00 points at the close. How much did you bank?
Quick Tip: Trade Plan Part 6
You’ve made five trade plan decisions so far, time devotion, style, capital investment, asset class and strategy selection. Next is risk management.
There are seven main risk management rules you should incorporate in your trade plan:
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4263.75 stop 4268.50.
Long Level: Buy 4140.75 stop 4135.75.
P.S. Tired of trading alone? Need more quality setups?...
Friday’s Blog Results: The suggested buy level and the subsequent breakout lower both failed. What you didn’t see were two other immediate losers that our team experienced. Losing streaks and drawdowns happen. In tomorrow’s blog we’ll propose some risk management rules to help you weather these storms.
Quick Tip: Trade Plan Part 5
You’ve made four decisions so far, time devotion, style, capital investment, and asset class. It’s time to think about your strategies.
Dozens of different methods of trading can be profitable. If you doubt this statement read any of Jack Schwager’s “Market Wizards” books. In fact, you should read his books before you finish your trade plan. You’ll get plenty of ideas.
In each book he interviews top traders from around the world. Dozens of them. What you’ll find is that almost every trader has a different take on how to trade.