Here’s an important quote from Nassim Taleb, celebrity author of Black Swan and Antifragile, “Whether it’s Covid, vaccines, Bitcoin, or stuff about elections, we’re swayed by the anecdote. So, our world is becoming more complex, requires more statistical sophistication while social media is driving us to the most primitive way of thinking.” 

Basically, he’s saying that we can be swayed by single or random events or stories rather than robust statistical analysis, adequate numbers, and scientific rigor. 

This pertains to trading perfectly. You see a one-off winning event and are wanting to repeat it. Maybe it even happened a few times. But how robust is that analysis? Not at all. 

Before changing your plan or trading the anomaly you just saw, do some research. If you’re able to code the event in back-testing software like EasyLanguage from TradeStation, do it. If not you’ll need to scan the prior price charts by hand. 

What are you looking for? Start with a sample size of 30 events....

While we can’t predict the future exactly we can approximate the future. Take price action for example. Price is either: 

1. Trending and volatile.

2. Trending and quiet.

3. Range-bound and volatile.

4. Range-bound and quiet. 

A complete trade plan would include different strategies that are in harmony with each of these market conditions. With that, you can align your working strategy with the current market conditions.

Knowing the present condition is easy, the challenge becomes which condition is next and when will it change? 

Technical indicators are helpful. Yes, most are lagging and we’re always looking for leading information but used skillfully indicators can help build your case for timing the change in market conditions. 

Bollinger Bands are a fabulous indicator for this purpose. They clearly display trends and volatility, the key data points to consider. 

In reading his book, Bollinger on Bollinger Bands, I found a pearl of trading wisdom that stuck with me, and I u...

A critical component to our trade plan is the review process. Let’s face it, we’ll never improve at anything unless we know what to change. The other key benefit to a comprehensive review process is how it increases our confidence in our strategies. 

Review starts with documentation. You’ll capture several data points for every trade the strategy teed up regardless of whether you took the trade or not. 

Here’s the data we capture for our futures day-trading team. 

1. Date, Day of week, Catalyst(s) (news, earnings, etc.).

2. Overnight range, Expected day session range. 

3. Inside/Outside day, daily pivots, hourly trend, daily trend.

4. Average True Range, day session range, ATR targets up/down, supply/demand levels, volume profile levels. 

5. Trade data: taken or not?, time in, time out, entry price, stop loss, target(s), risk/reward, Maximum Favorable and Adverse Excursion, result. (Note: if you use other technical indicators like RSI, moving averages, etc., their values would b...

As Thomas Paine said, “Lead, follow, or get out of the way.”

How does this apply to trading? From a stock trading perspective “leading” implies one has performed exhaustive research and has uncovered a stock that has positive fundamental, technical, and marketplace metrics. “Following” on the other hand implies you know this analyst and they shared their findings with you. 

Or would you rather know the executives running the company?  

Who would you rather follow? 

Unfortunately, we don’t have a snowball’s chance in Hell of getting any tips from the insiders. It would be illegal anyway. 

But there is one way to legally “follow” the insiders without knowing them at all. Our team does this every day with outstanding results and I want to share this strategy with you. 

Join me today, Thursday February 6th @ 1PM for a training session on this strategy. Click here to reserve your seat. 

Here’s what we’ll cover on Thursday:

The best leading indicator of stock price explosions.

The r...

As a 25-year trading veteran, I’ve seen plenty of winning and losing streaks, and I know how dangerous they can be—especially for less experienced traders. Here’s what I’ve learned over the years to help manage the streaks. 

On Winning Streaks: 

1. Stay humble. The market is always waiting to humble traders who get overconfident.

2. Lock in profits. Consider scaling out of trades instead of holding full positions too long.

3. Take a step back. If you’ve had a great run, consider reducing risk or taking a break to clear your head.

On Losing Streaks:

1. Cut back on trading. Reduce position size and frequency until you regain confidence.

2. Analyze your trades. Review what went wrong—was it the market, or your behavior?

3. Recenter yourself. Walk away if you’re frustrated or switch to simulation mode.

4. Stick to proven strategies. Don’t jump from one strategy to another just because of a few losses.

5. Accept that losing is part of the game. Every trader loses. The key is to lo...

To survive and thrive in trading managing risk is critical. The basic component in your risk management plan is the stop loss (how much you are willing to lose on each trade). Before determining the stop method you’ll use, make sure the dollar amount of the loss truly fits your personal risk tolerance. 

There are many types of stop loss methods including:

1. Fixed dollar amount

2. Maximum Adverse Excursion 

3. Volatility

4. Moving Average

5. Time

6. Opposing entry signal

7. Percent Retracement

Just like your choice in style of trading, your stop loss method needs to resonate with your personality. You must trust, even like it. 

Given that markets change in volatility constantly the volatility stop is an excellent choice. This method will adjust the distance from entry to stop based on present time volatility. One simple formula uses a multiple of the Average True Range. This method will tighten the stop when the market is calmer and widen the stop when the market is volatile....

Legendary golf coach Harvey Penick wrote in his best-selling Little Red Book that you could build a solid game of golf around one club, the 7-iron. If Harvey were coaching you he would say “Simplify. Focus. Pick one club and master it.”

While that’s a sound plan to get started it won’t win you any tournaments. 

The same goes for successful trading. Focusing on one strategy or style of trading until you’ve mastered it is a great start. But market conditions change, and strategies get hot and cold. You’re best served by having the skill to trade effectively in varied conditions. 

Is the market trending or range-bound? Is the market volatile or quiet? Pick your “club!” 

Once you master your first strategy make sure the next one is complementary not competitive. Make sure it addresses different market conditions and allows you to trade in different timeframes. Have trend, reversal, day, and swing trading versions. 

Our trading teams focus on multiple strategies for day trading futures...

Pre-Paying

Before online retailing we went to a brick-and-mortar store. We saw, touched, used and/or fitted the merchandise. Then we decided and paid. Very safe, the sequence of paying afterward. 

I recall the first time I wanted to buy shoes online. It was a hard decision. I wanted to try them on, feel the fit, and not have the hassle of shipping them back for a refund. Eventually I gave in and judging by the growth of online retailing, most everyone did too. 

If you’re comfortable now with buying from an online retailer, you are one step closer to being an unemotional trader. 

Think about trading this way: The price you’re paying to enter a trade is your pre-determined stop loss. That’s the most the trade will cost you. The “merchandise” you’re expecting is the profit target(s). Pay a fixed amount in advance, receive an unknown amount back. 

Imagine you’re writing a check to Mr. Market when you enter your trades. If you have this mindset that the "check" was cashed and out of yo...

It’s easy to get lost in the price charts, technical indicators, price patterns, and economic data looking for trade setups. However, when it comes to identifying why any tradable asset may move significantly in price, few factors are as influential as a catalyst.

Today, the FOMC releases an interest rate decision and holds a press conference announcing their view on the economy and future interest rate direction. A catalyst like this is easy to manage. We can prepare our response since we know when it’s coming.

If you’re trading stocks or options your primary catalyst is earnings season (MSFT, META & TSLA report tonight). We don’t know the direction a stock will take until after the announcement, but like the FOMC release, we can prepare ourselves for a trade decision in either direction. 

The best catalysts are those that are unknown to the public: the “surprise” news announcements. The price reaction to these can be extreme because traders are caught off guard. 

Here’s the good ...

If trading is 80% psychological that leaves 20% to the edge your strategy has. We really don’t know if the 80% figure is accurate but you’ll hear a big number like that from many skilled traders and coaches. Regardless of the accuracy, how we behave as traders is vitally important. 

Back when racquetball was popular I was a competitive player and hired a coach to improve my performance. Here’s the dialog from our first lesson. 

Coach: “Why do you want to play racquetball?” 

Mike: “Exercise, gets me in shape, fun.” 

Coach: “You have it backward. You don’t play to get IN shape. You get IN shape to be a winning player.”

Mike: “Aha!”

I was approaching the game out of sequence. That first lesson ended with me getting a detailed exercise regime and the directive to follow it precisely before next week’s lesson. 

Sometimes what we’re looking to achieve has a hidden sequence. In trading, knowing yourself and addressing weaknesses should be early in the sequence. How much time do you spe...