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.
Thursday’s Blog Results: The suggested short pegged the top of the day session and ran for 20 points to the next level. Aggressive traders saw this trade run for 70 points and close the day with 50!
Quick Tip: Trade Plan Part 4
You’ve made three decisions so far, time devotion, style, and capital investment. It’s time to pick your primary asset class.
Position Traders (six figure account, several hours available every month): Stocks, Options, Bonds, Forex. The stock market is the familiar to most and there are plenty of research resources available at modest cost to help pick and manage your portfolio.
Dividends are a great benefit. Using options to buy (cash-secured puts) and sell (covered calls) your positions will add to your ROI with no added risk.
Most stocks move with the overall market. The adage “a rising tide floats all boats” applies. This means you may be diversified within the stock market owning different sectors, but you’re...
Wednesday’s Blog Results: Neither suggested level triggered.
Quick Tip: Trade Plan Part 3
You’ve made two decisions so far, time devotion and style. You’ll treat this like a business so let’s be professional and examine the startup capital required.
Technology: Computer, printer, cell phone, back-up power supply, reliable high-speed internet access, WIFI hotspot (backup internet access). If you’re day trading you’ll need multiple monitors, the fastest available internet access, and a hard wire connection, not WIFI. You probably have this technology already but if not, go shopping. The software you’ll use will probably be provided for free by your broker. If not, consider Ninja, eSignal, or MetaStock.
Education: Learning trading is not like riding a bike. You’ll need continuing education, coaching, and support. This investment is worth it at almost any price. Why? Because without it you’ll likely lose far more making mistakes you...
Tuesday’s Blog Results: Both suggested entries stopped out within minutes of each other. That was a good test to see if your risk number is appropriate! Read the January 21, 2022 blog on how to find your risk number.
Quick Tip: Style
How much time are you able to devote to your trading? That was your homework from yesterday. The answer guides you to the next step in refreshing your trading plan: Style.
Your broad choices are day, swing, or position trader.
If you have a modest amount of time available, 6 – 8+ hours a month, position trading could be your choice. These are trades you will usually keep open for months, maybe years. You’re looking to catch a long-term trend and in many cases dividend income.
If you have more time, 6 – 8+ hours a week, swing trading could be your choice. These are trades you will usually keep open for days, maybe weeks. You’re looking for short-term movement attempting to catch the “swings” of price up and down....
Monday’s Blog Results: The suggested short was only good for a 5.50-point scalp. The breakout upon failure was a bit better at 9.50 points. Two small winners.
Quick Tip: Time comes first
You have a rules-based trade plan (if you don’t, quit trading and create one). It might be time to refresh it.
One way is to simply read it and consider your current situation (goals, capital, etc.) then update what needs to be changed.
A better way is to start fresh, as if you don’t have a trade plan yet. This will get you thinking more creatively and likely produce a much better plan. You’ll have to do some research and learn the trade plan process and components all over again. As Jim Kwik wrote in his best-seller Limitless, approach reading (learning) as if you know nothing about the subject. Bring no baggage or limiting beliefs.
Let’s do this together over the next few days.
Time comes first. That is, how much time can you devote to trading? What time...
Friday’s Blog Results: The suggested short stopped out for a 4.25-point loss (per contract). The long didn’t trigger.
Quick Tip: Contrary is good.
The Wall Street definition of a correction in the market is a 10% drop from the high. All indexes but the Dow did that last week. A possible short-covering rally late in the week repaired the situation.
What’s next is anyone’s guess but looking at evidence from past performance can be useful. Here are some interesting S&P statistics that may help you with your long-term portfolio plans (day traders don’t care about this).
In the past 33 corrections the S&P went on to Bear territory 7 times. The other 79% of the time it reversed to new highs.
The average correction was -15%. We hit that last week. The average Bear market was -36%.
Moving over to the Dow, in the past 29 events of global crisis (think wars, terrorism, Covid, Ukraine), the average drop was 11.6%. After 3 months it was up 11.3%, 6 months...