Today’s Lesson: Prepare yourself more.
There are countless ways to beat the market. Your first challenge is finding a method that is in harmony with your personality, time commitment, finances, and goals. Once you find that, trading should be easy, right? Nope.
The second (and more difficult) challenge you’ll face is yourself. Impulsivity, impatience, need to be “right”, etc. There are countless ways to beat yourself, too!
One trick I’ve found very useful is mental preparation. Instead of getting up, brushing my teeth, downing a coffee and looking for trades, I’ve developed a morning routine that leaves me energized and focused. Mental preparation increases your confidence as well. Confident traders are good traders.
Find your own routine but to give you some ideas, here’s mine:
For Thu 211007 (Plenty can change by the open, be aware.)
Globex Review: Thursday blues may be back. Two takeable trades, one loser and one small winner (which was the start of a great move up, but shaken out by our stop )
Day Session Analysis: Sentiment is BULLISH. Stats suggest SHORTS will perform SLIGHTLY better. Looking for quality trades in either direction. Thursday (both sessions combined) garnered ONLY 4% of all the gains over the past 5 years in dollars. Breakouts (95%) crush Reversals (5%). Consider not trading Volume Profile. Trading ES/CL/GC using BB Rev with MORE new filters (download the new Edge). VERY cautious about credit spreads.
S&P 500 Futures CPL: 4309/4315. We’re trading ABOVE the CPL (short edge below, long edge above) and ABOVE the equilibrium 4328.75/4330.75 (open below = short edge, open above = long edge).
The World Index: (+100/-100) SOARS from -92 to +83 with all major world markets very bullish (remember our contrarian alert yesterday?) Today:...
Today’s Lesson: Write a check. Well, not exactly (who does that anymore anyway?). This is about a risk management trick I learned from a really great trader. I can’t remember if it was Larry Williams or Jake Bernstein.
First, never risk more than you can afford to lose both financially and psychologically. Be honest with yourself. If you’re not, you will definitely find out when the losing streak happens. So, take that “per trade” risk and multiply by 4 or 5 to get closer to reality.
Second, and this was Larry or Jake’s trick… when you enter the trade visualize you just wrote a check to Mr. Market for the stop loss amount. It’s gone. Out of the account. You spent it.
The beauty of this “re-framing” is that you will never feel emotional about the loss. You didn’t lose anything. You spent it, just like you do every day for all the other things in life.
Now, if you end up getting out at breakeven after trail-stopping...
Today’s Lesson: Why volume levels work.
Normally when you insert a volume indicator/study on your price chart it appears on the bottom in histogram format. This shows you the volume during the time interval of your chart (5-minute, 60-minute, daily, etc.). This can be useful as dramatic changes in volume may affect price.
If you’re day-trading futures contracts the volume you’re better off using is volume at price (see the chart above). Notice that the majority of transactions occurred at very specific price ranges. These tend to be fantastic reversal and breakout levels.
The key to any trading strategy is to get the “math” in your favor. In other words, the combination of your win/loss percentages (trades) and your average win/loss (dollars) needs to be in your favor. This means you need to manage the risk very well. By using a fine-tuned volume-at-price tool you can laser-focus on great setups with smaller risk. We use tick data for the ultimate...
New: Futures Trading Daily Lessons & Levels Blog
Today’s Lesson: How to exit. New traders are usually focused on entry signals. Clearly, we don’t want to enter randomly but the more important decision you have is WHEN and HOW to exit. That’s where the money is made or lost.
The worst situation to be in is having one contract. Fortunately, with so many micro contracts to select from even smaller account holders can trade multiples. This gives you the flexibility to “scale out” of the trade one contract (or more) at a time.
We typically take one quick profit on every trade. It’s called a “risk management profit target.” It gives you a little win, reduces your risk substantially and leaves you with more contracts to make a better return on.
The remainder are aiming for “pre-planned profit targets.” Instead of deciding when to exit while in a potentially emotional state, it’s better to select those exits...
Today’s Lesson: Sequel to yesterday’s “Get a night job.” Normally I wouldn’t write about the same topic two days in a row, but this was too coincidental to pass up.
The levels on the chart above were distributed to our team of traders yesterday at 5:15 PM ET. As you can see, price opened the session (light green vertical line) below our desired short level. This gives us the perfect Globex trading opportunity: Set/Forget. Go have dinner. Go to a movie. Go to bed early. Whatever you like!
At 8:15 the trade filled, went only 1 tick against and ran for 50+ points. You can’t get it all, but there is plenty to grab in a run that fast. For Thu 210930 (Plenty can change by the open, be aware.)
For Fri 211001 (Plenty can change by the open, be aware.)
Day Session Analysis: Sentiment is firmly bearish, yet the S&P has bounced back to positive after a 50-point drop. Stats are mixed. Taking trades in either direction. Friday (both sessions...
Today’s Lesson: Get a night job. The futures markets are open 23 hours a day. You probably knew that. What you might NOT know is that the Globex session (from 18:00 to 9:30 ET) trades differently than the day session (9:30 to 16:15 ET). It trades BETTER (just much slower, but you’ll be sleeping anyway so who cares?).
Here’s 5 compelling reasons why you should take on this “night job…”
If you’re thinking “I don’t have the time to analyze...
Today’s Lesson: Persistence. Let’s use yesterday’s review chart from our trading team’s day session (above). This is a lesson that you’ll get more from if you VISUALIZE being there as we go along. Write down your honest answers.
Today’s Lesson: Should you trade multiple strategies?
Given enough money diversification becomes mandatory. You’ve never heard of a hedge fund that ran “one” strategy. But what about those of us with relatively smaller trading accounts? There are pros and cons.
Today’s Lesson: Get in early. Trading is usually counter-intuitive. What you think should work, doesn’t.
Consider the entry on the trade above. The suggested short was 4436.50 with a stop 5.75 points above. Price moved against by only 1 point.
Some traders may not want to risk 5.75 points. The “accepted” solution I’ve heard too many times is this: move your entry deeper into the price level. Wrong.
Hard evidence from over 9000 trade setups says you don’t want to miss those quick price turns. For our Volume Profile strategy, price penetrates the level by a maximum of 1 point 31% of the time before it continues in your desired direction. Think about it. If you’re not entering early you’re giving up 31% of your winning/breakeven trades! It’s way better to move your STOP in from the other side. Morning Edition: This will be updated today (Sunday if today is Friday) at 17:30 for the Globex session.
For Mon 210927 (Plenty can change by...