Today’s Lesson: Reframing

This is critical for your success at anything. Do you think about the positive outcome or the negative outcome? It makes a difference. You have a choice.

Looking at yesterday’s long suggestion on the chart above you’ll see…

1. The trade triggered entry.
2. The stop was touched (probably filled).
3. Price moved in your direction for 15 points, but you sold at the precise bottom of the market.

What were you thinking?

“This strategy STINKS, the stops are too tight!”

OR

“This strategy is AMAZING, we picked the bottom of the market!”

Reframing is the act of taking a negative situation and finding good in it. You change your thoughts about it, which changes your beliefs and your emotions, your actions and ultimately your RESULTS. Really.

If you want to turbocharge your trading, you need to solve your biggest challenge… YOU.  Focus on trader psychology and learn dozens of other nifty tricks like this, enroll in...

Today’s Lesson: Lethal Biases. 

Have you ever looked at your trade result and said to yourself “If I had a bigger stop it would have been a winner” or “If I don’t use a stop I’ll see more winners because this market just swings back and forth"?

What you’re experiencing is hindsight bias. It is our tendency to look back at an unpredictable event and think it was easily predictable. It is also called the ‘knew-it-all-along’ effect.

Yesterday’s short suggestion stopped out for a 5.75-point loss. Eventually, it went all the way to the next level for a 22.25-win. However, the adverse move was huge at 19.25 points against. This may be a bit exaggerated to alert you to hindsight bias but it happened yesterday and that’s what we’re reviewing.

It's not uncommon to feel this bias. When you combine it with small sample size the pair become lethal. You see something unpredictable happen a few times and now you think...

Today’s Lesson: Documentation & Review are key.

Rather than wax-on about today’s subject I’ll point you to a Zoom recording from Saturday on this subject. Lots of lessons were shared in a new format I’m testing… reviewing all the prior week trades from our trading room. Go to https://www.thedailymarketforecast.com/video-lessons.

For Mon 211011 (Plenty can change by the open, be aware.)

Globex Review: Missed filling a fabulous 35+ point short by one tick. The opposing level was suggested for exits only saving two losers.

Day Session Analysis: Sentiment is mildly BULLISH elsewhere. We are down. Stats are mixed so taking trades in either direction mindful that the holiday range may be tighter than forecast.   Monday (both sessions combined) garnered 27% of all the gains over the past 5 years in dollars. Reversals and Breakouts are about even. Trading ES/CL/GC using BB Rev with filters (download the new Edge). Thinking credit spreads might be...

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:

1. Up at 5:30 am.
2. Lights on in every room I’ll enter.
3. Music on.
4. Tidy up (make the bed, empty the sink, etc.)
5. Drink 16 oz. of lemon infused water.
6. 15 minutes of...

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...

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...

Today’s Lesson: You need to think ahead so you don’t miss great opportunities. We’ll use a review of yesterday’s team trading session as an example of why this is so (chart above).

1. A solid shorting opportunity at 4420.50 just after the opening bell stopped out. The “decision” whether to take the breakout trade came quickly. Now be honest with yourself on this… do you LIKE making trading decisions immediately after you lose? Is your confidence rock solid? Or are you a bit worried about losing “two in a row?”

Newer traders unaccustomed to the ups and downs of trading results might pass on the breakout, then watch it soar for the rest of the day and get frustrated. “Damn… I’m always picking the wrong trade!”

2. Seasoned traders don’t have this problem because they PLAN AHEAD.

Going into the short trade you should know what you’re going to do NEXT if it fails and triggers the breakout. The...

Today’s Lesson: How to choose your trading asset.

More and more futures contracts are being released in micro size. This is great news. Not just for beginners or those with a modest account, but everyone. Why? Because now you can live “test” your trading strategies on different assets that you might not have traded prior.

Diversification is good. You should do it. The question becomes WHICH other contracts should you trade. Here’s a quick look at filtering for candidates:

1. Volume. Without adequate volume you’ll experience slippage and not perform as well in the real world.
2. Margin. Check with your broker and determine whether your account size can afford the margin required. Keep in mind that all brokers will give you more margin than you should use. Keep your per-trade risk to no more than 2% of your account, even if the margin required allows you to trade excess contracts.
3. Movement. You’re going to make more money with contracts that MOVE....