12/28/11 Trade results: 2 trades, $50 profit. Trading light and on low volume

This is the last trading week in 2011. The volume is very light this time of year, therefore don't expect much from the markets, be patient, and enjoy your vacation! I glance at the screens maybe 30min-1hr each trading day this week. I take very few trades because of the realization that there may not be volume to support the moves. I had 2 trades today, one was a $50 loss and the other a $100 profit, netting $50 profit on the day.

I began writing out my analysis sheet by hand this week, editing a few things, and incorporating the trade journal into the same page. I log each trade and note a mistake if a mistake was made. This is in the hopes that I can recognize and eliminate these mistakes if I see them regularly.

Here is the chart from today and below are the mistakes that I made and why they were noteworthy mistakes.

Trade 1: Took the 123 long signal, placing a stop limit to buy above the swing high.
Mistake: The trend was down and my rules say that the failure trade is a higher probability trade than the 123. Basically, placing a limit order to sell above that swing high.

Trade 2: Took the PB short signal, expecting the lows of the day to test and break much quicker than they did.
Mistake: I took a weak signal, micro-analyzed the charts. I should have waited to short higher on a better signal or waited for the breaker signal through MAJOR support.

Major mistakes that retail / new traders make that cause them to fail and how not to make them.

When I started trading, I did almost every possible mistake there is. I failed numerous times, went through times of large drawdown, and considered whether its even possible to earn a living trading. I quickly realized what my mistakes were, but it took me a very long time to actually correct them for good. The macro level mistakes are things like:

- Not having a trading plan
- Being under capitalized
- Trading in "non-trading" environments (not knowing when to just sit on your hands)

Those are things that you read about all the time. Today, I want to discuss micro level mistakes that retail and new traders make. These are thigns that even with a trading plan, plenty of capital, and knowing what to do; new traders "mess is up" anyways.

1) Retail traders chase the market
2) Ratail traders jump in too early
3) Retail traders get out too late

I came up with solutions for each of these mistakes. One thing that I started doing, which helped me a lot, is reading a list of rules every morning. The same list, each and every morning. Eventually, it gets memorized and your brain subconciously does not perform the mistakes.

1) Retail traders chase the market
-BE DISCIPLINED-
Plan the trade. Know what you're going to do when and define your entry signals. If the breakout occured and you missed it, wait for the pullback.

2) Ratail traders jump in too early
-BE PATIENT-
Simple, be patient and wait for the SIGNAL. Never anticipate a signal.

3) Retail traders get out too late
-DON'T BE GREEDY-
Nobody ever lost money taking profits. Another thing, never let a winning trade turn into a losing trade, always move your stop to positive.

12/22/11 Trade results: 2 trades, $110 profit. Trading bull and bear channels

Today had VERY light volume. It seems like a lot of the trades ended work for the holidays. The market was moving very slow on low volume since last night, after hours. I had a couple signals triggered however. They were both channel trades, the first a bear channel trade, the second a bull channel trade.

The second trade had a 123 signal within the bull channel. I missed target by 1 point and got stopped out for +$10 on that trade. The first trade met target at +$100. I ended the day with only those 2 positions for a profit of $110.

12/21/11 After hours trade: $100 Profit. Trading Price Structure, bear channel

The most important technical indicator I use is price structure. I defined exactly how to trade certain price structures. When I spot the structures, I try patiently wait for the highest probability trade. For example, in a bear channel, the highest probability trade is shorting the highs of the channel. Next, its buying the lows of the channel. I recognized the bear channel and shorted around the highs of the channel with a stop above the resistance. I made the big mistake yesterday of not trailing my stop and having a target too high, therefore I made sure that my target on this trade was at the lower support line of the bear channel.

This trade yielded $100.

12/21/11 Trade results: 3 trades, $250 profit. Trading trends, cutting losses short, letting profits run

Over the past few months I've altered and improved my trading style. I started out trying to take "x" amount of dollars per trade, over and over again. This leads to overtrading and eventually netting losses. What I then realized is that time is your friend when it comes to futures trading, so let the profits run, protecting them with a stop. I had 3 trades for a profit of $250 today.

I had one major mmistake today, letting a very profitable trade turn into a breakeven. Importantly, it wasn't a loss, but a break even after being so much in the money is a MAJOR MISTAKE.

The reason I let the trade play out is because I thought the momentum from yesterday was going to continue over into today and that 2300 on the Nasdaq would be tested (this was my target on the trade).

The One Simple Idea That Enabled Me to Become a Full-Time Trader

I always like reading informative writing from traders around the world. I am able to expand my ideas and pick up valuable information from others in the field. I want to share a very interesting piece from Jim Neihart who graduated in 1980 from the University of Arizona with a degree in Finance. 

The One Simple Idea That Enabled Me to Become a Full-Time Trader

Trade To Trade Well, Not To Make Money! I have repeated this statement hundreds of times to my students. It seems like a contradiction but it really is not. Traders who routinely make enormous amounts of money trading don’t mentally count the dollars while they’re trading. They don’t keep a mental calculator continuously running in their head to constantly keep track of how much money they’ve put into their account. “Let’s see, I bought 1000 shares of Halliburton and it’s up one point, times one dollar a share, equals 1000 dollars!”

Nothing and I mean nothing, will blow your concentration and cloud your judgment faster than keeping that calculator running in your head, calculating the dollars you’ve made or lost each minute that goes by during the trading day.

Another booby trap is to announce to the world, your husband, wife or even your dog that you’re going to make a specific amount of money trading today. You’re setting yourself up for failure. Setting as specific dollar amount you must bring home each day, especially if you’re a beginning trader, assures that it probably won’t happen. This need to make a specific amount of money colors your view of the market and pressures you to open positions that are marginal trades because you have promised yourself or worse yet, someone else - that you’re going to bring home the cash! Your pledge echoes in your mind, so you force trades. Odds are, you lose money. Now you’re embarrassed with yourself and you start questioning your self-esteem, which automatically leads to more losses.

The cure for this illness: From this point forward, your goal is not to make money. Your goal is to trade to trade well! Money is a by-product of trading well. A very interesting thing starts to happen when you focus on trading well. Your profits will start to add up a lot faster than they did when making money was your primary goal. This is simply because traders who focus on trading well cut their losses and let their winners run. They protect their capital and leave unnecessary risks to others. They recognize a choppy market and sit on their hands and don’t trade. They make promises to no one, including themselves, about the money they want to take home.

Traders who trade well let the market come to them. They are extremely patient and disciplined. They wait for the perfect setup and entry point. If that perfect point doesn’t come along, oh well, they wait for the next one knowing that another chance is just around the corner. Once in the trade, they mechanically and methodically manage their position, taking profits at specific points, and moving their stop loss to protect their principal.

Traders who trade well don’t trade simply for the excitement of the trade because they have become addicted to the thrill. They don’t trade out of boredom or when they are sick or tired. They don’t trade especially if they have stress in their life that disallows their full focus on the market. Successful traders always abide by their trading rules and never stray from them. Traders who trade well are perfectionists and are very wealthy as a result of their unwavering discipline. You too should have this goal

12/19/11 Morning Trade Results: 3 Trades, $60 Profit. This is why I use STOPS.

Wanted to make a post really quick on showing you how to use price structure for profit targets. Looking at this chart, you see the bearish channel. What this tells us is to take profit around the resistance if you're long. Therefore, I had my target around that level, 5 points. I ALWAYS move my stop above entry after the market goes in my favor. The reason for this is to avoid getting destroyed by a move like this:

Imagine is you had a 1 to 1 risk to reward, for example 10 points profit to 10 points loss and you never adjust your stop, or worst, you don't use a hard stop, only a mental one! This is a situation you need to avoid and if you experience it, you want to experience it on the right side movement of the market.

So far I had a few trades, $20 from premarket, a $60 stop, and a $100 profit. I am at +$60 on the day so far.

Mondays are usually a "get back into the swing of things" kind of day. It's usually a slower trading day for me in the sense that I try to be very cautious with trades and my only goal is to try to turn a profit so that it puts me in a positive mind set for the rest of the week. I may end around +$60 for the day and work on a couple of things for the rest of the session.

12/15/11 Trade results: 4 trades, $65 loss. Its the sample of trades that matters

I had 4 trades today and ended with a $65 loss. 3 of the 4 trades were managed very well, according to the system, stop was moved to +$5 after movement in favor. One of the trades took a full stop due to an emotional decision (as I said I'm still working on correction this issue).

The whole thing with trading is that its the net result that matters. How you end at the end of the week, the month, the quarter. I used to put a heavy amount of focus on each individual trade and each individual day, but I learned that its the "sample" of trades and the end of a period that  really matters. For example, I like to see how I performed over 20 trades or 1 month, thats what will build consistency.

The moral of the story is that I expect down days, its a part of the business. MOST IMPORTANT THING IS NOT TO TURN A BAD DAY INTO A CATASTROPHE! Take your losses and learn from them, make sure your decisions are correct. Also, try to make sure your down days are small, especially smaller than your positive days.

12/14/11Trade Results: 13 trades, $130 profit with a 15% win rate!

Today was very interesting. I had the 1st trade of the morning long at the lows of yesterday. It was a classic system setup, also, following the system, I got stopped out for a profit of $5. I ended up having 13 trades today and only 2 of them were profitable! BUT, applying the number one rule, cut losses short let profits run, I ended the day with a slight profit. I had plenty of mistakes today regarding fighting trend, I had way more long trades than short trades and according to my system that's a problem. I will review today later on and try to fix the issue of forcing counter trend trades. I seem to "notice" more seller failure trades in a short environment than there actually are. Lets see what I can come up with tonight to fix this for the future! I finished with $130 at the end of the day.

12/14/11 Live Nasdaq Trade: $25 risk, $800 max profit

Here is a live trade that was just taken. At previous day's lows, you want to look for buying opportunities, if previous day's low is broken, then you want to look for short opportunities.

I took a long signal around previous day's lows. The max risk on this trade is $25, which will eventually have the stop moved to 1 tick above entry, for a risk free position, worst case scenario making $5. The max profit target on this trade is $800, but the position will be managed accordingly depending on market conditions.

12/13/11 Trade Results: 15 Trades, $625 Profit. The trend following system way

Today was a great example of how important it is to follow your system for the long run. I started the day off with multiple stops of $50-$60, which was VERY discouraging. I tried to reiterate to myself that a trend following system accepts those losing positions, and knows that the profit will come from the trade that really takes off. Here's the trade that took off for me in the afternoon session and took me from being negative today to a profit of $625:

12/9/11 Trade results: 6 trades, $530 profit. All 3 trade signals triggered today

As mentioned before, Friday I tend to end the work day early and go over the trades from the week and the decisions made. I try to find solutions for mistakes and reinforce the positive decisions that were made.

I have 3 trade setups that I take. They include:
1) High of day / Low of day trade
2) Buyer / Seller failure trade
3) 123 Trend trade

Today's chart shows examples of all three of those setups. I try to make it a habit and stop trading by noon, especially on Fridays, so I'm done for the week.

If you have any questions, please let me know. Enjoy the weekend!

12/7/11 Trade results: 2 trades, $270 profit trading mini DOW and Nasdaq seller failure

Had another one and done day after meeting target on my DOW position very early in the morning. Because of meeting full target on the DOW trade, I just closed out the NQ trade for a profit of $20. Both the NQ and YM trade were seller failure trades.

I am done for the day and its only 8:42am EST, these are the days I like when trading!

Here's the entry and exit on the DOW trade:

12/6/11 Trade results: 1 trade, $300 profit. A one and done day trading wedges

If I have fundamentals agreeing with technicals, I like to position trade for bigger moves. These types of days I have less trades and large profit targets per position. I trade the price structure that's being presented by the market. For example, today, fundamentals were bearish (EU), technicals were in a falling wedge (bearish).

Prior to entering positions on these types of days, I know where I will enter and where I will take profits. For example, on the chart below, I entered short at the resistance of the wedge. I took profit around the indecision zone, which is the open of the day.

I ended up having 1 trade today for a profit of $300.

HT Trading Office / Monitor Setup

I received emails from people asking what my trading office setup looks like.
I have a custom built PC with a 6 monitor display. Here are photos of the office and then the monitors up close.

I only have 3 instruments on my charts.
Monitor numbers:
123
456

1: Long term charts on Nasdaq, Euro, and Dollar
2: Medium term charts on Nasdaq and trade management chart on Nasdaq
3: The most important monitor of all- It has my RULES and notes
   (Be patient, dont be greedy, follow the system)
   (Losers average losers)
   (3%) noting that 3% of traders succeed, and to strive to be in that group
4: Medium term charts on Dollar and Euro
5: Faster term charts on Nasdaq
6: Euro and Nasdaq DOMs and Time and Sales for Dollar, Nasdaq, and Euro

Please let me know if you have any questions.

12/2/11 Trade recap: $175 profit. Including HT Trading entry setups.

In this video I go over my trades for the day and show you the type of setups I took. I have 3 main entry setups that I look for on a daily basis, they're all discussed in the video below! Have a great weekend!

What is buyer and seller failure, how to know when it happens, and how to use it to make profit

The concept of buyer and seller failure is fairly basic:
- Buyers are unable to make new highs / lack conviction behind up move attempts
- Sellers are unable to make new lows / lack conviction behind down move attempts

In the trading community, there is the belief that institutional traders will "run stops". Basically, you take a long, place your stop below the swing low, you get stopped out (lose money), and the market rallies in your original direction. This concept of buyer and seller failure will allow you to recognize when this is occurring and profit from such instances.

I want to stress that it's very important to leave stops in place, NEVER ADJUST A STOP AGAINST YOURSELF, this leads to bad habits! Protect yourself on trades, always assume the worst move against you rather then a quick stop run.