Emini Trading Blog

Archive for the ‘S&P 500’ Category

Busy morning for our aggressive trader, Bob. On the other hand, our fearful trader J.R. is feeling frustrated, a little down after seeing two large moves and regrets missing “all those easy points”. The Existing Home Sales report was much better than forecast. This, along with Bernanke’s “growth in the near term” comment has spurred markets higher.

Our aggressive-inclined trader “Bob” has been busy. He took, of all things, a sell-side entry at the open near 1015.00. Feeling a bit flush from yesterday’s gains, he had a hunch Existing Sales would disappoint and liked selling at Monday’s high. So, he enters by selling five contracts! To give the trade space, he placed his stop two points above the high, at 1018.00. For a few minutes all seemed fine. He moved his stop to 1016, after price dropped to 1011. This minimized his risk to a loss of $250. Which traded shortly thereafter. Now down $250, Bob is eager to catch up.

J.R Down, our fearful type trader meanwhile, has silently asked himself the last couple of days “what is wrong with me?”. He wanted to buy after the huge run up. But, needed price to retrace down further before he would. This never happened. Yet, from the minor move down, price has now traded up to within one point of the day high. Wondering if he will ever get this right, J.R. waits and watches.

So, how did our fictitious aggressive trader “Bob” fare? Quite nicely on this trending day. Very near the close he moved his stop up to 1005.00 which was reached just before 16:15. Gain of five points ($250) on the final contract means he finished the day with a gain of $2150 (21.50% of 10,000 equity), less commissions on eight contracts.

This shows how great an impact matching the style of your trading to the behavior of the market can have on your profitability! Certainly the right day to trade for the bigger move. Bob feels more than satisfied at first. But then, he starts to feel uncontrollably excited about tomorrow. Will he be able to hold on to all he has earned? Tomorrow we will see!

In the way of known news announcements that could move the markets, the National Association of Realtors will release their Existing Home Sales report in the morning at approximately 10:00, EDT. Earlier this week, the U.S. Commerce Dept. reported an unexpected drop in Building Permit applications. However, in view of the deep plunge in real property values, perhaps the forecast 5.1 figure will be realized. Even if it isn’t, it seems the current state of the market could overpower a slight miss. After today’s push higher (beware of lighter and lighter volume), despite further unemployment pressure and corporate warnings (see: Sears), a retest of the 1016 highs seen last week appears to be the only cap in sight.

Our more aggressive trader, “Bob Bright” has had a nice day trading the e-mini S&P, thus far. An aggressive entry on the buy-side before 10 a.m. (all times, EDT) was a nice trade, long from approximately 1001.00. As an aggressive trader, Bob entered with four contracts, despite the high price of his entry, relative to the day’s range at that time. With his personality, looking for the big move so he can “make some real money”, he took profits at +two points for a profit of $200. The remaining contract’s stops were moved to break-even (he is focusing on controlling his aggressive nature), which was reached. Frustrated because of the “small profit” (2% of 10,000 equity), Bob entered long on the pullback, buy filled near 1000.00.

He now feels compelled to make up for his last trade outcome, so he now trades six contracts. Using a three point stop, he risks over 10% of his account equity but, again is looking for the big move. Once price moved in his favor, he takes +two points profit on just one of his six contracts (a gain of $100). This time his aggressive trading personality works in his favor, as price rises to new highs. He looks to take profits near Monday’s high, which has been reached. However, he gets more aggressive thinking more is to be made. So, he takes profits at 1005.00 with only one of his remaining five contracts (gain of $200).

Hoping for more, he leaves his stop way back at break-even, risking unrealized profits. So far for the day however, the more aggressive trader type that we refer to as Bob Bright, has a realized profit of $500 and is still long four contracts from 1000.00. Things are looking great today for Bob and we will check in as this trade continues.

Initial Claims Report, released at approximately 08:30 (all times, EDT) rose unexpectedly, further straining the current bull-market. Or has it? As of 12:25, price has exceeded yesterday’s high by six points! If you believe that “price never lies”, the bulls then are still clearly in charge. That being the case, deciding where to get long is the job at-hand.

Regarding trade entry-tactics, what would you say, is the biggest variable in the answer to the question of where? There are numerous tools available to aid the market technician in positively identifying support. Further, there are numerous tools capable of broadcasting an indication of the strength of the momentum that pushed the price higher.

After working with hundreds of traders, from beginner to 20+ years experience, my opinion is that the biggest variable is YOU, the trade operator. Each trader reacts differently to the readily available data referenced above. Yes our differences can be vast. Remarkably however, most I have worked with, seem to have one of two, primary “trader personality” types.

First, there is the swashbuckling, warrior-style mentality. Exorbitant risk, large drawdowns, and a tremendous sum of hope prominently characterize this type. Secondly, there is the anxious, fearful type. Self-doubt, trade-execution inconsistency and regret rule for this group of traders.

Yet, the majority of BOTH “trader personality” types desire an income. $500 per day is a typical starting point. To showcase how BOTH types trade, how BOTH types face pitfalls peculiar to their “trader personality” and how EARNING $500 PER DAY IS POSSIBLE FOR ANYONE willing to grow, I will now introduce to you two (fictitious) traders!

Trader 1: Bob Bright. Trader Personality Type: Aggressive. High risk, high reward.

Trader 2: J.R. Down. Trader Personality Type: Fearful. Out too soon, if in at all.

Both have $10,000 to start. Watch and read further updates. Both “trader personalities” will be showcased routinely. Then I will address how to move past the limitations associated with keeping rather than expanding your trading mentality. See you soon! – Jared

That a multitude of tactics can earn you money is a well known fact. Thus, each of us use what works for us. However, even within our skill-set, what works well varies, don’t you agree? Isn’t it true before entering for example, we survey our tactics collectively. Then, after endeavoring to make the best choices based on the information we have at the time, we choose which of our tactics will put us in the best chance to earn. Essentially, we place some of our “rules” entirely above others. Yes, a set of rules is advisable for a beginner. However, the discernment that comes with experience and a willingness to investigate what I have suggested can enable one’s earnings to surpass the mechanical approach.

TODAY WE SAW:

Sizable gap down followed by solid buying up to and beyond opening high. Eventually, price exceeded opening high by some four points. At the 916-ish highs, came a classic Trading Concepts sell opportunity. After the sell-off reached expected support areas between 909 and 912 and an awkward buy opportunity came our way, price largely traded sideways for the balance.

BUY-SIDE OPPORTUNITIES:

This buy opportunity was a bit awkward in that price was still trading in weak territory and lacked a significantly higher price penetration when compared to Friday’s close. However, on an intra-day basis, the 916.75 high before 11:30 a.m., EST provided a clear sign of bullish strength. So, a long entry no higher than 911.75 was advisable. Had that been the entry taken, after implementing Trading Concepts trade management system, a loss of six tics would have occurred. RESULT: -6 tics.

SELL-SIDE OPPORTUNITIES:

This sell-side opportunity was as natural as the earlier buy opportunity was awkward. A textbook Trading Concepts entry through-and-through. In an area of resistance, at a time we expect counter-trend strength there occurred a powerfully bearish entry trigger. Entry would need to be no lower than 914.50 and all taught profit objectives could have been filled. RESULT: +6 tics, minimally.

LOOKING FORWARD:

Overall, today’s trading communicates agreement. Typically, this is short lived. So, monitor key highs and lows on an inter-day basis. As these are penetrated, expect swift movements. However, intra-day we will continue to note significant areas of support and resistance. Then, trade these as triggers manifest themselves. For assistance, help is available at the link above or you can email to: jared@tmitchell.com.

Today’s price behavior illustrates how keeping pace is a necessity for intra-day traders. In consideration of today’s US stock index trading this need is highlighted. Do you however, see the opportunity?

Ever wonder what you need personally in order to see and trade this vast opportunity? Essentially, you must know what to do when it arises. After all, until you are capable of safely entering potentially income-producing trades, you will continually avoid entries and miss out.

TODAY WE SAW

The gap to the downside of Friday’s close all but filled thanks to the 13+/- point rise in the span of about 40 minutes. Serious selling strength at or near 865 kept the retest of the high to within two tics of the previous high. An orderly, tradable sell-off ensued. Within this sell-off, a legitimate long opportunity became available. After which, a change in trend and test of resistance presented an opportunity to profit from the short-side. The entries listed below are based on strict trend-trade criteria available to Trading Concepts members and are hypothetical.

BUY-SIDE ENTRIES: At approximately 1:00 p.m., EST a long entry of approximately 858.75 was possible and the conservative six tic profit objective became became available within six minutes. Outcome: +6 tics.

SELL-SIDE ENTRIES: Near 3:00 p.m., EST a short entry above 856 was fillable followed by more selling sufficient to reach at least six tics below the entry price. Outcome: +6 tics.

TODAY’S HYPOTHETICAL RESULTS: +12 TICS.

While at first glance 12 tics seems small, notice please the conspicuous absence of losses. The methodology authored by Todd Mitchell can assist you to lose less frequently and in smaller amounts. Recall too, that 12 tics equals $150 per contract. By attaining consistent profitability, simply trading more than one contract can swiftly raise the dollars involved. Yes, knowing how to keep pace amidst a sessions rise and fall likely means also keeping pace with your expectaions.

TODAY WE SAW…

Without a gap in either direction, Friday started where Thursday left off. Price continues to rise as fewer and fewer sellers step in. That may change in the near 880 area, however the market’s search for sellers continues on. Weak selling this morning was short-lived and buy-side strength dominated the balance of the day.

 

TODAY’S BUY SIDE:

Today there were two long entries. The price of 861.25 was the first long entry around 11:30 a.m. As a reminder, the entries listed are for demonstration purposes. Please see the full disclaimer at the page “All Trades Discussed”. The most conservative profit-objective taught at Trading Concepts of +six tics was easily able to be filled. The second long entry opportunity presented itself around 2:00 p.m. at 866.25, with the + six tic objective price trading soon after entry. Today’s buy-side total is: +12 tics.

 

TODAY’S SELL SIDE:

As was mentioned, seller strength was weak. However, as taught by Trading Concepts, enough seller strength was identified to seek a short trade. The limit-sell of 859.75 just before 11:00 a.m. was fillable. Shortly afterward, the near retest of the day’s low enabled the + six tic profit objective to be filled. Today’s sell-side total is: +6 tics.

 

LOOKING FORWARD:

Yes, we all knew a bull-run was overdue. However, it still feels odd watching price continue to rise in search of sellers. Thanks to the fact that Trading Concept”s methodology centers on price first, the fact that trading more on the buy-side seems strange has done little to cause those that follow it to miss out on these glaring upside opportunities.

TODAY WE SAW…

While trade pricing rose today, bulls were slow in exerting influence. After gapping down, trading meandered sideways. While in the range between 842 and 851 approximately, we saw three somewhat aggressive entries. Each of which did reach initial profit objectives. Since these had components of safe entries, opting to participate in them is reasonable. However, these lacked range extension beyond the high or low. Thus, in the strictest sense these were aggressive. Once beyond the initial range, there was one conservative entry.

TODAY’S BUY-SIDE

The conservative long trade was fill-able at 849.75 soon after 3:00 p.m. The earliest profit objective of six tics was also fill-able within minutes. Today’s buy-side total is +6 tics.

 

TODAY’S SELL-SIDE

Implementing only the strictest trend-trade entry tactics taught here at Trading Concepts there were no sell-side entries today. 

 

LOOKING FORWARD

To keep values rising, market participants must see increased spending positively. Which seems counter-intuitive for many since (over)-spending is widely regarded as the culprit of this world’s current woeful economic state. Pre-NY Open, the release of the Producer Price Index and Consumers Price Index numbers are scheduled. If these even hint of recovery, I anticipate the majority reaction will be tepidly bullish since spending ultimately begets economic growth. Prudent spending that is. Which just might be the only spending taking place right now in view of the wholesale drop in global sales receipts. As usual, rather than holding out for the home-run with ALL of your contracts or shares, pay some bills so to speak by taking some of your position off at a small profit. Just some though, otherwise how will the S&P value hold?

As active traders, those that enter and exit in the same day, we face a challenge. Chiefly, we must earn enough to counter our losses. After realizing that, many set out to find the surest way to make every trade an earning one. Which is impossible. Also, it leads to needless frustration. In turn, leading to still more frustration. Sound familiar? Yes, success in this business depends on a variety of factors. Two of the many that impact one’s level of daytrading success involve the types of orders you use and how you manage the risk inherent to your entry.

To mitigate costs involved when initiating your position, why not consider using limit orders? The typical one-tic bid/ask spread in the e-mini S&P 500 is worth $12.50! Since using a limit could save you likely double what you pay in commission, try it. If you are filled on the majority of your orders the savings will take immediate effect since each contract will earn $12.50 more.

Another huge money-saver some traders view as a hindrance is using a stop-loss order. Which, if the stop is placed poorly, can easily be the case. Obviously, being frequently stopped out of earning trades is a big hindrance. What if your initial stop-loss were rarely reached? One benefit would be your account would be protected. Also, using stops legitimize you as a more professional trader. Both of which elevate your operation!

Even if you had a month of days similar to today your overall results could be nicely improved. For example, today price traded in a ten point range until roughly 1p.m. According to the trading tactics taught by Todd Mitchell, on a conservative basis, there was one long entry today. This text-book trade became available near 2 p.m. As was mentioned, using a limit-order entry likely saved $12.50. Which means that if this were to be the case over just a one month period, your earnings could increase by $250 per month! All the while by using a well-placed stop, your self-image improves with each trade! You will begin to see yourself as a trader that knows what he or she is doing by never risking “the farm”. Since this idea is reinforced by your actions the idea becomes a well founded belief.

As I see it, using limits and stops as two simple daytrader money-savers can immediately improve your take. Gaining authentic self-confidence is, at a minimum, one nice prize.

For now, the blazing rush of demand for stocks and related futures contracts like the e-mini’s, has stalled. Today, after a week’s worth of notable bullish demand we saw an upside opening gap fill quickly and any subsequent bounce was unsustainable. Yes, despite great upside potential now in place, there are no guarantees are there? This story that unfolded in the duration of a few hours reminds me of a similar story that has taken decades to unfold.

It is the news that Switzerland will soon relent its exclusive and long held banking privacy position to US tax-evasion investigators. By turning over both confidential banking records and the respective owner’s identity, demand for their services could drop significantly. So much for a sure thing, right?

Which brings us full circle. As traders we seek to be as prudent as possible with the information we have at the time. The more we buy into the fact that “men don’t create circumstances, but that circumstances create men” the better we’ll trade, in my opinion. Recently, after considerable delay, Switzerland decided their prospects are best enhanced by cooperating with crime investigations involving their banking system. Overall, today’s market participants decided the long-term positive effects set in motion yesterday are outweighed by today’s negative realities.

Regarding today’s price behavior, how did you react? Were you stuck bottom-picking or dexterously seeking short-side entries? According to Trading Concepts methods, there were four entries today, all on the sell-side. Two were more aggressive and two more conservative. All four however reached their initial profit objective. To dramatically improve your choices when reacting to the market, get started using what works! Click the link above for a thorough, free offer. At the moment you may be in a better position than Switzerland.