Futures Market Blog

By: John Paul www.daytradetowin.com

For those of you who are using multiple contacts in their trading of the Emini SP, here is a little technique that I devised for exiting positions. I call it the time reference for exits analysis.

Let’s say you are trading 4 contracts and you want to exit 2 at one price, one above it and one above that. Here is something that I also back test, and many other traders don’t.

Here is what I back test: how long it would have taken me to get filled on my first position. Let’s say the average time would be 1 minute.   Well, if let’s say in real life, my target reached within less time, that would signal to me a strong market and I would live my targets. However, if the first target is not getting hit or was hit with a big delay, I would remove the positions and try and exit the market.

I use the same methodology of back testing time for the second and third position.
This time factor of back testing is my measure of volatility and helps me maximize profits.

By: John Paul  President and trader www.daytradetowin.com

There are a few common mistakes committed by educators, that don’t trade, and in my opinion misguide many traders who want to become full time traders and trade for a living.
Sometimes I think that most educators just want to sound politically correct, and so they seek to give advice that is rather sounds good instead of being practical.
Here are some common myths that are being thrown around:
1) The trade with the trend myth. 2/3 of the time the markets is not trending, and by the time one recognizes the trend, there is a violent correction that most traders get caught in. Trading with the trend requires large amount of money that most traders can’t afford to risk on one given trade. So is the trend is your friend? YES! Practical advice?, nope.
This is why I choose to day trade and deal with each day as it comes.
2) Brokers are bad myth. Find a good platform, cheap commissions and a broker that knows your name and you found a friend. Brokers are not dime a dozen! A good broker is one that is there when your computer malfunctions, or one that could alert you to potential mistakes.
3) Don’t listen to the news myth. You can’t trade on the news, but you should know when the major announcements come up, like CPI, housing report, etc. you should be careful not get caught up in a trade where news has influenced the market.
4) Diversify. What a load of ^&*%$!!! I trade Emini S&P and that is all I need to make a living.
How could one look at different instruments and applying the same methodology to all?
5) Risk to Rewards Ratios myth. Some say you must trade 1:3 or 1:2 as a risk reward ratio.
For every dollar you risk, you need to make two to three dollars? Right?
WRONG!!!
Some trades have such a set up that it could have an 80% success, but the stops are larger than the reward. If I had skipped trades like that I would have been out of business.
6) Technical analysis is the only method there. Well, what if I told you I can trade with a chart.
If you don’t believe me, see how I apply price action daily Click here: http://www.youtube.com/user/daytradetowin

To your trading success,

John Paul

By: John Paul www.daytradetowin.com

…..

Many beginner traders ask me how they should trade the E-mini S&P? Should I start with one futures contract? Should I swing trade or day trade?  I understand that prior to even developing a methodology; one has to decide what time frame they should trade.  I have chosen day trading.

But before I explain why I chose it, let me explain some misconceptions about day trading:  for many day trading means the “sweat” of anxiety, many transactions, and trading from morning until the session is over.
Well, let me tell you about my day-trading:

1. I trade one to two times a day
2. I don’t get stressed. I have developed a methodology that allows me to stay profitable for most trading days.
3. My trading session is done by noon.  I find that there is enough action until noon time.  My trading methods do work in the afternoon. Once a profitable trade is made in the AM session, we take the high road and as disciplined traders take our profits and are finished trading. Why risk our profits for the day, I always say.

I hope to clarify what day trading is all about. In reality, not many have the time or luxury to be glued to the screen all day and trade. I am one of those guys, so I have a methodology that helps me to be finished by 12 noon EST.

As far as my decision to day trade, it was due to a few reasons;

1. Increasing number of contracts and participants. I have followed the e-mini SP for years prior to deciding to trade it. Over time I saw the number of contracts go from a few thousand to a few millions in a day.  This creates enough opportunities between all the different interest groups of speculators, hedgers, hedge funds, propriety trading, etc to make the ranges high enough for one to capitalize on.
2. Swing trading and long term trading implies leaving positions over night. Nowadays with complete worldwide economical instability, I rather not.
3. The complete reversal that occurs these days doesn’t allow capturing long terms moves.
4. Longer term trading does not allow me to use price action; instead one has to resort to the same old technical analysis…that does not work.

I hope this was helpful. Good Luck in your day trading of the E-mini S&P.

John Paul