Futures Market Blog

By: John Paul www.daytradetowin.com

I love when the news say:”investor sold” when the market goes down and “investors bought” when the market rallies.
I even like it more when they say “investors panicked” and “investors felt confidence”.

You see, I am done trading the Emini S&P futures by noon time, and watch TV for purely entertainment purposes.  The barrage of useless news never helped any day trader, and I believe that just further confuses and dilutes trader’s thoughts.

So why are we so drawn to the TV and its anchors?
Here is why:
1)    we seek justification for our long and short positions
2)    we think that someone is smarter than us
3)    if it’s on TV it “must be important”

This is how you have to look at the news:
1)    reporters HAVE to report
2)    reporters are not traders
3)    reporters only report the BIG picture

The bottom line is that news anchors are not there to help you with your positions.
They are not concerned with intraday rallies, your stop losses nor any other methodology that they employ.

I won’t mention any specific names, but some guys with their “bells and whistles” have turned the financial industry into a financial circus.

Let me get to the main point: in these specific markets where news refers to investors, here is really who you are trading against:

1)    Other traders like yourself
2)    Market makers
3)    Automated Computer programs

I hope you are getting the picture that the fluctuations don’t come from the TV, they are coming from real time traders who trade with and against your positions.

Watch I trade daily http://www.daytradetowin.com/videos.php, and see if this helps you at all.

Here is my daily you tube channel as well: http://www.youtube.com/user/daytradetowin

To higher profits,

John Paul

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
Trader and President of Day Trade to Win www.daytradetowin.com

Ever since I wrote my Emini course and manual Day Trade to Win, I have been approached by some traders, who were puzzled by how I completely eliminated technical analysis from my Emini trading.  At first, when I was introduced to futures trading, I was sold on technical analysis, and to a degree it did work for me as a trend following trader. But, when I turned around and became a day trader, the niche of the traditional technical analysis did not help me. In fact, it led to many losses.

When I decided to search for alternative methods of trading, I came across a very powerful methodology that is called price action. Essentially it eliminated and took out the technical analysis out of the equation.
After day trading with technical analysis for a few months, two factors stood out to me. Sadly, both have led me to the conclusion that I needed to dump the RSI, stochastic, moving averages, etc out of my day trading.

First, day trading requires precision in entry and exit, and technical analysis as an indicator is lagging. It gives the signal way after the fact, and in a market like Emini S&P, where I take only 2 to 4 points, I needed something that gives me the signal faster.

Secondly, the support and resistance formed by technical analysis is sometimes so obvious that the pro “gun” for the stops.  Right after, it would turn around in the trader’s initial position.  This was once my reality as well.
The use of Price action which is essentially the study of price movement and action throughout the day, does wonders to a day trader:

• Pinpoints exact entry

• Pinpoints exact exit

Above all, it increases the percentage of profitability while allowing to minimize the risk.
Click on the link below for illustration of a chart and how I use Emini with price action only:

Here is what I like the most about Price Action: it allows me to determine where to get in and where to get out based on one day’s action.  I absolutely make no reference to the days before.  The logic for day traders is flawless because trading one day’s action has enough to digest without making references to outdated indicators.  By the way, I use this method and finish trading by lunch time.
Grab your free book to see what I mean Emini trading course

Trading is an individual thing, but I still believe that many concepts are universal to profitable trading. The use of price action has allowed me to go from an amateur to a professional profitable trader.

John Paul is the president and trader behind Day Trade to Win an educational company focusing solely on the education of Emini futures trading via Price Action.

Watch him trade live click on this link Emini SP Trading

…..

Should I Day Trade Futures?

These days, it’s common for someone to tell you that trading futures is one of the most lucrative financial investment instruments. The idea that futures trading became popular and is not as complicated as it was in the past is why many are attracted to it. There are thousands and thousands of stocks out there, which can easily scare away the vast majority. In the futures markets, a speculator has only a few stock indices to choose to day trade from. The most popular contract to trade is the Emini S&P futures contract.  There is tremendous flexibility in trading it because of the factors that I would specified below.

Technicality

There are many platforms out there to make day trading as simple as possible. Each platform offers different functions and unique capabilities to make the process run as smoothly. They are also all feature rich, and include trailing stops, depth of markets, trading from the chart capabilities, etc.

Ability to Buy or Sell (Long or Short)

When dealing with futures trading, you have the ability to either long or short the market. Regardless of the actual market price, the opportunity to trade in both direction always requires the same margin.  And there are no shorting restrictions either.

Small Commission Charges

Compared to other investments, the commission charges for futures trading are relatively small, and paid only half in and half when the position closed. The commission charges may vary, depending on the service level of the broker. Commissions involving online brokers may be as low as $3.

High Leverage / Small Margin

The fact that futures contracts are highly leveraged financial instruments means that an investor can go into the market with a relatively small investment - called margin - and potentially come out reaping large profits. The concept of investors having to pay the ‘margin’ is comparable to a security bond, whereby should the trader make a loss on his trade, he may lose some, all, or even more than what he put up. However if his market predictions turn out to be correct, he gets back his margin and whatever profit he might have made, the profit usually being ten-fold on a 10% margin. In comparison to other investments, futures trading offers an excellent return, and this is why it is one of the best advantages of futures trading.

Money Management for the Futures Trader

The most important factor in successful futures trading is money management.

The ability to take a loss and trade another day is the key to survival–and ultimate success– in the futures trading arena.

A successful futures trader should be more an act of survival in the early going than scoring winning trades.

Successful traders set tight stops to get out of losing positions quickly; and they let the winners ride out the trend. On the balance sheet, a few big winning trades will more than offset the more numerous small losers. Good money management allows for that to happen.

Day trading is not a get rich scheme. It is serious business where you could lose everything within minutes because of wrong information. Before jumping into day trading, remember to do your homework first. Go to seminars on day trading, use simulations if possible and practice reading market indicators. To be a successful day trader, you do not just need luck. Knowledge and experience counts.

Pick a few classical chart patterns and specialize in trading with them. You must have discipline and patience to wait for the patterns to develop correctly using only markets suitable for you size account. Additionally, you must apply strict risk management and have great tenacity to let your profits run on the good trades.

Since strings of losses are inevitable regardless of your approach, you must control risk so you are not wiped out by consecutive losers. Experts agree that for proper risk management, you should limit risk to no more than about 1-2% maximum of your account equity. Make sure that no one trade is really going to affect your day trading float, positively or negatively.

While novice traders spend all their time working on entries, seasoned traders know that the really difficult decisions in trading involve exiting profitable positions. Letting profits run on good trades is absolutely essential to long-term success.

Winning traders understand that winning in the markets means “cash flow”. More cash must come in than goes out, and anything that effects this should be considered.

ANYTHING that affects bottom line profitability should be considered as a viable area of study to improve performance.

Never, never, never add to a losing position, and every trade should be taken with professional care and planning.

Losing traders focus on winning trades and high percentages of winners. Winning traders focus on losing trades, solid returns and good risk to reward ratios. The observation implies that it is much more important to focus on overall risk versus overall profit, rather than “wins” or “losses”.

When winning traders have a bad trade they spend time figuring out what happened and then they adjust their current methodology to account for this possibility next time.

The most successful traders have a methodology or system that they use in a very consistent manner. Often, this revolves around one or two techniques and market approaches that have proven profitable for them in the past.

While successfully trading commodities with limited capital presents the highest challenge in trading, you can do it if you recognize the problems and construct a trading plan to accommodate the realities.

You need to position yourself so that you can endure long strings of losses, and maintain your day trading system.

If you can survive some losses in your day trading, the profits will come.

CONSISTENCY is a key factor to profitability.

————————————————————————————————

About The Author:

Linda Wainman is author of the “Keeping It Simple Day Trading System”
Get the exciting details from http://day-online-trading.com