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 trade 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 for 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 not and repeat should not trade that day.
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 NOT 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