Started trading futures well before they invented the e-minies,started full time in 1995. Here is the traders handbook that might help you in your trading. Simple Rules and Strategies Confessions of a floor trader R.K. talks about the simple rules that enabled him to earn as much as a couple million dollars a year in the S&P's. What was one of B.H.'s simple rules? IN A BULL MARKET, WHEN THE OPEN IS STEADY TO LOWER, YOU HAVE TO BUY S&P CONTRACTS AND HOLD ON FOR THE INEVITABLE RALLY. Buy a steady to lower market open.
opinions & rules opinions on the market are a dime a dozen and each day they are offered from a wide variety of sources. so here’s mine again. looking at the charts of GOLD,CRUDE OIL,SPX,DOW and NASDAQ one hundred mini futures and bearing in mind how strong my time frames were for late, i’m keeping the door open for a top any time soon. i take this view with the understanding, of course, that I could be wrong. on the other hand we must have an opinion on the market – ideally a well-informed one – or we have nothing. nevertheless, our opinions are secondary to good TRADING RULES, some of the most important of which are good ENTRY rules. we should only enter the market on a genuine signal that our opinion bears a close relationship to the facts and figures.
profits/losses there probably isn't a novice or experienced trader,swing,scalp,day-trader or any trader alive who DOESN'T think of a market position in terms of his/her own profits or losses, it's on your platform starring at you! unfortunately, this kind of thinking leads to some major market blunders! did you ever say or think to yourself,"i can't get out now, I've lost too much money?" that's how traders think when money is at stake. the impulse is to try and recoup losses and regain lost ground. but the market is indifferent to your position. it doesn't care that you are long 10 contracts from 1281 and it is trading at 1279 a thousand bucks in the hole, and you want the market to continue to go back up. on the contrary, the fact that you are in a losing position, one which you continue to hold, suggests that it was a bad trade to begin with. why attempt to throw good money after bad?
why not focus on the REAL ISSUE; is the market about to go lower or higher?
and why not make your trading decisions based on that critical issue?
too many traders make their decisions based on the irrelevant issue of an already established position. the time to think about the money is after the position is liquidated. the position is important, not the money. concentrate on the position and the money will take care of itself.
One of my rules is to never paper trade. i seem to break this rule from time to time. without real money at stake it is to make believe that you are actually trading when you are not. the difference between real trading with real money and paper trading is enormous! without money at risk, you can pretend you've made millions - or,on the other hand, you can lose millions and never lose a moments sleep,Ha! paper trading leads to bad habits. it is destructive to establishing winning strategies. therefore, you should never paper trade. if you don't have a lot of money to risk in the market, you should trade one-lots or mini contracts(which i believe your doing)or even a few shares. if you want to see the real difference between paper trading and actual trading, pretend you have taken a 20handel in the S&P futures market. then press the buy/sell to open 20-lot(20contract of mini futures). you'll notice the difference immediately. the fact is, YOU BEHAVE DIFFERENTLY when real money is at stake-a lot different! there is no substitute for trading real money under actual market conditions. don't kid yourself about the value of paper trading. it is meaningless.
realize please- this does not apply to testing automating, mechanical systems and when you are learning to use your method/system,platform and language...
re:day-trading and trading in general. there is so much to learn about the markets that most new traders lose their money and give up in frustration before they realize how to really trade. in a sense, this is a positive situation because, after all, one man's/woman's market is another woman's/man's market gain. i have no doubt there will be a steady flow of misinformed speculators/gamblers in the years to come. my point is, YOU DON'T HAVE TO BE ONE OF THEM. learn all you can. keep your eyes open. some of the most significant market fortunes have been made by AVERAGE people who started with next to nothing.
I'm not worried about revealing trading secrets because i know that only a small number of individuals will be psychologically capable of capitalizing on them. remember, it is not enough to simply know where the market is going. you have to be able to TAKE THE TRADE. and this is not as simple as it seems. having said that, i will keep giving you a few suggestions on what tools you need to successfully day trade if you want them.
stop-running is a favorite practice of floor traders. WHY? because they know that stops will typically generate a temporary flood of one-sided orders and this, in turn, will push prices for a short period of time. by trading against this trend, floor pros can make themselves some nice profits. for example, let's say a high has been established during the day(1281). the 'conventional wisdom' of brokers across the world is to place buy stops ABOVE the highs to protect their clients short sale positions. but these buy stops become red flags for the floor. when price reaches the stops, a flurry of buying will certainly push prices still higher(1283) knowing this, the floor traders buy in ANTICIPATION of running the stops. they, in turn, become SELLERS once the rally is underway. visa verse near these support levels. this is why so many public or upstairs traders like you and i, find themselves buying near the high of the day or selling near the low of the day. they have their stops sitting where they are ready targets for the knowledgeable pros. there is also another phenomenon which is common in the market. typically, during the day, both the intra-day high and low will be taken out. WHY? because there are stops BELOW the lows and ABOVE the highs. on a day such as this, both buyers and sellers can find themselves in trouble, as we saw yesterday and maybe next couple days. first you buy in anticipation of higher prices and find your sell stop hit; then, turning bearish, you sell in anticipation of lower prices, and find your buy stops hit. what is extremely frustrating when this occurs is that the market will often close virtually unchanged on the day. so don't let yourself become victim of this stop-running. don't place your stop where it can be easily hit.
hard-&-fast rules establish your trading level and stick with it! know how much you are willing to risk(lose). so much of success in these markets is a product of discipline, temperament, and TIMING that it is often difficult to isolate HARD-AND-FAST rules which must never be violated.
bail if you can not sleep because of your open positions:)
be flexible! I'm going to risk sooner and not wait for exact resist/support levels to hit.
so much of success in these markets is a product of discipline, temperament, and TIMING that it is often difficult to isolate HARD-AND-FAST rules which must never be violated.(why did i write this twice? because breaking this rule this year cost me my early 200% plus gain in the first quarter):(
yet, upon reflection, every experienced trader will tell you that without knowing the fundamentals of trading, the naivete,beginner,is certain to lose his/her trading capital. if not immediately, then certainly over time. for this reason, I'm posting about detailing the most important rules governing trading success. the rules every good speculator must adhere to if she/he is to not only survive, but actually thrive, in these competitive rough and tumble markets like we just experienced during the bank and housing melt up and down,Egypt,then the neighbor Omar Gonedaffy,Japanese earthquake, and now Euro zone!
what are these rules? how is one to master them? are the exceptions?
sure, some are easier to learn then others,,,some are just plain common sense. yet they are each vital to trading success. and as for exceptions, the one abiding truism that you must never forget is DO WHAT WORKS! does it feel right to you? are you comfortable in your selection of following or breaking rule 1 or 2? does it work for you? remember, the bottom line is the measurement of your success in the market. it isn't enough to know that you've made a mistake.
the bottom line is profits.
there are a number of generalizations that one could make concerning winners and losers in the futures and option markets. you can have the best knowledge, soundest trading system, but still be unable to profit because you are unwilling to pull the trigger when the moment of execution arrives. on the other hand, you can be over-enthusiastic about getting in or out the market when caution is the best policy. you want to cultivate the middle path, one in which you are ready to embrace risk before all the information is known. so many traders want the so-called hard info before taking the trade when it is not available. the best, one must often work with soft info...the hint of market moving news, like this fed rumour had i heard it before the move,;>)....once info is readily known, it loses its value in direct proportion to the number of traders that know it.
Re:trading futures/systems/methods But it applies to the new trading vehicles like CEF, DVR and FSG. Here's my beliefs on trading after a couple decades of being involved with futures 1. 99.9% of trading is between your own ears. If your not successful it's your own psychology that's keeping you out of the winners circle. A better technical method will not help you.
2. You can define your own edge by simply sticking to any simple method and learning every nuance of it over time. Getting the mindset to trade it is where you need to put your energy.
3. Entries are more important than exits, period. If you get a good entry you will risk very little and it's more likely you'll get a profitable exit.
4. Diversifying in the futures market is, over the long run, a waste of time. Learn a couple markets like the back of your hand and trade the hell out of them. I prefer to trade one market at a time, all in.
5. Not all types of trading will allow for the use of stops. There are times they can be used and times they will not do your bottom line any good. Know the difference.
6. 'Cut your losers short' & 'execute your edge without hesitation' are about the only trading cliche-type adages I agree with, the rest aren't worth the paper they're written on i.e. 'let your profits run'. Letting your profits run is a good thing, but not all methods require a a 'run' to be successful. In other words, don't always swing for the fences, or, even better, know when to swing for the fences.
Trading is tedious work but it really isn't all that hard to do if you can master the psychology of it. A system can work but few will execute it properly, especially your broker. You do not need to be a genius to trade as it is a very simple format >>> define your risk (and accept it), execute your trade, know where you want to get out (or, at the very least, where you want to start trailing a stop). The two best books ever written on trading are by Mark Douglas and I suggest reading them. The Disciplined Trader is a better read if you have had some college level psych and Trading In The Zone is a great read if you've been in the markets for awhile. Either book will disappoint you if your looking for a new fail-proof method to trade with.
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