Always think in “R” units

OK, in my last post we saw how there could have been -3R on the 3min YM, as I said, the ES was only -1R. BUT, and I have to say this again, these were not good buys to take as the 15min trend on the e-minis yesterday was more down than up, so sells should have been the order of the day (not buys).

So now let’s look at the 3min NQ, where a nice +2.6R Profit (ignoring slippage and commission) was found.

This is the important part, even on a bad day -3R plus +2.6R equals only -0.4R (ignoring slippage and commission) down. Compare this to the +8.7R Profit from Friday and can you all see why it is so important t keep the losses small. There will always be losses and bad day and yes, even losing days, but the trick is to keep these small when compared to the Profits., This is what makes a successful professional trader..........

Steve

Be cautious about DP’s

The DP set-up is a very good setup for nailing the “end” of a trend, but by definition because it is a “trend termination” setup, you need to have added confirmation that a higher degree turn is coming in. That is why I always say be very cautious about DP’s on day like yesterday when the larger degree trend was down on 3 of the 4 US e-minis.

However, let’s look at what the “worst case” would have been on the 3min YM (the ES was a lot better than this with only one -1R loss yesterday). As you can see, there would have been three -1R losses BUT, as I said in my last post, on days like this, when the trend looks to be more down than up, caution is advised on taking long trades, so the more experienced traders among you would not have taken these sell setups.

Steve

Trend, trend, trend.............

After a good week last week it looks like we are back in the harder part of the cycle, particularly for the definition of the larger degree trend. A good “rule of thumb” is that if the picture is unclear then be very cautious or even don’t trade. There are too many amateurs who “over trade” and think they have to trade lots each and every day, this is simply untrue. As I outlined in the Trading Course, there will be times when the picture is unclear. When this happens the best cause of action is to have the patience and discipline to wait until the picture become clear again before committing your valuable trading capital.

Yesterday the 15min trend looked down on all the US e-minis, apart from the 15min YM earlier in the day which looked to be making support at the DP. As such you should have been mainly looking for short trades.

Steve

Back now............

Hi Everybody,

I am back now after a wonderful and very enjoyable vacation.............

After looking through the charts, it was nice to see that there have been some nice trades while I was away, for example this massive +8.7R Profit (ignoring slippage and commission) on the 3min YM from last Friday...........

Thanks

Steve