Size matters.......

Hi Everybody

The 3min Dax this morning has just shown us a perfect example of why correct position sizing works and why it is so important to keep your losses small.

Here we had two losing DP sell’s as the DAX continued higher, but then on the 3rd sell the market collapsed. As you can see from the chart, this 3rd trade netted a massive profit of approx. +7R Profit (ignoring slippage and commission). Now compare that to the two losses earlier at only -1R each. So 3 trades, 2 losses and 1 profit but overall you ended up with a massive profit....

This is what amateur traders do not understand, they seem to only strive for a high % of winners, not understanding that you don’t have to win on all trades to make money overall. Here we had more losses than winners and still came out with a huge profit overall.

This is what separates the losing amateur with the successful professional, the understanding what is important in trading, and that is to keep losses small (not avoid them).

Steve

PS, this was taken using a Beta copy of the new MTPredictor v6.5 RT that has history trades shown by small triangles on the chart. Click here for a video on this new feature.

15min YM Wave C low

Here is the 15min YM chart. As you can see “at the time” of the 3min DP buy, the 15min chart was right at the minimum Wave C WPT support zone.

Thanks, Steve

3min YM DP buy

Hi Everybody,

Today I would like to remind you all to always keep an eye on the longer terms charts (15min for 3min entry). The DP buy on the 3min YM at 14:18 EST was a great example of this.

Normally we are cautious of DP’s because they can “creep”, but they are OK when they fall at “larger degree” support or resistance, so when this DP buy came up you should have had a quick look at the 15min chart. As you will see in the next post, the 15min “at the time” was right at the minimum Wave C WPT for a potential support, as such, the 3min DP was a good one to take....

As you can see, this nailed the very low of the day for you ! The YM then rallied nicely into the first projected profit target, but the STF was strong (exceeded the strength band) so it was time to swap to the ATRStop to look to run the trade. This held the long into the close for a very nice +6R Profit (ignoring slippage and commission).

So this is why I say to always keep and eye on the longer term charts for potential support / resistance zones.....

Thanks, Steve

Advanced Analysis....

Hi Everybody,

As the new MTPredictor V6.5 RT is getting closer to release I thought I would remind you all of how the Advanced Traders among you can use some of the more advanced tools and modules in the current V6.0 to help find additional trade setups. Here is a good example on the 5min YM, that nailed the high of the day for you on Friday.....

As you can see, the high unfolded at the minimum wave 5 WPT. But I also like how this was on a high volume (VSA) spike as well. This was a classic “blow off” top formation, where the move to new highs on very high volume failed and was just a “fake out” by the professional traders....

Please remember, that the Elliott module is an advanced technique. For Wave 5’s please see the Wave 5 help video at: http://www.mtpredictor.com/support/V6.php (bottom of the page).

The 5min YM then declined into the DP (from the prior Wave 4 low) perfectly for a nice +4.8R Profit (ignoring slippage and commission)

Thanks, Steve

3min YM +4R Profit

Hi Everybody,

It was not all hard work on the US e-minis yesterday. The trend on the 15min YM was down to flat yesterday so the TS3 sell early afternoon on the 3min YM was a lot easier to take with confidence.

This resulted in a nice +4.6R profit (ignoring slippage and commission).

So there were some much easier trades yesterday on the US e-minis

Thanks, Steve

Profits and loses.....

I just want to remind you all that there will always be loses as well as Profits in any trading. We show these are small triangles on the charts in the RT add-ons. We will be adding this feature in the new MTPredictor v6.5 RT soon.....

But the important point is that the losses are kept small. Three -1R losses here are still such small than just one of the +4R or +5R profits yesterday. This is what amateurs don’t understand, it is not the number of profits and losses (win %) that is important, it is their size. Here 3 losses at -3R total was still much small than just two profits at +9R total. Professional know and understand this, amateurs need to learn this......

Thanks, Steve

3min NQ – TS3 sell later in the day

Unusually, the best trades yesterday on the 3min NQ were “against” the larger degree trend. This is rare but as long as they are managed more aggressively, they can still be nicely profitable. For example a nice +4R Profit later in the day on this TS3 sell.

Normally the best trades are “with” the larger degree trend, but the market does not always work perfectly in the way we want. The idea of “knowing” the larger degree tend is helping you be more aggressive or not in your trade management.

Amateurs expect the markets to work 100% as they expect, the truth is a long way from this. Successful trading is about risk control and trade management, and not trying to “predict” the future, the market will always be right, we will not, so it is better looking at what we can control, and that is our initial risks and trade management. This is what professional traders focus on, what they can control and not worrying about what they cannot :-)

Thanks, Steve