Small losses and Big Profits

OK, now if we look at the 3min NQ, you can see how there was a TS3 buy later in the day (the first one was against a red STF, but this second one was on a black STF so was OK). But the important point is the size of the profit at +3.7R (ignoring slippage and commission).

So even after 3 losses on the ES, this one profit put you back into Profit overall for the day. 1 profit and 3 losses is only a 25% hit rate, but you still made money. Most amateur traders never get to fully understand that you don’t need a high winning % to be a successful trader, controlling your losses is actually far more important. This is why 95% of amateur traders end up broke in this Industry because they never learn what is important and what they have to do to get it.

Thanks, Steve

PS, as I have already said, the 15min trend was UP so not only should you have avoided the losing sells but the Advanced Traders should have been looking to “run” their long trades further. So in reality, the Advanced Traders among you should have had a very good day yesterday.

Small losses and Big Profits

Hi Everybody,

Yesterday was a brilliant example of how the use of correct position sizing can help you when a number of losses come through. If you look at the 3min ES chart, you can see that there were 3 -1R losses. On the surface this does not look good.

BUT, as we will see in the next post, all it takes is one good trade to put you back into Profit. So in reality, you do now need to have lots of profitable trades to make money trading, you just need to control you losses. This is a point that most amateur traders never seem to get or fully understand.

Thanks, Steve

PS, also please look at the Advanced Blog where you will see that the Advanced Traders among you would have avoided these losing trades anyway as they were “against” the 15min chart.

Follow all 4 e-minis

Hi Everybody,

I know a lot of you only follow the ES or YM, but this is a good example of why you should follow all 4 of the US e-minis. As you can see the Russell Index (TF) gave a nice TS4 sell just after the open, which went onto reach the first projected profit target. At that point the STF was strong (beyond its strength band) so standard traders would have swapped to the ATRStop.

The result was a nice +3.7R Profit (ignoring slippage and commission).

This is why I suggest following all 4 e-minis because sometimes a trade will appear on one of them and not on the others, like this example on the TF.

Thanks, Steve

+10.9R Profit on the 3min YM !

The ES was not the only market yesterday that has brilliant trades, the YM also had a TS3 sell setup, please see the chart. Here the profit at the first target was a massive +10.9R (ignoring slippage and commission) !

What a brilliant day on Friday !!

Thanks, Steve

A brilliant day

Hi Everybody,

Well I did say that it would not be long before we had a few good days . This is just how the Cyclical Nature of Trading unfolds in the real world. And Friday was another good day. If we first look at the 3min ES, we can see how we got a TS3 sell in the morning. This nailed the high nicely, before the ES started to drift lower. This decline kept of going and going, until it reached the first projected profit target, where standard traders would have banked a very nice +6.4R Profit (ignoring slippage and commission).

This just goes to show how we should understand the Cyclical Nature of Trading. After a bad day on Wednesday it was all too easy to give up. But then you would have missed two brilliant days on Thursday and Friday where some big profits came through....

Thanks, Steve

Amazing ES short

Hi Everybody,

As I said yesterday, the markets go in cycles and after a few hard days we were getting ready for a good day, so when we got a TS3 sell to go short right off the open, I had high hopes. The ES did not disappoint, as the ES dropped straight into the Typical Wave 3 WPT. With +6.4R Profit (ignoring slippage and commission) available at that level, and some TS4 buys coming in on the 15min Charts (NQ), looking to bank such a good profit was a good idea........

No do you see why it is important to keep your losses small. Even with a bad day on Wednesday with three -1R losses, this one +6.4R Profit puts you back into profit in just one go ! That is the secret to successful trading, keeping the losses small and profits large.

Even with two more -1R losses later in the day, you were still up overall............. So all in all, a good day yesterday !

Thanks, Steve

Cyclical Nature of Trading.

Hi Everybody,

As I said a few days ago, after a very good week last week, where we had some huge profits, this week we have move into the harder part of the cycle. This is all the natural way markets unfold. I call it the “Cyclical Nature of Trading”, where the good times are followed by quieter times, where some small losses unfold, before the good (profitable) times come round again.

Well yesterday was a hard day on the 3min ES with three -1R losses. Yes this can and does happen sometimes when trading. Most vendors never tell you about losses because they are not real traders. But we believe in telling you how the markets unfold in the “real world” and yes there will be hard days like this. But, as I have said, this is OK as the losses are kept small, small in comparison to the big profits last week.

As we are in the hard part of the cycle now, it will not be long before the good (and profitable) part of the cycle come round again. But understanding how the markets unfold in the “real world” is vital if you are to become a professional trader, and learning to accept the harder times is just part of that.

But was it all hard work yesterday ? lets look at the Russell Index on the Advanced Blog.

Thanks, Steve