Tricky trade management

Hi Everybody,

After a couple of easier days, where we had some massive profits come in, it was no surprise that yesterday was a little trickier. This is just the natural Cyclical Nature of Trading at work...........

In particular, I would like to look at the TS4 long on the 3min YM. In past post I have suggested that when a trade reaches the DP from the prior wave b that stops should be raised to “at least” break-even. Well, that is what happened yesterday on the 3min YM.

After that, it was a frustrating wit until the close, as the markets just chopped sideways for the rest of the day. But the upside is that on the close there was a small +1.8R Profit (ignoring slippage and commission). So even though it was a hard and frustrating day, there was a profit at the end of it.....

The Russell Index was more interesting, so I will look at this in the Advanced Blog.

Thanks, Steve

Watch the STF colour

Hi Everybody,

Just a reminder that “Standard Traders” should only trade “in the direction of” the STF colour, so that is blue/black for a buy and red/black for a sell. Only “Advanced traders” should consider going against this, when they use the larger degree 15min charts. But to keep it simple for the newer traders among you please just trade with the STF colour. Once you become more experienced you can look to use the 15min charts and then you will be taking trades against the STF.

So this mean ignoring the two sells early in the day on the 3min NQ. But then taking the TS3 buy at 14:33, but this resulted in a -1R loss. Losses are OK, because straight after we got another TS3 buy, this one nailed the low.

The NQ then rallied nicely to reach the first projected profit target, where a profit of +3.7R (ignoring slippage and commission) was made. But do you see the important part here ? The Profit was much much larger than the loss. This is what makes money over time – big Profits and small losses. And that is what MTPredictor helps you achieve.

Thanks, Steve

What a brilliant day !

Hi Everybody,

After a very quiet day on Thursday, Friday came in with some brilliant trades, for example, let’s take a look at the 3min YM.

The day started with a TS3 sell, that would have been stopped out for break-even. But the trade that got my interest was the TS4 buy at 12:45EST. As you can see, that nailed the low just before a very strong rally. As the YM reached the first projected profit target, the STF was strong so standard traders would have swapped to the ATRStop. This held the long trade for a massive +8.5R Profit (ignoring slippage and commission ! What a brilliant trade !

Then we had another TS4 buy later in the day that would have made approx. +1.7R (ignoring slippage and commission) on the close. So Friday should have been a +10R day for the standard traders among you. So now are you starting to see how markets unfold in the real world, and why you should not get frustrated or bored during the quiet times, because massive days like this will be just round the corner !!

In MTPredictor you have the tools to keep the losses small during the quiet times, that keep you in the game so you are ready to make the most of massive trades like this.

Thanks, Steve

Protect open positions

Hi Everybody,

This is a question I get asked a lot, and it is “when do I move my initial stop to protect open profits”. With EOD trading we have the 100% initial risk level, but this is too close for normal day trading, so we only use the 100% guideline when the larger degree picture is uncertain. Otherwise we want to let the market have some more “wiggle room”. But the question is how much ?

Well, this depends on how the market is unfolding. A good example is on the TS3 long on the 3min ES yesterday. Here the market was making its second swing higher, so a “logical” place for the stop is now juts under the last pivot low.

At least this had your stop at a small profit, so if the market turned (which it did) you came out with a small profit (and not a loss)

But there are no hard and fast rules on this, it all depends on how the market is unfolding, so this is where common sense comes in.

Thanks, Steve

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