Trade Aptitude

Results of Friday’s Best S&P Turning Points: Shorting 3945.00 stopped out. 

Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets): 

Buy 3951.50 stop 3946.50. Short 4022.50 stop 4027.75. 

The World Sentiment Index: (+100/-100) EASES from +50 to +30 with China on holiday, remaining major world markets are modestly Bullish on lower volatility. Historically the close was higher than the open 44% of the time. 

Catalysts: Nothing on the economic calendar.  

Quick Tip: Windfalls

It’s almost always a smart decision to take windfall profits. You have a good idea what your house is worth. If a developer came by and offered you far more than market value you’d likely accept and move on.

Do you know what a windfall profit is in your trading? Rather than arbitrarily defining the amount, study your track record. What is your average winner? What are your largest few winners? How often do the big wins happen? As simple as it sounds knowing your windfall number is important. They don’t happen often enough so getting a rule in your plan for managing windfalls makes better sense than making a flip decision when they happen. 

Here's an example: In our intraday trend trading strategy, after 663 trades completed, the average winner is 15.75 S&P points. The top 5% of winners range from 30 to 60 points with only 5 trades being over 50 points. Good to know! 

Next time we’re seeing a 30-point winner we know we’re in a rare occurrence. Closing the trade doesn’t make sense but protecting that profit more aggressively does. Scaling out or tightening your stop are potential rules to apply. The key is to know the numbers and have a pre-determined rule. 

My mistake is your gain! The discount coupon codes for our memberships were set to expire yesterday. I mistyped the date and  they are expiring tonight at midnight. Rather than cancel them I decided to let you know you have another day to take advantage of the offers. Watch the recording of our Live Trading from last week here. The offers and discounts are explained. 

Trade Fearlessly,

Mike Siewruk 

P.S. Feel free to share this blog with all your trading buddies.