Trade Aptitude

Results of Monday’s Best S&P Futures Turning Points: Shorting 4261.50 only offered 7 points before stopping out. 

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

Buy 4181.75 stop 4177.50. Short 4305.00 stop 4309.00.

The World Index: (+100/-100) jumps from -57 to +21 with most major world markets mildly Bullish. 

Catalysts: Flash MFG & Services PMI @ 9:45. Richmond MFG Index @ 10:00. Treasury yields ease. MSFT & GOOG earnings after the close (applicable to Globex trading). 

Quick Tip: Small Winners

Trading has only four outcomes; big winners, small winners, small losers, and big losers. 

Allowing big losers is the kiss of death so keep what you’re risking small. Your small losers don’t need much analysis beyond stop loss optimization for varying market volatility. 

Your big winners are likely open managed or reaching a Ratio Exit (see the October 20th post for details). 

That leaves us with small winners. Looking at yesterday’s short suggestion the starting risk was 5.75 points and price ran 7 points in your favor. That trade has a few outcomes; 5.75-point loss, smaller loss, breakeven, or small winner. 

Your decision on how to manage your small winners is a matter of personal preference. Some traders never move their stop loss tighter allowing for some expected spiky price moves. Others will trail-stop using a fixed dollar or percentage loss. If you have enough evidence and are trading multiple contracts/shares then you can scale out with pre-determined small winners along the way leaving some contracts/shares for the big winners.

Our evidence from the strategy that identifies these levels shows that scaling out rather quickly nets better. We’ve found that moving the stop to breakeven after a 4-point move in the S&P futures and taking some profit at that point is best. 

This may not apply to your strategy or your style. But wouldn’t it be great to know what your optimal small winner exit should be? Documenting and reviewing all your trades can find you this edge. 

Our team receives detailed documentation from every trade setup, taken or not, every day. Join our team. You can learn multiple strategies tuned for different market conditions and trade live with us for 30 days. New reduced price offer. Money back if you’re not blown away!

Trade Fearlessly,

Mike Siewruk

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