Yesterday’s results: Neither trade idea triggered. 

Today’s Best S&P Futures Turning Points: Buy 5422.25 stop 5416.50. Short 5581.25 stop 5584.75.

The World Index: (+100/-100) remains at -7 with sentiment mixed and volatility low. 

Catalysts: Fed’s Barr @ 10:00, Bowman @ 12:15. Waiting for CPI tomorrow.  

Quick Tip: Moving Stops

The stop loss placement decision is made before entry. It’s at a price where your choice of direction is proven wrong. 

You can always tighten the stop while the price is moving in your direction to minimize the risk. No one will tell you to increase your risk by moving the stop farther out if the price is going against you. Another alternative is to not move the stop at all and manage out of the trade from the profit target side. 

I know successful traders that have opposing views on this subject. The correct answer is not simple, though. You need to know their trading style and risk tolerance to truly understand their answer. 

Trader A enters momentum...

Today’s Best S&P Futures Turning Points: This strategy remains on hold but is improving.

The World Index: (+100/-100) jumps from +29 to +64 with all major world markets solidly Bullish. 

Catalysts: PCE Price Index @ 8:30. Chicago PMI @ 9:45. UofM Revised Consumer Sentiment @ 10:00. 

Welcome back to Poker Week! If you haven’t read the last four blog posts now is a great time to do so. All week we’re exploring poker lessons that are also invaluable for traders. Enjoy!

Lesson #5: Maximizing Wins

In poker, as in trading, one universally agreed upon tenet is “minimize your losses and maximize your gains.” But what is the proper way to achieve that outcome?

Imagine you’re playing poker, and you get a powerful hand. Your reaction should be to raise the bet. Novice players make the mistake of slow betting the hand instead of raising. They want to keep players in the hand to maximize the pot and their winnings.

The problem is more cards are coming and your powerful hand might end up in s...

Today’s Best S&P Futures Turning Points: This strategy remains on hold but is rapidly improving. Stay tuned. 

The World Index: (+100/-100) rises from +7 to +14 with sentiment mixed and volatility low.

Catalysts: CPI @ 8:30. Crude Oil Inventories @ 10:30.   

Quick Tip: Re-Starting

When you start trading you’re obviously attracted to the potential gains and entrepreneurial freedom from traditional work. But trading is not easy to master and losing in the beginning is normal. This is why learning to trade in simulation mode makes sense. 

Of course, simulated trading can only teach you execution. It doesn’t address the psychological challenges of winning, losing, being right, and being wrong. Still, it’s the best “first step.”

Fast forward to once you’re a profitable trader. You’ve experienced winning and losing but you’ve built the confidence to manage the losing streaks because they’ve come and gone before. 

Here’s a usually tough decision that can be hugely beneficial: During or ...

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Friday’s results: This strategy is on hold... but is improving and likely out of the drawdown soon.

The World Index: (+100/-100) plummets from +36 to -36 with most major world markets Bearish. The U.S. deviates with a strong bullish Globex session so far. 

Catalysts: Empire State MFG Index @ 8:30. Fed’s Powell @ 12:00, Daly @ 4:35. Goldman Sachs gapping up on earnings. Trump presidency looks more likely. 

Quick Tip: Excursions

I’ve been asked a few times… “Why do you document the trade results with the maximum that price moved, since you can’t exit there anyway?”

Two data points you should keep for every trade, taken in real time or not, are Maximum Favorable Excursion (MFE, how far price went in your favor) and Maximum Adverse Excursion (MAE, how far price went against you). 

As your data set grows you’ll have hard evidence to explore different exit strategies. This review process often uncovers edges in your t...

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Monday’s results: This strategy is on hold. 

The World Index: (+100/-100) rises from -7 to +36 with most major world markets mildly Bullish on low volatility. 

Catalysts: Retail Sales @ 8:30. Industrial Production @ 9:15. Business Inventories & Fed’s Barkin @ 10:00. Fed’s Collins @ 11:40, Logan & Kugler @ 13:00. 20-year Bond Auction @ 13:00. Fed’s Musalem @ 13:20, Goolsbee @ 14:00. 

Quick Tip: Time to Change?

All traders experience losing streaks and drawdowns in their trading account. Market conditions change. Some strategies stop working and others start working. It can appear cyclical.

Handling this is tricky. One voice in your head says, “stay the course, it’ll come back.” The other voice says, “dump this strategy and find one that is working.” 

But it doesn’t have to be a black or white decision. You can reduce your position size to the bare minimum or trade in simulation. Examining your equity curve for cl...

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Friday’s results: This strategy is on hold. 

The World Index: (+100/-100) soars from -14 to +57 with all major world markets Bullish.  

Catalysts: Final MFG PMI @ 9:45. ISM MFG PMI, MFG Prices & Construction Spending @10:00

Quick Tip: When to Stop

All trading strategies have drawdowns (a protracted losing streak). The challenge is trading through it. You can’t stop thinking that it may “never come back” or churn for an extended period. Or you could get FOMO and think if you stop now it will roar back and you’ll miss the gain. Obviously, these thoughts are destructive. Don’t go there. 

What you should do is have Stop-n-start rules to follow. These are rules that tell you when to stop trading the strategy and when, if ever, to start up again. This will take the emotion out of the process. Apply these rules to the performance of individual strategies, not your whole trading account. 

Here’s an example of a rule set...