It’s easy to get lost in the price charts, technical indicators, price patterns, and economic data looking for trade setups. However, when it comes to identifying why any tradable asset may move significantly in price, few factors are as influential as a catalyst.

Today, the FOMC releases an interest rate decision and holds a press conference announcing their view on the economy and future interest rate direction. A catalyst like this is easy to manage. We can prepare our response since we know when it’s coming.

If you’re trading stocks or options your primary catalyst is earnings season (MSFT, META & TSLA report tonight). We don’t know the direction a stock will take until after the announcement, but like the FOMC release, we can prepare ourselves for a trade decision in either direction. 

The best catalysts are those that are unknown to the public: the “surprise” news announcements. The price reaction to these can be extreme because traders are caught off guard. 

Here’s the good ...

Imagine starting in trading without any historical information. No price charts. No patterns to study. No economic information. No annual reports. What would you use to determine if it was time to buy or sell? 

Thankfully, we needn’t dwell on that question at all. We have incredible historical information available that we can research for potential edge in our trading. But the fact is that historical information is not a perfect predictor of the future. We can’t control the market. 

The future we can control is our behavior. The result of every new day, every new trade is mostly controlled by how we behave. Were we disciplined following our rules? Were we emotional about wins and losses? Were we prepared? Were we curious about improvements? 

While we depend on historical data to give us an edge, that edge is only as good as how we act in present time. This brings us to the cornerstone of successful trading: self-mastery. In a world where the market’s movements are beyond your contr...

The worst situation to be in trading Futures or options is having one contract. You have little flexibility with your exiting decision. 

Fortunately, with many micro contracts in Futures to select from even smaller account holders can trade multiples. This gives you the flexibility to “scale out” of the trade one contract (or more) at a time. 

Ultimately, your size is a function of your acceptable risk. How much you’re willing to lose when you stop out will determine your size. Trading micro contracts, if you’re willing to lose $120 on a trade and the per-contract risk is $30, then your size is obviously 4 contracts. 

The challenge you have with day trading is market noise. The bigger picture trend may look smoother than the trading timeframe chart. Sometimes that "noise" will stop you out prematurely. One way to mitigate this is to set an initial high probability profit target as your first exit. Call it a “risk management profit target.” It gives you a little win, reduces your ris...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

3. Delaying Gratification: The Patience to Wait for Profitable Trades

"Delaying gratification is a process of scheduling the pain and pleasure of life in such a way as to enhance the pleasure by meeting and experiencing the pain first and getting it over with." – M. Scott Peck

Many traders struggle with the urge for instant results (especially yours truly). This impatience leads to overtrading, revenge trading, and abandoning strategies prematurely. Peck’s concept of delaying gratification teaches traders to endure short-term discomfort fo...

Trading Lessons from A Road Less Traveled 

In this 4-part series we'll explore why traders need more than technical analysis and market strategies—they need emotional resilience.

We’ll use ideas from the bestseller A Road Less Traveled by M. Scott Peck, to find ways how traders can achieve mental discipline, personal growth, and manage their emotions for long-term success in the markets. If you missed yesterday's article you can find it here. 

2. Acceptance of Responsibility: Owning Your Trades

"We cannot solve life’s problems except by solving them." – M. Scott Peck

Blaming market conditions, news, or external factors for poor trades is easy, but it stunts growth. Peck stresses the importance of accepting responsibility for our actions. In trading, this means owning both wins and losses. By doing so, traders can analyze their mistakes, learn from them, and refine their strategies.

Tips:

• Keep a Trading “Thought” Journal: Document every trade, including the reasoning, emotions,...

Happy New Year! This is the final part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior eight posts, you can find them here. 

If you were an actor you would not only memorize and practice your script, but you would listen to and watch a recording of your performance to hone your act. Repeatedly. Practice and review. This sequence is the formula for mastery. It applies to anyone wanting to truly master their profession including traders. 

It’s critical that you practice in simulated mode before risking real money. You want to develop “muscle memory” and confidence. Your knowledge and skill using your chosen trading platform should be first-rate. Your entry and exit execution should be flawless. 

It’s even more critical that you develop a consistent review process. Think about it this way, the trade plan you just developed is your script. Your performance will vary. The only way to improve is to review your performance relative to...

Happy New Year! The next blog is part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior seven posts, you can find them here. 

Brokerage risk is rare but real. Ask anyone who had money with FTX. Keeping your trading accounts with reputable brand name brokers regulated in the USA is the safest decision. If you’re comfortable with offshore and unregulated brokers then start with a very small account and regularly take money out of it. That should give you some comfort that you’ll get your money when you want it, but it won’t guarantee that when you want a large distribution you’ll get it. 

Market risk is unavoidable. Major catalysts happen with no notice. Think about the reaction to the pandemic. Your best protection against market risk is a personal financial plan that is diversified among uncorrelated assets. Stocks, bonds, precious metals, real estate, cryptos, art, etc. Your best protection is having multiple income streams from ...

Newbies Only Part 7

Happy New Year! The next few blogs are part of a multi-part process to tune up your trading plan for the coming year. If you haven’t read the prior six posts, you can find them here. 

There are more risks in trading than the loss on any given trade. Here’s a few to consider. 

Liquidity risk. You’re buying and selling. That means someone needs to be your counterparty at a fair price. The difference between the bid (buyers) and ask (sellers) is called the spread. If this is wide enough it will ruin the edge your strategy has. 

Spread changes not only with the asset itself, but during changes in volatility. For example, the spread on the most popular ETF, the S&P Index (SPY) is less than 1% in the options market. Similarly priced stocks can have spreads of 10% to 20%. The spread is your cost of doing business with that asset. Avoid assets with a wide bid/ask spread.

Furthermore, the spread of any assets can increase during volatile markets. Consider the FOMC relea...