Tuesday’s Best S&P Turning Points Results: Neither trade suggestion triggered. 

Quick Tip: FOMC Trading

The most effective habit a trader can develop is detailed review. Journaling, watch recordings, data capture. Do it all every day. Think of yourself as a professional athlete. Your coach would have you watching films of your performance. 

Today is FOMC day. This is an ideal time to look back and review the S&P price action on prior FOMC days. The pattern tends to be range-bound before the announcement and spiky afterward. This should help your trade selection and planning. In fact, if you have solid historical data on your strategy’s performance on FOMC day you might not trade at all. It’s always better to have some probabilities at hand. Keep accurate records whether you took the trades or not. 

The announcement releases at 2PM ET. You might think the highest volatility is within the 30-minute interval...

Monday’s Best S&P Turning Points Results: Neither suggested setup triggered. 

Quick Tip: Niche Trading

Dr. Brett Steenbarger, in his book Enhancing Trader Performance (must read), writes about the importance of FIRST finding your niche in trading. 

Too many new traders spend their time and money trying to find a strategy or indicator that makes money. They think that’s all there is to trading successfully. 

The more basic and important aspect is style. What style of trading resonates with you. There are so many different markets, timeframes, and styles to trade. If you could experiment with several different “niches” you’d be way better off than simply trading just like the guy in the YouTube video. 

For example, our trading room runs 5 different strategies. No one trades them all. And within each I’m sure there are nuances that each trader attaches to their personalized trade plan. There...

Friday’s Best S&P Turning Points Results: Neither trade triggered on a relatively narrow, range-bound day. 

Quick Tip: Choices

Market conditions change constantly. This means your strategy will either offer plenty of trade opportunities or very few. Having skill running multiple strategies is the answer to abundance, and that is the foundation of consistency. 

For example, the Volume Profile strategy that is highlighted in this newsletter every day had only 3 setups trigger on Friday, one small winner. And that included the Globex session the night before. A wider range day would have solved that. 

The Volatility Reversal strategy, which prefers range-bound days, offered 7 setups with 5 winners.  

The Trend/Momentum strategy, most active every day, offered 33 setups with 18 winners. 

SPX Credit Spreads had ideal market conditions. 

This is not to say that you would take...

Thursday’s Best S&P Turning Points Results: The short breakout below 3925.50 stopped out. 

Quick Tip: Losing streaks… 

It’s Friday and likely this will be a losing week for me… and I’m unconcerned. 

Losing should not affect you financially or psychologically. You’ve determined how much you can lose before you react emotionally, and you’re disciplined to limit your loss to that number on every trade. If not, you’re destined to fail. 

That risk number can change. You can increase it when you’re doing well and decrease it when not. A common formula for that change in risk is the Fixed Percentage rule. Simply this: risk the same percentage of your trading account on each trade, usually no more than 2%. This way you’ll risk more and gain more as the account grows and vice versa. 

But what if you do get anxious or upset in a losing streak?...

Tuesday’s Best S&P Turning Points Results: The suggested buy level was cancelled due to the CPI release.

Quick Tip: No Gambling

After trading for 23 years and teaching trading for 14 years you know the top 3 questions you’ll hear when you say you’re a trader: 

Q. Where’s the market going? 

A. I don’t know. 

Q. Any good stock tips? 

A. No. 

Q. Isn’t trading gambling? 

A. No. 

At this point they’re curious and confused. If I don’t know where the market is headed, and I don’t have a good stock tip, and what looks like a crapshoot isn’t, then what is it that a trader does do? 

Traders find opportunities in the market where the probability of success is in their favor. It’s not gambling. It’s more like being the casino, which is a highly profitable business. 

But the main difference between being a trader...

Wednesday’s Best S&P Turning Points Results: Neither trade triggered. 

Quick Tip: Style Matters

I hosted a group coaching session last night on the topic of trading style. This decision is critically important to your success. You must find a style of trading that resonates with your personality. 

Jack Schwager, author of the “Wizards” series of books (interviews with top traders) observed that almost every trader approached the markets differently, yet they all made money.

If there are so many ways to trade profitably why is it so hard to achieve? Jack’s answer was they all found a style that suited them. 

In our trading room we run 5 different strategies that require different skills and time commitments. A new trader joining our team can explore the various styles of trading and select the one or two that “fit” their personality best. 

For example, two strategies require very...

Tuesday’s Best S&P Turning Points Results: The suggested buy level @ 3940.75 stopped out. 

Quick Tip: Risky Business  

There probably isn’t a book, course, or video on trading that doesn’t stress risk management as the key to ultimately succeeding. 

Determine your risk number. Make sure you consider losing streaks and drawdowns. Size your position. Use a stop loss order. Done. 

Not quite. That was simply one part of your “trade risk.” You still need to know if, and when, you’re going to move the stop. How are you capturing the profit that remains “at risk?”

There are many forms of risk in trading that require preset rules in your plan. 

1. Trade Risk: Managing open trades. 

2. Psychological: Managing your emotions. 

3. Market: Preparation for outlier events.

4. Liquidity: Ensuring your chosen asset has enough buyers/sellers. 

5. ...

Friday’s Best S&P Turning Points Results: The suggested short level @ 3990.50 was a breakout entry (not reversal) and ran for 16.75 points to the next volume level. That level was unpublished here and returned the favor for another 16.75 points. The suggested buy level @ 3933.50 only offered a 9.75-point bounce. 

Quick Tip: Play to Win 

All your results start with your orientation toward life. In Larry Wilson’s book, Play to Win: Choosing Growth Over Fear in Work and Life, he reveals the two orientations that you must choose between.

1. Play to win.

2. Playing not to lose. 

What’s the difference? 

People who have a positive attitude packed with a view of abundant opportunities that are willing to overcome challenges, grow and risk for gain are “Playing to Win.” 

Conversely, people who need to remain in their...

Tuesday’s Best S&P Turning Points Results: The suggested buy @ 4038.00 was only good for a quick 6-point bounce. 

Quick Tip: Target Optimization

Yesterday you learned about the ratio between the Maximum Favorable Excursion (MFE) and Maximum Adverse Excursion (MAE). The higher the ratio the better. 

Yesterday’s suggested buy only offered 6.25 points before reversing. If your target was greater than that, you stopped out. Here’s how knowing the historical MFE for every individual trade your strategy set up, not just the average MFE (for the ratio mentioned above), will be very helpful. 

Let’s say you have collected MFE on hundreds of trades. You didn’t need to take the trades, they just needed to fit your strategy rule set. Sort the data by MFE, high to low. Now you can ask, “What percentage of the time does price go how far?”

Now you can assign targets to scale out of your winning...