Friday’s Blog Results: The suggested buy level @ 4454.25 offered 8.50 points before reversing. The suggested short level failed by only 5 ticks and then plunged 32.25 points to the close.

Today’s Lesson: Near wins.

As you review the trades from Friday you’ll likely pause on the short entry, which failed by only 5 ticks before offered a sizable winner.

Was the stop too tight? Was the entry too soon? You’re thinking about how you could have gotten into the trade.

Now if you’re a discretionary trader with no evidence of edge, just intuition and experience, that may be the correct review process.

Our team is rule-based. We work with statistically relevant evidence to make trading decisions. Pondering the reasons how we could have “made” it a winner is a waste of time. Specifically, we know that our entry and stop were correct probability-wise.

The review process then becomes “reframing.” Taking a negative and making it positive. Ask...

Thursday’s Blog Results: The suggested buy level ran for 24.25 points. Which stop did you choose? The tighter stop lost. The looser stop enjoyed the 24.25-point run. How did you decide which to take? (Re-read yesterday’s blog about market conditions and exit rules.)

Today’s Lesson: Swiss army knife?

Technical indicators are helpful. Yes, most are lagging and we’re always looking for leading information but used skillfully indicators can help build your case for taking a trade or not.

Think about trend. If you’re concerned about trading with the trend then you need a definition of what that looks like and now you’re using historical information.

Where you can run into trouble is combining indicators that are directly related to each other. A moving average and a chart trendline for example. No need for both. Pick one.

You can benefit by combining different types of indicators. Trend, volatility, momentum, volume, sentiment, open interest, and...

Wednesday’s Blog Results: The suggested buy level ran for 22.75 points. How much did you keep?

Today’s Lesson: Exit alternatives.  

The money is made in the exit, not the entry. That’s not to say you can randomly enter a market (although Market Wizard trader Linda Raschke was quoted as saying you could give her any entry and she’d optimize the result).

The long trade yesterday did have a “near perfect” entry. Buying at 4540 and seeing only 1 point of adverse move (all orders there were filled). It ran for 22.75 points before returning to the level and eventually hitting the stop. Depending on your exit rules this great entry could have been a small winner, solid winner, breakeven, or a loss.

Market conditions are important to guide you to your exit rules. Is price moving fast or slow? Is the expected range for the day wide or narrow? Is there a catalyst on the horizon that could impact price direction? Lots to consider.

Here’s some...

Monday’s Blog Results: The suggested short @ 4443.00 stopped out for a 4.50-point loss. Team members saw the breakout setup that ran for 56.25 points.

Today’s Lesson: Wrong > right. 

Curious how I’m going to dance out of that statement?

If you’re always “right” then you’ll never be open minded enough to change for the better. Being flexible and open-minded to new ideas is a huge advantage in trading.

I’m not saying you simply agree with every new idea you hear. I’m saying that when you’re presented with an intriguing idea (setup, rule, etc.) you owe it to yourself to investigate the value of it. And if you find improvement, then admit you were wrong and change.

I was told the great investor George Soros wrote in his book about a trade he took in the Japanese Yen. It ended up a monster winner. His first entry was short based on his analysis. It failed quickly so he doubled his size and went long. Just like that.

We...

Friday’s Blog Results: The suggested short at 4380.50 ran for 15.75 points.

Today’s Lesson: Expect some slippage.  

One aspect of trading many people don’t consider is order execution. At first glance you may think “How hard could buying and selling be? Click a mouse!” Getting a precise price is not always possible, though.

For example, the other day I was live testing a new process whereby the entries and exits were set at different prices and quantities. Scale-in, scale-out. There were significant advantages… less risk, potentially greater reward.

My platform allows for most of the orders to be automated, but not all. This meant I needed to pay attention in real time to ensure all the rules were met. OK, can do. Unfortunately, price moved extremely fast with volatile swings making it impossible to duplicate all the benefits of the rule set. It was better, and in calmer markets likely more so.

The takeaway here is that you need to start...

Thursday’s Blog Results: The suggested short at 4411.00 stopped out by 3 points. No long triggered.

Today’s Lesson: “Take ‘em all.”

Found this quote the other day reading one of my favorite trader/educators, Larry Williams (https://www.ireallytrade.com). He was talking about the trap we all fall into of picking and choosing our trades as opposed to taking every signal (filters are still honored).

“If you pick and choose, you will invariably pick the losers and walk away from the winners. It is nothing personal, we all do, and the way to beat this devil is to take ‘em all.”

This is not news to me but being the imperfect human that I am, I fell into this trap the other day. Reading this shortly afterward was coincidental but great timing for me!

If you’ve ever struggled with the feeling that you pick the losers and miss the winners, try lowering your risk (or size) and “take ‘em all.” Larry Williams has been...

Wednesday’s Blog Results: FOMC day paid out HUGE. Your suggested short @ 4443.00 caught the top of the session and ran for 98 points to the suggested buy at 4345.00 (which did see a 7-point bounce before stopping out). How much did you get?

Today’s Lesson: Expectations and reality.

People are impressionable. Sometimes that can be a problem. We can have great expectations that won’t match up with reality. A “good result” can look like a failure after a big win.

Here’s an example. Let’s say yesterday was the first time you traded the levels I share in this blog. Your first trade was a 98-point runner. Clearly you’d be ecstatic. What would your expectations be for future trade suggestions? If all you saw were 5 and 10-point winning trades for weeks on end you might be a bit disappointed. But those are more the reality.

This happened to me years ago when I started trading in the late 90’s. The strategy I found worked so well during...

Tuesday’s Blog Results: Heartbreaker! The suggested long @ 4293 found the bottom of the session and ran for 102.50 points to the suggested short @ 4395.50 which was the top of the session and ran for 44 points to the close! Unfortunately, the buy only ran 11.25 points before stopping out and the short stopped out before running.

Today’s Lesson: Reframing.

You had the “top” and “bottom” levels of the market in your hands before the open. The day had a range of 126.25 points. How could you NOT make a killing? Stop placement was the cause yesterday.

How you react to this result, a modest winning day when you could have crushed it, is critical. Getting emotional and changing your rules to fit one event is not OK.

Instead, you should practice “reframing.” This is a simple technique whereby you change the event from negative to positive.

True that you didn’t get the big winning day, but the volume levels WORKED like a charm. This...

Monday’s Blog Results: What a day! The suggested buy level at 4303.00 was good for a 15-point bounce. Not much on a 198-point range day, but that was only one of 28 setups the Team here saw get filled.

Today’s Lesson: Have confidence.

Before you can have confidence as a trader you need to be confident in your rules. There is a difference.

The way you get confidence in your rules is to perform deep research in all market conditions. Document thousands of trade setups. Look for edge based on probabilities.

The way you get confidence in your trading is to stop thinking you can “beat” the probabilities and just follow the rules like a machine.

Yesterday is a great example. The S&P sold off hard dropping almost 5% (from high to low). It gained all that back to close higher. During the plunge you might have been thinking “There is no way I’m taking a buy signal and trying to catch this falling knife.” Big miss with that thought, huh? Volume...

Friday’s Blog Results: The suggested short @ 4469.50 was a beautiful 39.75-point runner to the next level. How much did you get?

Today’s Lesson: How to find your “risk number.”

There is a popular risk management tool that uses a fixed percentage of your account size to determine per-trade risk (and ultimately position size). It’s simple to use and highly effective. Here’s how it works:

Account size: $10,000

Fixed Percentage: 2% (your choice up to 2%, higher is rarely suggested).

Per Trade Risk: $200

Stop Loss: $100

Position Size (contracts): 2

So why is this formula so effective? Because as your account grows the Per Trade Risk grows allowing you to trade larger size. Conversely, if you’re in a drawdown the Per Trade Risk will be less limiting your position size.

In fact, just to put it in perspective for you, using the numbers above you would have to endure 35 losing trades IN A ROW to hit your “no-trade limit” (less than $100...