Tuesday’s Blog Results: The suggested short at 4623.50 stopped out.

Today’s Trading Tip: Anticipation

Plenty of time in trading is spent waiting. Waiting for a setup, waiting for an economic release, waiting for a profit target. Lots of waiting.

Here’s how to make this “downtime” productive: Practice anticipation. Get in the habit of asking “What if…?” questions. Answer them. In doing so you’ll be making decisions in advance and be able to act on the spot. No wondering, guessing, procrastinating or flat-out missing the trade. You’ve committed with foresight.

Here's a simple example: Price is slowly moving sideways. Your entry price to buy is far enough away that you don’t expect to see it trigger soon. Suddenly price plunges. The speed candle down is looking powerful.

Now is the time to anticipate. Why is this happening? What catalyst occurred? Will it continue or reverse? What are the likely outcomes?

What CAN...

Monday’s Blog Results: The suggested buy at 4527 stopped out.

Today’s Trading Tip: Asymmetry

In its simplest form trading is nothing more than risking money to make money. You need to be a net winner. This will happen if your losses are kept “small” (that’s a relative word) and you have…

1. More winning than losing events or
2. Larger winners than losers.

Successful traders look for asymmetrical trades. These are trades where the risk is very small compared to the potential gains.

One application for asymmetry is frequently overlooked. Trade direction. Evidence shows that price tends to fall faster than it rises. Look at enough charts, measure the moves, you’ll find it’s true most of the time. Tops tend to be “round”, bottoms tend to be “V” shaped.

Given this reality, shouldn’t your exit rules for shorting be different than for going long?

Doesn’t it make sense to take quicker profit on plunges in price...

Friday’s Blog Results: The suggested buy at 4616.50 stopped out. The suggested short at 4658 missed filling a great runner by 1 point.

Today’s Trading Tip: Breaking a bad streak.

If you missed our weekly trade review session, LookBack (5), the recording is up here. After 14 winning weeks our strategies hit the inevitable losing week.

Here’s what we know from our documentation and 9500-trade database: Losing streaks become winning streaks. And vice-versa. There’s even some math about this phenomenon called Theory of Runs.

The chart above shows every high-volume level that was likely to be touched in last night’s Globex session. After last week’s losses, right when you might be wondering if you should quit, the tables turn and you have 7 winners in a row. Obviously, it takes confidence to persist when losing. That confidence comes from your experience and the evidence you have.

If you’re wondering about the rules followed to get those 7...

Thursday’s Blog Results: The suggested buy at 4715.25 offered a modest 8-point run. The short breakout afterward stopped out.

Today’s Trading Tip: Taking profit.        

If your day-trading strategy has edge then you won’t see many trades go against you to stop out immediately. Of course, you’ll have plenty of stops triggered, but most will show some open profit before stopping out or moving on to your target(s). This is the nature of trading small time frames intraday. Price can be “noisy.”

Every asset will differ, but you can and should find their price movements that recur over and over. This data will give you better profit targets.

Here’s an example based on the S&P futures trading a Volume Profile strategy with 9,508 trades logged. Price will FILL a 2-point target 62% of the time (meaning it moved at least 2.25 points to guarantee execution). Price will FILL a 4-point target 38% of the time and a...

Wednesday’s Blog Results: Both suggested levels stopped out. The Team here had a tough couple of days in both strategies.

Today’s Trading Tip: Handling losses.    

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.

But what if you do get anxious or upset? Here’s a quick checklist you can use when that happens:

1. Was the risk amount within your tolerance?
2. Did you follow the entry rules precisely?
3. If you’re in a losing streak, has the drawdown happened before?
4. Was the prior drawdown equal or less?
5. Are you feeling confident in your strategy edge?

Stop when your answer is “no” and fix the problem. That may be easier said than done but until you do moving on through the checklist is ineffective.

If you get to the end and you’ve lost confidence in your strategy...

Tuesday’s Blog Results: The suggested long entry at 4633.25 ran for 18.75 points. The short never triggered.

Today’s Trading Tip: Reversals or breakouts?       

Both. The high-volume price levels formed by the accumulation and distribution of large positions are simply at “fair value.” Think about it this way: there was a buyer and seller for every contract traded. This means they AGREED the price was fair.

Once price strays OUT of the fair value level it becomes attractive to a trader who is either bullish or bearish. This allows you to trade both reversals and breakouts around the volume levels. Looking at the chart above you’ll see that price went up and through the prior day’s fair value level offering you the opportunity to buy the breakout, as was suggested.

Keep in mind as you follow the performance of the Blog levels every day they are both reversal and breakout setups. If you want to see ALL the levels...

Monday’s Blog Results: The suggested long entry only bounced for a 3.50-point scalp. The Team saw two more like that, all three trades breaking even.

Today’s Trading Tip: Breakeven is a win.              

Yesterday you read about alternative exit strategies and how in current market conditions our “rapid stop movement” is working best.

It’s a simple risk-averse ruleset designed for day traders only. Enter a minimum of 3 contracts. At profit target 1 move the stop on the remaining contracts to breakeven “for the trade.” This means you’ll be giving back that initial profit. At profit target 2 move the stop to breakeven for the remaining contracts. This means you’ve guaranteed a small winning trade. As the trade runs move the stop to pivots on the chart.

Downside: You’ll miss some big moves in your direction if price is choppy around your entry. You’ll have...

Friday’s Blog Results: The suggested long entry never triggered. The short did fill but too late to enter minutes before the close. Team Members had a tough day with Volume Profile but made most it back with Volatility Reversal. Diversification of trading strategies helps.

Today’s Trading Tip: Your trade plan is alive.  

In your trading plan you’ve established a set of rules that when followed, show a positive outcome. You have edge.

Most trade plans start simple. When to enter and exit. Which asset to trade. Which tools to use. How much to risk.

That’s a good start but the real meaty rules come from live trading experience. We can’t possibly consider all outcomes and influences in the beginning. We need to trade live, observe, document, and mine the data for new rules to improve. This means your trading plan is a living document. It should evolve.

Add to all that the fact that markets change character. This means you will eventually...

Thursday’s Blog Results: Price chopped sideways between volume levels with no trades triggering.

Today’s Trading Tip: Know the weather report.

The “weather” in this case is the condition of the market you’re trading.

Yesterday was slow for the S&P using Volume Profile. Other days there can be a dozen or more triggers. We can’t always predict the future, but we can frequently come close. Knowing whether the day will likely be wide or narrow range is very useful.

Here’s why: If you’re looking for a big move and the “forecast” is for a narrow day you’d be better off taking quicker profits. Conversely, if you’re in a trade that has room to run and the “forecast” is for a wide day you’ll have the confidence to let it run.

Here's two tools that will help you forecast the “weather:”

1. Daily Average True Range (ATR) with a default lookback of 14 days. This is a simple measure of recent...

Wednesday’s Blog Results: Price chopped sideways in a 30-point range with no respect for the volume levels. Both the long and short suggestions stopped out. The Globex did shine once again for Team Members with a great 20-point short (see chart).

Today’s Trading Tip: Team trader or lone wolf?

Which is better? This is one of those worthless debates. Both have their advantages and disadvantages. It boils down to your decision on which has advantages that outweigh disadvantages.

Wall Street may disagree, but I would say do both. Put some balance in your trading life. Devote an hour or two a day to collaborating and trading live with smart and successful traders. It will enhance your knowledge, skills, and ultimate performance.

Here’s just one real world example: Several months ago, a member of our team suggested a trading strategy ruleset he recently learned. The logic sounded fine. We coded the rules and through a combination of back and forward testing found it had...