Archive for ‘futures trading’

Todays ES Pivots

By , 13 July, 2009, No Comment

ESU9
For 07/13/2009
Symbol R1 R2 Pivot S1 S2
ESU9 880.08 885.92 874.42 868.58 862.92

Trading for 7-10-09

By , 11 July, 2009, No Comment
ESU9

ESU9

Charts courtesy of AMP Trading

The morning session traded along  nicely and I was able to start out with a nice couple of trades, and then had a great set up got stopped out before the market could start upward.  It happens.  I didn’t try to jump back in because it’s never a good idea to chase the market, so I had to eat some crow.  The afternoon seemed fairly range bound, and there were some decent set ups but none that were really compelling so I headed to the golf course  toward the end of the session.  It turned out to be a good decision.

I have taken to reading some other trading blogs lately and find myself perplexed by some of the advice offered.  I am generally aware when a big economic or political announcement is going to made public and avoid being in the market at those times.  Aside from that minor information, I really don’t pay too much attention to anything but the chart.

I THINK IT IS IMPORTANT TO TRADE THE CHART THAT IS BEFORE YOU RATHER THAN THE ECONOMIC NEWS.  After all, the charts are a reflection of the information being disseminated in the media.   I never listen to television financial news when I trade, or any other kind of information service.  I simply trade what is before me on the chart.  I think that this is an important idea to assimilate.  (Note:  I have been known to listen to the Chicago Cub games during the afternoon session and this can be a very depressing experience, though I do not really know if it effects my trading)

As a matter of fact, Friday was a day filled with announcement from the G8 and the US government, and I never gave any of this information any weight in my trading.  I trust the charts, and I trust my trading methodology.  I do not try to guess how a given announcement will influence the trading direction.  I exist in a sort of trading vacuum, I suppose, as I am unconcerned about the world and only concerned about the information that appears on the given chart I am trading.  Make sense?

Most Politicians Simply Don’t Understand the Futures Market

By , 10 July, 2009, No Comment

There has been a spate of proposals to regulate the oil futures market by the current administration.  The goal is to rein in price fluctuations, which is a worrisome trend.

The perception, perpetuated by the talking heads of financial television, is that over speculation has been the root cause of massive oil fluctuations.  Actually, the facts bear out that nothing could be farther rom the truth.

1.  The oil-futures market is tiny compared with the physical oil market: less than 3% of the world’s oil consumption over the next year is accounted for in the open interest.

2.  The U.S. government cannot possibly regulate the global market. Oil is an international commodity, traded by Americans and non-Americans alike on both American exchanges and exchanges overseas.

3.  With the proposed regulation, foreign oil suppliers will have a greater futures market share. The oil market will become more susceptible to manipulation by these suppliers.

4.  Another common misconception is that speculators only buy and hold assets. More accurately, speculators try to benefit from fluctuations in prices. In other words, speculators cannot profit from sustained high prices; they can only profit from changing prices.  Speculators do not drive prices up then wait…they take profit.

5.  While speculators affect the market in both directions, commercial participants tend to put upward pressure on prices, and it the big banks using stimulus money who tend buy and hold contracts.  Banks like Citigroup, through its Phibro commodities-trading subsidiary, and Goldman Sachs, through its own energy-trading desk.

The current administration needs to refrain from controlling the wrong participants, which would push the price for oil out of American hands and into the foreign dominated oil producers.

Strict position monitoring, that is, making sure no entity controls more than 20% of the open interest is a great idea…but stifling the futures market moves some measure of price control out of our hands and into the hands of oil producers.

I don’t doubt there is some price manipulation in the oil market, but we need not cede complete control to foreign entities, especially those hostile to our plight.

Trading on the ES Emini Contract Using CCI Entries

By , 9 July, 2009, No Comment

ES Trading 7-9-09

ES Trading 7-9-09

Charts courtesy of AMP Trading

Some pretty long bars today as the market enjoyed a day of volatility without a huge range.  I really enjoyed the trading today, but was fairly conservative.  Notice the entries on the 100 and -100.  I also avoid trades around the 100′s when there has been a lot of activity bouncing around those points.  I have found that these trades can be very uneven and unpredictable.  I like a straighter entry point.

Special Note:

The analyst from several investment firms have been absolutely screaming about the current glut of oil in the US and some have set targets as low as $20.  Of course, I have an inherent distrust of any analyst, but the fundamentals for the price moving downward, as it has been, seem fairly compelling.  I don’t trade the oils, but for those who have mastered this market it would seem a nice story line to cash in on.  I’ll leave that to your judgement, as it is not my area of expertise.

Learning to Trade the Emini through Experience and Discipline

By , 9 July, 2009, No Comment

Something has been bothering me lately, and I feel the need to express my opinion on the topic.  As many experienced, and unexeperienced traders know, trading is not an exact science.  Still, the impulse to trade on one’s “gut feeling” is one of the worst strategies a trader can have.  Remember the axiom:

The market is always right, you are always wrong

I also add a few axioms of my own:

1.  Never let a winning trade become a losing trade, ever.

2.  Never trade without well thought out stops and limits.

3.  When you are clearly on the wrong side of the trade, get out and move on.  Emotional attachment to any trade is the kiss of death.

4.  Trade markets you know, don’t bounce willy-nilly from market to market.  Learn one and trade it well, then you may be ready to move to another market.

5.  Trade the market on paper in a demo account until you can consistently string together five days of winning trades.

6.  Avoid counter-trend trades at all costs.

However, there have been a plethora of one size fits all trading programs that promise fantastic profits.  These programs, or systems, usually sell for thousands of dollars and are usually not nearly as fantastic as the seller promised.  Learn to trade through experience.  Once you have seen a set up two or three hundred times, you will recognize the pattern….then understand that even the most perfect setup may not result in a winning trade.  There is a randomness to the market that makes fools of all of us.  Just don’t compound your foolishness by riding the trade into the ground.

I love trading, and I truly enjoy traders.   Traders are a maverick bunch.   I prefer to scalp, which means I am making very short trades try to earn 2-3 point on a trade.  It is simply my preference, as I have no tolerance for sleeping while I have an active trade.  That’s just me.

Find your trading style, whether it be scalping, swing trading or any other trading style and be the best you can be, because it is a wonderful lifestyle to live.

All the best, and learn to love this wonderful thing called trading.

Get Yourself a Free Demo Account

By , 9 July, 2009, No Comment

Chad at AMP futures has been very gracious and is offering a free demo account using the state of the art platform, Ninja Trader.  Ninja Trader uses the Zen Fire feed and is lightening fast and accurate.  Readers of this blog can get this free of charge for thirty days.  It is a great way to practice some of the things we have been discussing and actually trade on a live feed.  Charts courtesy of AMP Trading.

Note:  I have no financial relationship with AMP Trading, but like using Ninja Trader and Zen Fire

ES Emini Trading for 7-8-09

By , 8 July, 2009, No Comment

emini chart for 7-9-09

emini chart for 7-9-09

Charts courtesy of AMP Trading

I didn’t get a chance to trade much today because of some prior commitments, but made one trade I limited out.   Most of my trading buddies said they tore it up staying short, short, and more short.

Looks like there was a nice countertrend trade toward the end of the day, which is often the case as speculators take profits.  Of course, I cannot be sure that was the case.  Anyway, have a good look at the chart and notice the nice entries at the 100 and -100 lines on the CCI.

Good luck trading, and have a great day tomorrow.

The emini Trade you Don’t Take

By , 8 July, 2009, No Comment

Trading is a funny thing, especially after you have stared at an emini chart for four or five hours.  A trader can see possibilities in every price move, and usually these potential trades are losers.  Learning to control your emotions and stay disciplined in your trading is one of the most difficult aspects of trading.  To be sure, it is, in my opinion, the MOST important aspect of trading.   In my opinion most traders fritter away their money by making emotional trades they should never have taken.

Emini trading is the process of discerning proper set ups and taking those set ups in a disciplined way.  In past posts have described a number of filtering mechanisms I use to keep me out of bad trades.

1. I try to never take counter trend trades

2. I strike an 89 period SMA and usually take short trades when the price action is significantly below the 89 period average.   When the price action is significantly above the 89 period SMA I concentrate on long trades.

3.  I use DecisionBar, with it’s dynamic support and resistance lines, to get a read on the market range and breadth.

4.  I set specific stops and limits with my trades using the Absolute Range Indicator.

But here is the problem most emini traders experience, they become emotionally attached to their trade. Sometimes the very best looking set up will result in a loss, and there is nothing you can do, as a trader, to change this besides exit the trade and look for a trade.  The problem many traders have is an emotional attachment to their trade…since the trade looked so well in the set up stage, surely it will eventually result in a nice gain.  This is not true.

A good trader learns to cut his losses and lock in his gains in a disciplined manner.  A good trader has no emotional involvement in any trade he makes.  It is akin to a math equation, when it’s time to exit a trade….it’s time to exit a trade.   On the other hand, I have witnesses hundreds of traders hang on to bad trades and ride them right in the ground.

Why?

The have invested their emotions in the trade and are convinced that it should be a good trade.  The market is always right, you are always wrong.  It’s a simple axiom, yet one of the hardest to conquer when trading the emini contracts.  Or any other contract, for that matter.

This is no simple skill to master, as it requires you to think akin to a computer.  After all, we all have emotions, and we all want out trades to succeed.   But a certain percentage of trades are not going to profitable.  That is a fact of trading, so cut your losses when it’s time and find a new trade.

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