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Recommended Reading and Web sites
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FREE OVERVIEW EMINI REPORT and TRADING ONLINE VIDEOS See Bottom Page. 1) Intro Index Patterns 2) Some tools that we use (The EMA's Crossing Technique) 3) Risk Management 4) Psychology 5) Free Online Educational Trading Videos on Money Management and Live Pre Market Analysis 6) Sign up for our Free live room and get a survey of more than 500 experienced Futures brokers asked what, in their experience,caused most futures traders to lose money. These account executives represent the trading experience of more than 10,000 futures traders. It is a Must read if you are serious about trading (Free live room sign up page Click Here) ---------------------------------------------------------------------------------------------------- 1)Intro Index Patterns A good trader has a good entry-exit point for at least two major daily trends (see below) and does not overtrade.In trading the commissions impact is overlook by new traders unfortunately if you track very closely your daily results you will see that: Commissions will represent 30 to 50% of your total gain or losses in any given day. You are consistently fighting against the commission factor.VERY IMPORTANT e.g.(A typical trader in the future market makes 8 Round trip trades per day @ about $5 a round trip (Buy-Sell), so per day commission is $40day, $200/week, $800/month, for only one contract. The average day trader trades 2 to 4 contracts that makes it per month $800*2 or $800*4= $3,200/month or a whopping $38,400/Year in commissions alone. This means that if you want to be a successful trader you have to cut your number of trades per day, to a a minimum 1 to 3trades maximum per day. However at over 4trades per day a day trader starts overtrading. As seen above you need to make in a year $38,400 just to break even in commissions for 8 round trip daily and 4contracts. Ideally try to keep the number of trades per day between 1-3round trip per day. By trading more than 3-4round trip you are increasing the probability of being wrong in your trades since there are usually no more than 3trends per day anyway. ( These are
facts also mentioned by the SEC investigation on Day trading)
Edwin Lefevre in Reminiscences of a Stock Operator : “Men who can sit tight are uncommon. I found that it is one of the hardest things to learn,
but it is only after a stock operator has
firmly grasped this that he can make big money.” Usually---3Major DAILY TRENDS (positive opening price signal) or below (negative opening price signal) the 9:30 a.m. EST. open price.
2) There will usually be a countertrend around 11:30 a.m. - 12:00 noon EST..
3)
Between 2:35 - 4 p.m. EST. (watch out for head-fake at 2:45 p.m. and 3:15
p.m.), the Emini S&P goes in the direction of the initial morning trend.
It is a vital daily step to keep a trading journal. You can review and analyze all the trades you have done during the day. You can analyze the price and time at which you entered each trade, and the time and price at which you exited each trade? You can analyze the logic you used to enter each trade, write it down and think it through. We advise you to even draw a chart on your journal, mark your entry and exit points, and note the logic and time frames you used. See if you respected your trading plan and used all the tools of the trade taught in the Cornerstone report . Keeping a trading journal will multiply your results immensely. You will be aware of recurring mistakes, weaknesses to improve,
strength to consolidate and
most of all, it will help you to be honest with your trading and your commitment
to success. Emini Contract Months
*H=March, M=June, U=Sept, Z=Dec
Examples
of Symbol for the Emini S&P 500:
EX1:
ES Z2 (Emini S&P500 December 2002 contract)
EX2:
ES M1 (Emini S&P500 June 2001 contract)
YM
M1 (Emini S&P500 June 2001 contract)
The nice part of trading the Mini Dow, the ES and the ER2 Russell 2000, is the liquidity is fantastic and there is no need of knowing the best routing order ECN, or Market makers. Emini trading involves only buying, selling, or shorting. You just use a professional platform and your fills are 2 seconds with no routing order migraine ,no high commissions and always high liquidity. Also with Emini contracts we are able to short a downtick in a fast moving market. (Round trip commissions range from $3 to $4.9 depending on the volume of contracts traded per day.) Now that we know there are 2 to3 major trends and we understand the leverage, liquidity and speed of execution, which tools do we use to spot these trends and
which rules do we use ?
2) Some tools that we use (The EMA's Crossing Technique)
So what
are some of the basic tools we use? System
requirements: 1)
You must use a fast computer
Get a fast computer with adequate memory (2GB RAM
minimum) and a fast processorfor reliable
trading. Make sure you have a high-speed Internet connection (cable or
DSL). Low memory and having to reboot your computer while in a trade can
cost you a lot of money. 2)
You must have two screens connected by a video card. One screen will show your
real-time quote and graph. The other screen will be your execution panel screen with level 2, risk management and P&Lresults
4) Look for a real time quote feed provider With advanced chart capabilities .(Esignal has been our provider for 5years excellent charts and service." now TradingEmini.com is proud to be an Esignal Educator Partner")
The Method:
1) Look
at the opening price on the Emini S&P and
the Mini Dow YM, the Mini Russell, the QQQ, the BKX banking Index and MSFT Note the Opening price-Previous Day High-Previous Day low on a Daily report sheet, with your support and resistance points for the day.
2) We look at Market internals the TRIN the VIX , the $ADD and the $VOLD with a 2mn chart of the $BKX 3) Use an 8 (EMA) Exponential Moving Average… if the Emini S&P price is above (candle closes above) the EMA it is bullish, if below the 8 EMA it is bearish…. this works great too...see details on our TradingEmini.com Cornerstone report (we explain the importance of candle position relatively to the EMA's)
and spot support and resistance
4) Use a 5 Minutes Mini Dow
chart
for spotting chart patterns, double tops, double bottoms reversal, breakup and break
down.
5) We use oscillator like the William %R (from Larry Williams) to spot divergences
to reflect when the trend is about to turn with overbought and
oversold interpretations, we use the oscillators mainly in synergy with the
crossing technique to exit a trade or add to our position.. A traders objective should be to buy and add or sell contracts that are moving in his direction not against him. Oscillators provide very good trend reversal signals with divergences: EX1: Bullish Divergences: Price
Oscillator
Prices make a new low while
the oscillator makes a higher bottom
6) We use a 2M-2W system used by Victor Sperandeo one the best futures traders . 2M double top and a 2W double bottom method
7) 1-2-3 Method of trend breaking up or down One Complete Example:
Important: The
best time to go short is when you sell your longs,
and the best time to go long is when you cover your shorts.
These
are few of our basic ingredients as far as tools go…
Now
the most important ingredients are money management, psychology and
discipline…knowing how to execute the proper steps is good, but the only thing that produces results
is DOING IT AND RESPECTING WHAT YOU UNDERSTAND.
3) Risk Management
Anyone
trading the Emini should be adequately capitalized to have the highest
probabilities of success. Always
think in terms of how much of my trading capital can I afford loose?
We
use no more than 2% of the capital at risk in any single trade.
The lower the better. Typically 1% is best.
Ex:
If you have $25,000 of trading capital for Emini S&P you should not loose
more than $250 on that trade…
Think
about it, how many loosing trades would it take you to loose all your $25,000
capital risk with 1% loss per trade?
Obviously 100 loosing trades will make us loose the entire $25,000
capital. With a 2% of capital at risk per trade limit you would be out
with 50 losing trades etc…. So the lower the risk management loss % you
use and the higher the chances to get winning trades. Vice versa the higher your
% at risk point the quicker you will be out of the market…and that is not what
we want.
Always think in terms of odds and
probabilities before placing in the trade.
4) Psychology
This
one is the toughest parts to master. Actually some great traders would tell you that it
may take you years to master the trading process.
The
most difficult ingredient of trading is the control of your mind and emotions.
We will go through topics that cause traders problems
in
our TradingEmini.com Cornerstone report with the 10 personal trading
commandments to live by:
-Trying
to solve why your loosing average is > to your winning average
-Adding
up to a looser
-Holding
on to a loosing position
-Positive
attitude in trading
-The
importance of trading as a long-term process and not one single trade to be
successful -Resolution of your "Inner Conflicts", why are you trading? Why are you making money?
Why are
you loosing money? Why are you repeating negative destructive behaviors…?
We at TradingEmini.com are one of the few web sites trying to help you focus through good psychology reading and visual exercise…. As a member we will go over every month one topic that causes a major problem
to the majority
of the Educational Trading room and we will explain some possible solutions.
5) Online Video Clips Enjoy our Live Pre Market Videos below and Most importantly the Video on Money Management (Click here to see it). Incredible Analysis live Dow predicted 8,441 on 10/07 on 10/10/08 the Dow close at 8,451 Pre Market Live Analysis Friday AM 10-03-2008 Pre Market Live Analysis Thursday AM 10-02-2008
Join
our trading students NOW…
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