Sunday, April 13, 2014

The Diamond Setups: Setup #2


If I had to mention only one of the characteristics of the Diamond Setups I would definitely say: Simplicity.

Let's talk a bit about the Diamond Setup #2 for instance: it's based on 1 chart only (I can't say which chart here, part of our little secret) and once price closes twice above/below the "key levels" it's the signal we need to take a short or long trade, depending on the time of the day we will use the "trend in play" to make a decision on which side the chances would be bigger, for instance, in a trend down day we'd look for a short entry.

When using the DS system we always have a t least 2 different approaches as to entering trades and using STOPs: Conservative X Aggressive.

Once decided which style fits better your OWN personality then use same approach on ALL trades you take, and as we know as traders, sometimes we will get stopped out and lose some money, that's just part of the game, no problem, the setups are designed to be profitable in the long run, from every 10 trades (or 100 trades if you prefer) we will be wrong on 20 to 30%, but on the 70 to 80% of the time we'll be right we make up the losses and soooooo much more!

As an example of a trade on ES (S&P500 e-minis), depending on your style you will use a STOP order from 6 (conservative) to max 10 ticks (aggressive).

So, you take the trade and market gives you say 6 points, or 24 ticks in profits, now you'd have to be wrong 4 times in a row, if trading the conservative style, to give all profits back, and I'm giving an example of 6 points only, but lately, with the higher volatility, it gives much more than that on a single trade.

One of the biggest problems I see in struggling traders is the "fear to pull the trigger" that keeps them away from being successful in this business...

Now tell me, would you be afraid to pull the trigger after a winner as in the example above knowing that the worse that can happen to your trade now is to lose 10 ticks?

Rules profit, make sure you use a system that fits your personality and leave opinions/emotions out of your trading.

Best of luck.

Sunday, March 23, 2014

10 characteristics of the Diamond Setups System

I really enjoy teaching my trading methodology to other traders, besides learning a lot more about it myself, I get precious feedback which allowed me to greatly improve the system taking it to a whole new level in these almost 4 years that I have been sharing it.

Many traders ask me if I give trials, I don't, because once you have access to our website you'll see all the documentation on the 10 setups I use on a daily basis to be consistently profitable in the markets.

Below I outline some key charactesristics of the system so that you can know a bit more about it:

1 - The system is based on important levels that markets tend to respect most of the time, time x CLOSE always key in each different timeframe.

2 - Patterns repeat themselves over and over again, just the numbers change, we use that knowledge to profit.

3 - Risk management is key, traders must respect their accounts size, small losses DO NOT blow them up, learn how to lose properly and on the trades that you are profitable you make up those losses and much more.

4 - We DO NOT know what markets will do, we just react to what it has just done.

5 - We do the very same thing on a daily basis, when we start a trading day we look for the "key levels", take notes and watch what the market is going to do, when we see a good setup in play we take it without hesitation.

6 - If/when we do not see any setup in play, then there is nothing to do but watch.

7 - Traders can adapt the system to their own trading style, no matter whether they are scalpers, day or swing traders.

8 - We do anticipate trades based on the type of market we have at the moment, just as chess players anticipate their next move.

9 - We are able to eliminate most of the stress and emotions by following preset rules on each trade, we do not jump the gun and will only trade when the setup matches our own trading style and rules.

10 - We know anything can happen, we take all good setups and when a certain setup does not work as expected we have no problem at all in taking a small loss and immediately get ready for the next setup, we know the Diamond Setups work over 80% of the time so we keep our confidence on the system.

Take advantage of the knowledge I've accumulated in over 10 years of trading futures and Forex daily from open to close, over 15,000 hours of screen time and hundreds of thousands of dollars lost have allowed me to put this simple system together.

"Insanitydoing the same thing over and over again and expecting different results." - Albert Einstein

Thursday, January 2, 2014

Our journey begins now



After having been trading for more than 15,000 hours and having mentored over 400 traders in 3 years I've found that the biggest problems that struggling traders face are psychological, such as: fear (by far the biggest account killer), trying to be perfect, gambling, not being able to pull the trigger, to name just a few.

The fear of losing is what kills them financially, it holds traders back from taking the good setups. They take several trades mentally just to see them working perfectly as they thought they would but when they take a real trade it fails, and that repeats itself over and over again making them think there is a plot against them in the markets to make them lose their hard earned cash, and it only gets worse, day after day.

Yes, unfortunately I have seen many traders going through that kind of problem, it goes on and on until they decide to change the way they trade and stop repeating the same type of mistakes over and over again.

" - But how can I change that?" - they ask me in agony when they first talk to me looking for a solution to their problem of continually losing money in the markets and the answer is quite obvious: "- By doing what has to be done!"

Trading is about having set rules and following them with the discipline to not change your tested rules to suit the present circumstance. Some trades will fail, period.

Market tend to repeat its behavior, if we understand how, then most of the time we are able to find good levels for our entries and exits in any liquid market. Every time it makes a certain type of move, that is, it triggers one of our setups, we will take a trade, but we DO NOT know whether the trade will work or not, so we have to take ALL GOOD SETUPS, according to our own trading style, be it scalping, day or swing trading, we have been doing that for years, so we now know that statistically from every 10 trades we take, 4 to 6 trades will work and make us money, 2 or 3 trades will give us a small profit or nothing when we leave at breakeven price, and 2 or 3 trades will fail and we will lose money. Traders need to know how to live with that and have no worries at all when the losing trades take place.

If a trader is not aware of this constant outcome, he ends up taking only the bad trades, and believe me, they do it with an amazing precision!
I have seen they do it many times when they start trading with us in our trading room, while we take all trades and "don't care" whether the market will pay us or not, we know that if we get stopped out using proper risk management according to our account size, we will lose without any problem and we will be ready for the next good setup, so that in the long run we will be profitable, but that is NOT what struggling traders do, if they lose in one trade they will skip the next trade and only "trade it" mentally just to see that setup work perfectly. That used to happen so frequently that if a newbie would tell me he skipped a certain trade I would hold the full position without scaling out because I knew that would be a winner.

If you don't have your own trading system, a set of rules you use to trade daily that work consistently, then get it from someone else, from a trader who has been there, done that. You may try to create your own system yes, why not? But it will take you years of study and cost a ton of money.

The trading system I've created is very simple to learn and use, traders usually take 2 weeks to understand the whole concept of the system.

Last year, from 45 weeks we traded; 43 were winners, that is NOT a coincidence or luck, we make it week in, week out by following religiously a set of rules, because we know rules profit.

Start off the year doing the right thing, this year you can receive what you ever hoped and wished for, go for it.

"People don't change when they feel good. They change when they're fed up." ~ Og Mandino


Monday, October 15, 2012

US$ 5k to 100k in 100 days: 2 ES points a day

After losing consistently in the markets for more than 5 years I was looking for a way to risk the minimum possible while still trying to make a living from trading, even if it was to just cover my minimum personal expenses for food and gas and the trading expenses such as paying for a charting software.

Then among the 20 or so setups I used I found 10 setups (which later I named: Diamond Setups) that work over 80% of the time, so for every 10 trades I take using those setups I can make 1 or 2 points and be ready for the next one, as I learned they happen from 3 to 8 times a day, depending on market volatility.

They work like clockwork, I never again had problems with big losses and the beauty of that methodology is that I can increase the size of my bets as I reach the targets I have set for the week, month and so on, because I'll be risking 1 single point on each trade.

My favorite instrument for trading futures is no doubt the ES (e-mini SP500), for each lot traded it gives  US$ 50/point (or US$ 12.50 per tick, each point has 4 ticks), so what I needed to find was a way to trade that gave me at least 2 points a day for my living and that allowed me to risk a maximum of 2 points a day, if lost then I would be done.

So, in order to illustrate how it'd be to trade using that methodology trying to make 2 points a day (with +80% win rate, max risk 1 point/trade):

Suppose you start trading with a small account of only US$ 5,000, how long would it take you to reach US$ 100,000?

Cars to trade                      Target                                             Time span  (days)                      

        2                               US$ 8,000                                              15 to 20
        4                               US$ 10,000                                            5 to 10
        6                               US$ 13,000                                            5 to 10
        8                               US$ 15,000                                            2 to 5
       10                              US$ 20,000                                            5 to 10
       20                              US$ 30,000                                            5 to 10
       30                              US$ 40,000                                            3 to 5
       40                              US$ 60.000                                            5 to 10
       50                            US$ 100,000                                            15 to 20

So, if we consider the max probable time it will take on all targets, then it should take you not more than 100 trading days to reach the US$ 100k target. And here we are considering making only 2 points a day but most traders using our methodology make 3 points a day on average.

You may also use different trading styles, this is only the scalping version of the system.

Don't procrastinate no more, start today!

For questions and more details, please email: renatrader at diamondsetups.com

Best of luck in your trading!

Life has no limitations, except the ones you make. - Les Brown










Saturday, October 6, 2012

Move on to the next level


Imagination is more important than knowledge. - Albert Einstein

Trading is a real big challenge, no doubt about that, truly one of the most difficult endeavors anyone can undertake, but it can turn to be real fun if you follow a set of rules. Following a system means you will only trade when those preset conditions are met, otherwise you will just watch the market, that thing only already takes a good percentage of the stress off the trader.

It's all a matter of learning what to do and have the discipline to follow it day in, day out, and take the profits little by little on the way to your sought-after targets, allowing you to be consistently profitable.

I started trading around 8 years ago and lost consistently for almost 5 years in a row! I was trading daily from open to close and just couldn't make it, I used to win very little in a couple of trades and lose big in most of them, at that time I really thought trading for a living was just impossible... until I decided to create a system (and follow it), only taking trades that fell in the patterns I knew had a good probability of working, little by little the rules got all created and I finally have a system that works! Eureka!

So, after those 5 long years I started seeing the first wins with consistency, which got improved a lot over time and now, after having used it for almost 3 years, I can say I'm very satisfied with the results I'm getting and also being able to help others achieve their dreams in their trading.

I've learned markets behave similarly every day, only the figures change, patterns repeat themselves over and over again, respecting key levels most of the time and  many times to the exact tick.

The system I've put together is so simple, anyone can learn how to use it in one or two weeks, as long as you know how to enter orders in your trading platform that's all you need to start using and taking advantage of it.

 As everything in life, it might look complex at first, but after one week most traders understand all the concepts.

Have you ever played video games? Did you notice how difficult it seemed to be in the beginning just to become much easier after a couple of tries?

You lost a couple of "lives" but after a while you managed to pass on to the next level, true or not?

Same thing with trading when you use a system, in the beginning it may look hard, but after a couple tries you start getting the hang of it and start making money consistently and you will be able to move on to the next level! It's just a matter of practice.

The system is all visual, no guesswork, you see it, you trade it, if the key levels we're watching are not tested, then all we have to do is sit and wait, but if they do, we confidently just take the trade, trading according to our own style, no matter if you're a scalper, day or swing trader, just follow the system the way you feel more comfortable, using the time frames that interest you, if you're a swing trader then your STOP losses will have to be wider, a scalper will use tighter STOPs and will take profits quickier.

Of course if you are just starting in trading then you will want to risk very little, so you would start as a scalper, risking from 4 to 8 ticks (max) on each trade (on ES - SP500 e-minis) and taking profits as targets are met or just getting stopped out and being ready to move on to the next trade. Once you reach your $ targets you may increase the size you trade, this is key to moving faster to your targets.

Decide to do the right thing today and stop wasting time and money, create your own system or just learn one that works, give yourself a chance to move on to the next phase.

If you want to learn how we consistently make 2 to 3 points a day on ES, join us now at: www.diamondsetups.com

Best of luck!

Confidence comes not from always being right but from not fearing to be wrong.


Disclaimer
Notice: Futures involve substantial risk of loss & are not suitable for all investors. Comments are opinions only. Not trade recommendations.

Sunday, March 25, 2012

Dancing to the rhythm


After studying the markets for well above the 10,000 hour barrier, as Gladwell puts it in his book "Outliers", I have come to a level that gives me confidence to make the same type of trades day in, day out, as we know the patterns repeat themselves every single day.

Today I'm able to make money week in, week out, with the least stress and risk possible, I use a couple of tricks to get rid of them and that's the main reason why I keep my trading room open and many traders have fun there while enjoying some nice profits from my calls. Oh yes, we do lose sometimes, there is no trading strategy that will win 100% of the trades, we've had a nice 30 trade sequence without being stopped out this year, but then we went back to the normal 6-7 wins in a row.

The system we use offers traders many trading strategies adapting to each market condition and a trader's own trading style, sometimes we have traders going short while others are long, but both make money.

So, according to market behavior we use different methodologies, if we have big volatility in the markets for instance, then we use one strategy, just to give an example, a day trading strategy we use allowed us to make an average of 30 points a week for several weeks, and of course we loved it, because we caught the big moves that began by end of July last year which lasted to the beginning of January this year, we had many many wide range days making it really a perfect time for us, day traders.

I remember we had even a 100-point-day move on the SP500, on that day I called the low in our trading room, right after FOMC announcement, we got it perfectly, with the lowest possible "heat" (a couple of ticks) and then it went up forever giving +100 points in one single day! WOW! That was a really lucky call!! LOL

But after that 6 month period, from February this year, market started making tighter range days, making it much more difficult to those who were used to the 20 to 50 point range days, so now we can use a different strategy, we can say that this time it is more like "Hit and Run", a really simple strategy but really amazing, works above 85% of the time, and most of them getting quickly filled, without having to "suffer" a couple of points down before it goes up, the moves are usually real quick, sometimes the trade is done in just seconds giving the trader no chance to be stressed thinking whether the market will go up or down, we just take the trade and quickly take profits, we wait for key levels to jump in.

Besides that, we can choose when we want to work, those who prefer mornings, OK, they can trade 2 hours a day in the morning and be done by noon, or any time they want.

We don't care about the trend, neither about news, all we want is to take a small bite everyday and go home, or we can stay around and just watch the markets while chatting to friends.

By making only 2 points a day, if you trade for instance 2 cars only on E-mini SP 500, or ES, as we call it, you already have US$ 200.00/day which on a consistently basis is not bad at all, to think that you can increase that to 20, 30, 50, 100 cars, it's the same work but with bigger rewards.

Try to get yourself a trading system, either buy one or create your own, just make sure you put down all the rules, but trust me, it will cost you much less if you buy one.

Best of luck trading this week!

See you next time or in our trading room.


Sunday, January 1, 2012

Who wants to be a millionaire?



Oh yes, trading can do wonders for the ones who are disciplined, willing to pay their dues and work as a bricklayer doing the same thing everyday, certain that it's just a matter of time until they can reach even their wildest targets, all they have to do is plan the road ahead and travel safely all the way to their destination.

But most of the small traders I know are not looking to make millions of dollars in the markets, at least not in the short term, they know this is not possible with a small account, all they want is to be able to have a decent living out of trading, as any other small business owner; you don't want to start a business with say US$ 50,000 and expect that bu the end of the year you will have made US$ 1,000,000 in profits, that's not very likely, unless you come up with a brilliant idea on the internet with a new killer website/application...

We know there are lots of pitfalls along the way and we need to be aware of changes of conditions in the markets, sometimes we will be able to make a killing in the markets such as on the period between August and November/2011 when the volatility went wild and we were able to make a great deal of points when trading the SP500 e-minis, 20 points and more were common on most of the weeks during that period for any day trader with a good strategy, but things already started changing in December with tighter ranges making it more difficult to grab fat profits, so let's wait and see if the return of volume to the market will bring the volatility back or will we continue into a period of tighter ranges in the beginning of the new year?

No matter how the market behaves, we, day traders, will have to continue patient and disciplined waiting for the good setups to show up and only trade when they do, we will not force trades as we know they have a good probability of failing, we want the high odds trades only.

So, what exactly do I mean when I say: "do the same thing everyday"?

When you use a trading system you know the market will repeat a couple of patterns everyday, traders will show their greed and fear and that is what will make the market move the prices up and down, so your job is to wait until you see a "good setup" and make sure you pull the trigger when you recognize it, because you know that in more than 80% of the time that trade will be a winner or you will be ready to lose in case your STOP gets hit and you will patiently wait for the next setup, so it's the very same thing everyday, you just need to follow the system and you know that in the end of the day you will be profitable, we work with probabilities and we know what to expect.

One important thing to observe is to make sure you have your targets set for the day, week, month, year and a long-term one, where you want to be in 5 or 10 years from now, and also that you will increase the size you trade by the time you reach the key targets as I have explained in my previous blog post.

So, kick start the year doing the right thing and by the end of this year you will be rewarded with a good harvest, paying off for all the hard work you've put in during the whole year.

Below I put a small checklist with the 7 key things a trader needs to be successful in 2012:

1- Find yourself a good trading system

- If you don't have a plan on how you will trade, a plan you know that works most of the time, it'll be really hard to achieve consistent results, so make sure you create your own system or buy one from a reliable system vendor, as you probably know, I have put together a really simple system, easy to learn and use, the Diamond Setups.

2- Make sure you have a good software/platform

- Trading futures with a Forex account will make it almost impossible for you to be successful, competition is stiff, you need the best tools, make sure your broker is a specialist in futures, there are many good platforms out there, find one that will fit your trading style. Same with the charting software, make sure you get one that is flexible and that will allow you to customize it to fit your needs.

3- Have a good internet connection

- Of course if you will be day trading you need a reliable internet connection, make sure you get the best money can buy and also have a second one available in case the main one fails, it might be either a 3G connection or even a dial up emergency connection so that you will not be totally in the dark.

4- Have a comfortable and pleasant place to work

- If you trade from your garage or from the basement, make sure you have created a properly set up office space, with good lighting and well organized, it's hard to do the right thing if you're trading locked in a cubicle. If the place is noisy, with your neighbor's dog barking all the time, that might bother you and influence on your trading, pay attention to the small little things.

5- Get rid of those "friends" who say you can't

- Most of us have some "friends" who will always want to make fun of you when you start trading for a living, don't let them spoil your weekend as that could last the whole week and make you have a bad week, your state of mind is really important, get rid of those types... OH! Is it your wife/husband who says you can't? No one can stop you when you know where you want to get.

6- Read good books on trading

- As Warren buffet says: "I don't know a single rich person who doesn't like reading". You need to read to learn how others have succeeded in this business and follow their example, so make sure you read the good books available out there. On the right side of my blog I have a list with the 10 books a trader must read, there are many other good books, of course, but those 10 are definitely must reads.

7- Be disciplined

- And last but not least: Be disciplined with your trading this year, if you do the right thing every single day the rewards will show up automatically, you don't have to think about your profits, just make sure you trade well and the money will come to you. You will never be able to do good while you're failing to pull the trigger on good setups, or getting out of a trade without being stopped out, or by taking profits too quickly instead of letting your winners run, these are only a couple examples, you will never regret you were disciplined by the end of this year.

Maybe you think it'll take too long until you become a millionaire, but maybe you're wrong.

"Make measurable progress in reasonable time." ~ Jim Rohn

Wishing you all the luck in your trading in 2012.

Happy New Year!