Sunday, June 15, 2014

Walking the talk: The Trading Business Plan


Hi traders!

After my previous blog post "The road map from US$ 5,000 to 1 M" I received several emails asking me if that was something really possible to achieve, yes, of course it is possible, but it's certainly not an easy task.

So, I decided to create a real trading business plan to show how we can go from US$ 10,000 to 1 M and we will execute it real time, me and the traders who trade together on a daily basis in our trading room, using our trading system, the Diamond Setups, to achieve the target that seems like a far away dream to most people, mainly with such a "small" amount of capital to start any business, if we think about it, what business would we be able to start with such capital?

With the experience we have in day trading, gathered in over 20,000 hours of screen time and day trading, and also from using the Diamond Setups system for more than 4 years now, I'm really positive we can reach that target in less than 2 years, but the worse expected scenario it could take around 40 months to complete our target of US$ 1 M.

Everything starts with an idea, a plan, and we will make it to powerful execution and results. The results will be posted weekly on this blog, the challenge starts on August, the 4th, 2014.

We will set targets and what we do when each target level is reached, and use a sound risk management methodology and proven day trading strategies is how we plan to reach our target in the least time possible.

Targets and trading sizes are calculated in such a way that even during the so-called "bad times"*, when we might get stopped out even 3 times in a row, we do not give all profits back and even if we do we would just scale down to the previous level, regroup and start over, it will not be an easy journey, but it will definitely be worth it. The hardest expected time is of course the beginning levels, but after we breakout 4th phase, the level of confidence will increase dramatically.

The instrument we've chosen to day trade is the ES (E-mini S&P500), each point on ES is equal to US$ 50.00 (fifty US dollars) below I outline the first part of the plan which is the 14 phases that separates us from our target, as each phase is finished we increase the size we trade, making it a safer way to cut time in our pursue by using compounded profits.

So here's the first part of the plan on our challenge:

The Diamond Setups Million Dollar Plan (Part 1: The Targets)

Phase 1 starts with: US$ 10,000 
Trade size: 2 lots
Target in US$: 12,000 – In ES points: 20
Time to reach target: 1-2 months

Phase 2 starts with: US$ 12,000
Trade size: 3 lots
Target in US$: 15,000 – In ES points: 20
Time to reach target: 1-2 months

Phase 3 starts with: US$ 15,000
Trade size: 4 lots
Target in US$: 20,000 – In ES points: 25
Time to reach target: 1-2 months

Phase 4 starts with: US$ 20,000
Trade size: 6 lots
Target in US$: 30,000 – In ES points: 35
Time to reach target: 2-3 months

Phase 5 starts with: US$ 30,000
Trade size: 10 lots
Target in US$: 50,000 – In ES points: 40
Time to reach target: 2-3 months

Phase 6 starts with: US$ 50,000
Trade size: 15 lots
Target in US$: 75,000 – In ES points: 35
Time to reach target: 2-3 months

Phase 7 starts with: US$ 75,000
Trade size: 20 lots
Target in US$: 100,000 – In ES points: 25
Time to reach target: 2-3 months

Phase 8 starts with: US$ 100,000
Trade size: 25 lots
Target in US$: 150,000 – In ES points: 40
Time to reach target: 2-3 months

Phase 9 starts with: US$ 150,000
Trade size: 30 lots
Target in US$: 200,000 – In ES points: 35
Time to reach target: 2-3 months

Phase 10 starts with: US$ 200,000
Trade size: 40 lots
Target in US$: 300,000 – In ES points: 50
Time to reach target: 2-3 months

Phase 11 starts with: US$ 300,000
Trade size: 50 lots
Target in US$: 400,000 – In ES points: 40
Time to reach target: 2-3 months

Phase 12 starts with: US$ 400,000
Trade size: 60 lots
Target in US$: 600,000 – In ES points: 65
Time to reach target: 4-5 months

Phase 13 starts with: US$ 600,000
Trade size: 80 lots
Target in US$: 800,000 – In ES points: 50
Time to reach target: 2-3 months

Phase 14 starts with: US$ 800,000
Trade size: 100 lots
Target in US$: 1.000,000 – In ES points: 40
Time to reach target: 2-3 months


*We know by experience that every couple of months market gets real tough for day traders, we need to be ready not to lose our shirts during those times, and, on the other hand, we need to make the best we can during the "good times".

Wednesday, May 14, 2014

Road map: from US$ 5,000 to US$ 1 Million in 13 months



The sky is the limit.

Yes, that's possible (not easy, but it can be done) by trading the ES (S&P500 e-minis, futures).

All you need to make is 2 to 3 points a day.

ES is worth US$ 50.00/point/lot.

Month #1Start US$ 5,000
Trade size: 1 lot
Target in US$: 8,000 – In ES points: 60

Month #2 – US$ 8,000
Trade size: 2 lots
Target in US$: 12,000 – In ES points: 40

Month #3 – US$ 12,000
Trade size: 4 lots
Target in US$: 20,000 – In ES points: 40

Month #4 – US$ 20,000
Trade size: 6 lots
Target in US$: 30,000 – In ES points: 35

Month #5 – US$ 30,000
Trade size: 8 lots
Target in US$: 50,000 – In ES points: 50

Month #6 – US$ 50,000
Trade size: 10 lots
Target in US$: 70,000 – In ES points: 40

Month #7 – US$ 70,000
Trade size: 15 lots
Target in US$: 100,000 – In ES points: 40

Month #8 – US$ 100,000
Trade size: 20 lots
Target in US$: 150,000 – In ES points: 50

Month #9 – US$ 150,000
Trade size: 30 lots
Target in US$: 200,000 – In ES points: 35

Month #10 – US$ 200,000
Trade size: 40 lots
Target in US$: 300,000 – In ES points: 50


Month #11 – US$ 300,000
Trade size: 60 lots
Target in US$: 500,000 – In ES points: 70


Month #12 – US$ 500,000
Trade size: 80 lots
Target in US$: 700,000 – In ES points: 50


Month #13 – US$ 700,000
Trade size: 100 lots
Target in US$: 1,000,000 – In ES points: 60

The secret is to have a plan with an edge and the desire to get there, the drive to do it over and over again on a daily basis like a bricklayer.

When the student is ready, the teacher will appear.

Best of luck!


“The greatest danger for most of us is not that we aim too high and we miss it, but we aim too low and reach it.” - Michelangelo

Saturday, April 26, 2014

Statistics don't lie, play by the rules


We've been trading using the Diamond Setups system for nearly 4 years now, we know the the winning ratio ranges from 60 to 80%, market repeats patterns over and over again and we profit from that information, we take ALL setups that trigger according to our own trading style, be it scalping, day or swing trading.

OK. Now let's take a look at an example of a typical trading week on ES (S&P500 E-minis) using one of our day trading setups:

Day traders usually get at least 2 trades a day, sometimes 3 or even 4, but usually 2, so let's use an average of 2 as our example for a normal week.

One trading week would give us 10 trades, if we take them all we will be profitable on 6 to 8 of them but we'll use 6 here as our example.

We know that profits range from 3 to 7 points most of the time, sometimes we will see 10+ points trades, in our example let's use 5 points as our average on the winners.

On the losing side our max STOP is 3.50 points, but sometimes we use much less than that, so, as an average we'll use 3 points. Now let's do the math:

From the 10 trades on the week we would get:

6 winning trades at +5 each = +30 points

4 losing trades at -3 each = -12 points

On ES each point is equivalent to US$ 50.00 profit/loss, so 2 contracts would be US$ 100.00/point.

Result = +18 points on the week, if you trade 2 contracts, then you'd make: +US$ 1,800.00

If we play a little bit with the numbers, even if we make only 3 points instead of the 5 in the example above, which is the minimum we make on each winning trade, we would still be up +6 points on the week, or +US$ 600.00 if we trade just 2 contracts.

Trading is really not easy at all but if you apply a winning set of rules and follow them religiously, you will be profitable week in, week out.

Have a great trading week, best of luck.

In spite of your fear, do what you have to do. - Chin Ning Chu












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