Saturday, August 20, 2011

Enjoying the volatility?

When trading with our methodology we really don't care whether market is going up or down, it's all the same for us, we don't want to marry a position and try to squeeze 100 points out of a single trade, all we want is to make a couple of ES (Emini SP500) points every trading day, adding up towards our next US$ target. If you want to have consistent positive results, I strongly advise you to find a third party's or create your own methodology as soon as you can, once you find one that works, stick to it and repeat it day in, day out, like a bricklayer.

If the market continues like that making wild ranges in the weeks to come our strategy of making only 1 point a day is totally out of question, we are gunning for much more, for you to have an idea, last Friday, if one would have taken all the 4 good setups that were presented in our trading room, he would be up +70 points (yes, seventy - see chart below with all the 4 trades) in one single day! WOW! What a day!

Of course we know that was an exceptional day and it does not happen very often, but with this kind of volatility, 3 to 5 points a day is not a crazy dream, it's very doable, actually even +10 points a day.

We usually have a bias when we start a new trading day but we've learned long enough to trade what we see, so we wait and let the market tell us what it wants to do before we take our first trade, then, if we take a trade and get stopped out, we will patiently wait for the next good setup for we are sure it is very rare to get stopped out twice in a row when using our trading system, but if the trade works, as it usually does, then we just manage the trade as per our rules for protecting the position by scaling out and trailing.

The good news are, although the targets are much wider in our trades today due to the high volatility, the same is not true for our STOP, as market keeps respecting our levels with the same precision as it used to before the volatility started, allowing us to continue using the same 1 to 3 points STOP on both our scalping and day trades.

We have been using our trading system religiously for 52 weeks now, it failed to work only on 2 of those 52 weeks, so by observing how the setups work during the last year, we know that statistically around 8 out of every 10 trades we take will work and (with this kind of volatility) we can make 5 points or more on full size on each winning trade, so when/if we get stopped out we only lose from 1 to 3 points depending on the kind of setup we've taken.

So, you don't need to be that good in math to know that if we take all or most of the good setups that are presented every single day, at the end of the day our accounts will be deep in the green.

See the chart below with the awesome calls we made on Friday based on our trading setups: (click on chart to enlarge it)

Do the right thing and decide to win from this week, you can do it!

All traders are created equal in the eyes of the market, if I can do it, you can too.

Best of success to you in your trading! Cheers!

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