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.

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