I’ve put together a new indicator I’d like to pass along to my traders.
It’s nothing fancy or magically revealing, but it’s something I had my programmer build for me, and something I’ve found useful for some new trading systems I’m working on.
Take a look at the video below to see if it’s something you might find useful.
I’m making a prediction… and it is this – The S&P 500 Futures will close at or above 1235 before year end…
It’s not often that I make predictions like this. In fact, when anyone makes a ‘prediction’ my guard goes up. It’s just my skeptical nature. So I reserve my predictions for the times I think the odds are overwhelmingly in my favor. And right now I think they are.
I’ve made a few predictions in this blog through the past few years. At the start of 2010, I said it was time to load up on commodities, and they soared. Then I told everyone to sell them back in April of 2011, and commodities got crushed.
But that’s not all… there have been a few others along the way which I’ve reserved for my customers. The most recent one was in October of 2011.
It wasn’t an easy ride, we took some serious heat in September… we even stopped out of a few swing trades for some big losses. But just as soon as we stopped out, I issued another buy within days. We bought the S&P 500 futures around 1100, eventually exiting that trade as high as 1250 – over 150 points higher!
Those who followed me, stuck to our plan, and took that next trade, could have made out with well over six figures on just one trade, and in less than a month. It was a hard trade to make, but all trades which have potential, are hard to make!
So back to today… today I think we have another opportunity, one like we had back in October. It’s not as good, but it still a trade worth taking.
You see… the stock market is down this year. Not only are we technically oversold, but there’s another caveat that rings a bell with me, and it’s this. Not once, over the past 70 years, had there been a down year before a presidential election. Funny…
Within a few elections from the creation of the Federal Reserve, there hasn’t been a single down year for the S&P 500, the year before a presidential election. Hmm…
Now we are in a situation where every year before a presentation election has been an up year – for the last 70 years. It doesn’t take a math major to figure out we have some work to do on the upside over the next 30 days or so to keep up with that theme.
We’re going higher before year end.
So that’s it… by the end of December, the S&P 500 futures will be above 1235. That’s just about all I can “put my name to…” However, given the oversold level this market, I think even more gains could, and likely will unfold.
I’m gearing up for a short-midterm rally. And that’s what my subscribers are doing as well.
Today I just wanted to show you a short video I did on how to access the NYSE TICK on NinjaTrader. Now that NinjaTrader has it’s own data feed provider (Kinetick), it’s easier than ever to use the NYSE TICK on NinjaTrader now…
If you’re trading the emini S&P 500 this summer, you’ll want to have the TICK on your screen as well. There’s no other leading indicator which can tell you more about the internals than the NYSE TICK, so watch this short video, and start using the NYSE TICK!
How many losses would you take before you quit trading?
It’s a valid question… and it’s certainly understandable why anyone would want and need to know the answer. In fact, it is a question everyone should ask. The issue is not in the asking however. The real issue is in the answering.
The tendency is to come up with an answer that has some sort of ‘feel good’ or perhaps more accurately, ‘stop the pain’ type of remedy. And in fact, most newbie traders will come up with a response motivated by an “instinct to survive” necessity. The problem is, this type of response, which perfectly natural, is very wrong! It is a response which puts your personal needs before trading. But markets are not human, but you are. The intuitive thing to do is to stop the bleeding, so that you can survive. But your very ‘survival’ can be the instinct that is killing you. Often times, it’s not time to stop the bleeding when you feel like it, it’s time to put the gloves back on, and jump back in the ring:
But let’s not be stupid here, there is a sure time to quit, to take a step back, and decide when to quit, if only for a short period. It should be part of everyone’s trading plan. So back to the question: How many losses before you quit trading?
The only way to really come up with the answer is to go back and analyze trades generated by your trading method.
There is a way to come up with the right answer to that question. But it can only be derived from extended backtesting and a deeper knowledge of the win/loss column. If you take the time to do that, you will learn a great lesson which pertains to the relationship between wins, losses and how the combination of the two, create your equity curve:
Without that knowledge, you’re just trying to swing a bat at fast pitches in the dark.
So… 5 losses in a row? That doesn’t happen very often with a good online trading system, but it does happen. Six in a row is possible. For my personal discretionary trading, I stop trading for an hour if I have 3 losing trades in a row. But I tend to focus more consecutive losing days rather than consecutive losing trades. If I have two losing days in a row, I know I’m about to have a winning day very soon.
I’ll give you a very real and timely example, it happened just last month…
My DMS Trend trading system – which is a fully automated trading system and thus requires no discretion – was in the middle of a drawdown last month. It was down about $2,500 per Euro FX contract. Now this system is a high-probability trading system, and wins on average 72% of the time. But as with all trading, the drawdown wasn’t fun, and the instinct for most of my subscribers was to quit trading. However, I told everyone to hang in there, and let the system do its thing, and much to their appreciation, they’re now up 27% in the month of June from that equity low. But if they had given into their instinct to quit, they’d have been left with a loss, but instead they’ve seen an extra $2,700 added to their account in June. And we’re all going to be looking at brand new equity highs by the end of this month (fancy for more flipping money)!!
That is a real life example to emphasize my above points. You have to become involved with the win/loss column as it relates to the equity curve. It’s a trees from the forest type of thing. Don’t get lost in the trees and lose the broader perspective vision of the growing forest. Those that go through the trouble to create a strong foundation before committing real money, will be in a much stronger position to succeed as a trader. Studying the win/loss column will provide the best and most intelligent answer to the question, how many losses. Anything else is most likely a very human, and very wrong answer.
Our friends over at NetPicks have a handy little download to help you understand more about your own win/loss column. You should check it out.. it’s a handy little tool…
I love cliche’s, because there’s so much truth in them. The one I’ll remind you of today is ‘the trend is your friend.’ No one knows it better than the infamous Market Wizard Ed Seykota. He made many hundreds of millions trading with the trend… and wrote a song about it:
But I’ll add a little caveat to the old cliche: ’till the end.’ The trend is your friend ONLY till the end. Because if you’re trading with the trend, and it’s ends, it’s like a game of musical chairs – you don’t want to be the one left without a chair! But I fear that’s what’s happening to many people in the commodity markets these past few weeks.
If they had only read my last blog post here... they’d have known there was a correction coming in commodities. Gold/oil/silver/whatever, all the commodities are down double digits since my last post, and it’s probably just getting started.
I’m not one to short the commodity markets these days, it’s too early. We’re in a multi-decade bull market. But if you don’t take profits when the market tells you too – like it did a few weeks ago – or when I tell you to, well… then… I guess you’d better refresh yourself on the rules musical chairs, because once you’re left with out a seat, you’re out of the game until the next round. And next round in the commodity market might not start up for a few years.
Inflation is becoming a real concern… at least enough in the eye of the public that Bernanke moved from the comfort of being behind the camera, to being in front of it…
I won’t bore you with the significance of this, but we all know it’s something it has never been done in the history of the Federal Reserve. Obviously, Benny recognizes the public is fearing inflation… and perhaps his ‘internal’ inflation numbers – you know, the numbers he doesn’t share with the public – are really unsettling.
Don’t get me wrong here, but I’m just about a certain as I’ve ever been in my life, that inflation over the next 10 years, will be the worst we’ve seen in the 80+ year history of the Federal Reserve. But it’s not going to happen overnight.
You see, generally when the public fears something, they’re either too early, or too late to make any money on it. And I think that’s where we are with inflation right now. Um… commodities are already up hundreds of percent Mr. Public, why are you just now taking interest?
I’ll give you an example. Back in 2008, when gold/stocks/and just about anything with a quote was crashing to new lows daily. As this was happening, I made it a point to stock up on some more gold, I think it was about $750/oz when I did that buying. But if you recall, that was when the public was selling. The public was selling, and I was buying – getting the picture here?
Now… I’ve been actively buying gold and silver since 2003, but since then, the only other time I’ve really added to my position was in 2008 during the liquidity crisis. And I’ve never really thought about selling until recently.
Let me explain…
I spent some time in Denver a few weeks ago… strolling down a popular food and dining area enjoying a cigar. As I was walking down the street, I couldn’t help but eaves drop on the conversation between two college aged guys. The first words I heard was ‘the dollar is dead.’ One of them went on to convince the other that the dollar would fall off the face of the earth at any moment (and it very well could), but generally when you hear stuff like this from the public, it’s because they’ve been brain washed by the media. And I think that’s where we are today.
It reminds me of the type of conversations you’d hear on the streets in 1999, when Internet stocks were doubling every day. This is the same kind of euphoria we’re seeing in the commodity markets today. If you get nothing else from my little rant here, get this, NOW IS NOT THE TIME TO BE BUYING! Gold/Oil/Silver/Coffee/Sugar are all up 2,3,4, even 5 fold over the last two years.
Things area heated up here… and they need some time to cool down. Gold/Silver/Oil/Coffee/Sugar will all be much higher 10 years from today, but before we go higher, a correction is the highest probability scenario.
If you are one of my paid subscribers, you’ll recall I first told you to buy commodities at the start of 2010 in the annual review I provide inthis newsletter each year.
Today however, I’m telling not telling you to short commodities, but to lighten the load. You still want to own some for the long run (as insurance), and perhaps even for the short run, but there’s some risk in being long here – the easy money has been made. We’re extended, and markets tend to correct when they become extended. That’s not to say we can’t double again from here, but it’s more likely gold and silver will fall 30%-50%. And stocks will likely follow.
Remember, trading is about avoiding risk, and there’s risk being too long in the commodity markets right here.
For what it’s worth…
Brian Heyliger SixFigureTrader.com
P.S. Leave your comments… I might actually find the time to reply!
Today I want to talk to you about some of the more subjective aspects of trading…
It’s easy to discuss the mechanical aspects of trading, because everything is black and white. But trading is not a black-and-white business. There are many subjective attributes to trading, that if ignored can have a profound effect on your profit and loss.
I was on the phone the other day with a guy who’s been actively trading for about a year. I could sense the frustration in his voice. “Brian what do I have to do to be a profitable trader.”
He went on to tell me about all the systems that he’s tried, all the courses that he bought, and in general what he had done as a trader over the past year. He was looking for some help…
“Brian, how can you help me.”
The first thing out of my mouth: “I can’t help you, the problem is you, not something else.”
You see, this gentleman was looking for a solution to his trading woes outside of himself. But the problem was within. The problem wasn’t because he had the wrong trading setups, or had purchased the wrong trading course, but rather his problem was the way he manged his trading. It’s all too common in this business. I get calls like this all the time. And within 5 minutes or so of speaking to this guy, I had a good idea what he was doing wrong. He was making the same mistakes 99% of unsuccessful traders make:
The two mistakes most traders make are this: improper money management and under capitalization.
Look, it’s not hard to trade, if you will trade you will make money. It’s kind of like the movie with Kevin Costner… ‘if you build it, he will come.’
Repeat after me: ‘if I trade, I will make money.’
This is true and I firmly believe it. But listen carefully to what I just told you. In order to make money trading, you have to keep trading. And to keep trading you have to defend against the one thing that will keep you from trading: blowing up your account.
UNTIL YOU LEARN TO KEEP YOUR MONEY AS A TRADER, YOU WILL NEVER BE SUCCESSFUL.
Stop focusing on hitting the jackpot, and focus just keeping what you have. And do whatever it takes do to that. Then success will follow without effort!
Here are some practical tips I use for finding ways to stay in the black when it comes to trading.
The first step: Find a market that fits your personality – If you’re trading as many markets as you can fit on your screens, you’re doing too much as once. First pick your market that fits you. Do you like to trade with or against the trend?
So pick a market that fits you. Don’t marry your enemy.
The second step: Analyze you trading- you need to be looking at your trading history on a regular monthly, if not weekly basis.
Ask yourself these questions: What days did I lose money, what days did I make money. Is there a pattern there? If there is, then play big on the days where you win, and go play golf on the days you don’t win. It’s so simple a monkey could do it, but somehow as humans we mess it up.
Lastly - If you have more than 2-3 indicators on your charts, STOP! You’re killing yourself and you don’t even know it. I call it paralysis by analysis. The human brain (not Brian) simply cannot process that much information quickly enough. Brian can easily do all those things :-).
Also, the more variables you introduce into your decision making, the less opportunities you will have to make those buy/sell decisions. It’s very simple. The market will do 1 of 3 things. It will go up/down/or sideways. Don’t over complicate it folks, because doing so will rob you of the opportunities to make money trading. Remember what I said above, you have to trade to make money, and if you’re frozen, you can’t make money.
Here’s what my charts look like:
… need I say more?
…and the very best trader I know, who makes about $1 million per year trading the S&P 500 emini, this is what his charts look like:
I hope you enjoyed this little rant. The entire idea of this post came from a conversion on the phone I thought was worthy of sharing with everyone.
Be sure to leave a comment below, I’d love to see them, and if time permits, I’ll respond to them as well.
Short little video reinforcing some of the trading and ideas I’ve been teaching you over the weeks. These are great emini day trading lessons, using both moving averages, as well as the NYSE TICK.
And all of this trading occurred after the earthquake aftershock hi Japan today…
It’s been awhile since I highlighted one of emini S&P day trades, and I wanted to show those of you who are new SixFigureTrader.com how we roll…
Also, there’s some good lessons in today’s day trade as it relates to pivots. One of the most valuable lessons any trader can learn in the S&P 500 emini, is PAY ATTENTION TO PIVOTS.
Anyway, we made 5-points with today’s trade. Enjoy the video…
It’s been two months… two months since I launched my brand new trading system – The BHES auto trader… And in just those two short months, we’ve had 19 trades for a total profit of $1,919 per S&P emini contract (minus slippage and commissions).
How’d You Like To Make an Extra $9,500 This Year?
Well… if you were trading my system with a 5-contract position, that’s exactaly how much ‘extra’ money you’d have in your brokerage account today!
Here’s what we’ve done over the past two months:
Type
Date/Time
Price
P&L
Buy
1/3/2011 7:12
1260.25
Sell
1/3/2011 16:03
1268
$387.50
Buy
1/4/2011 8:06
1268.25
Sell
1/4/2011 16:03
1265.25
($150.00)
Sell Short
1/6/2011 10:48
1274.5
Buy to Cover
1/6/2011 11:15
1266.5
$400.00
Sell Short
1/14/2011 6:36
1279.5
Buy to Cover
1/14/2011 13:57
1287.25
($387.50)
Sell Short
1/20/2011 12:36
1273.5
Buy to Cover
1/20/2011 16:03
1276
($125.00)
Sell Short
1/25/2011 6:45
1284.75
Buy to Cover
1/25/2011 16:03
1287
($112.50)
Sell Short
1/27/2011 12:09
1293.25
Buy to Cover
1/27/2011 16:03
1295.25
($100.00)
Buy
2/1/2011 7:48
1287.5
Sell
2/1/2011 16:03
1304.5
$850.00
Sell Short
2/3/2011 9:36
1298.75
Buy to Cover
2/3/2011 15:09
1304.5
($287.50)
Buy
2/7/2011 6:00
1312.25
Sell
2/7/2011 16:03
1316.5
$212.50
Sell Short
2/11/2011 6:45
1312.75
Buy to Cover
2/11/2011 11:06
1325
($612.50)
Buy
2/11/2011 12:27
1321.75
Sell
2/11/2011 16:03
1326.5
$237.50
Sell Short
2/15/2011 10:12
1326.75
Buy to Cover
2/15/2011 16:03
1324.75
$100.00
Sell Short
2/18/2011 7:03
1336.5
Buy to Cover
2/18/2011 16:03
1340
($175.00)
Sell Short
2/21/2011 7:21
1339.25
Buy to Cover
2/21/2011 18:18
1329
$512.50
Buy
2/24/2011 11:15
1303.75
Sell
2/24/2011 13:57
1294
($487.50)
Buy
2/25/2011 12:09
1314
Sell
2/25/2011 16:03
1319
$250.00
Buy
2/28/2011 9:18
1323.25
Sell
2/28/2011 16:03
1325.5
$112.50
Sell Short
3/1/2011 9:18
1331
Buy to Cover
3/1/2011 14:42
1305.5
$1,275.00
Net P&L
$1,900.00
Many of you have shown interest in my new system these past two months, but haven’t taken action to get in while I’m still taking on new clients. Once we’re full, we’re full (no joking there). So if you’re on the fence about automating your trading this year, jump off, or risk losing your best option at becoming a six-figure trader in 2011.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THESE METHODS MAY HAVE WORKED IN THE PAST, PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH TRADING FUTURES CONTRACTS CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION SINCE ALL SPECULATIVE TRADING IS INHERENTLY RISKY AND SHOULD ONLY BE UNDERTAKEN BY INDIVIDUALS WITH ADEQUATE RISK CAPITAL.
ANY ADVISORY OR SIGNAL GENERATED BY SixFigureTrader Publishing,LLC IS PROVIDED FOR EDUCATIONAL PURPOSED ONLY. ANY TRADES PLACED UPON RELIANCE ON WWW.sixfiguretrader.COM SYSTEMS ARE TAKEN AT YOUR OWN RISK FOR YOUR OWN ACCOUNT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. WHILE THERE IS GREAT POTENTIAL FOR REWARD TRADING COMMODITY FUTURES, THERE IS ALSO SUBSTANTIAL RISK OF LOSS IN ALL TRADING. YOU MUST DECIDE YOUR OWN SUITABILITY TO TRADE OR NOT. FUTURES RESULTS CAN NEVER BE GUARANTEED. THIS IS NOT AN OFFER TO BUY OR SELL FUTURES OR COMMODITY INTERESTS.
