Archive for June, 2009

Consumer Confidence Drops$

After 2 months of improvement, consumer confidence index fell to 49.3 in June. In may the index stood at 54.8. Todays results were worse than expected. Prior to the number being released the market had an upward bias, but quickly retreated once the number came out. The SPY went from $92.90 to $91.92 within 30 minutes. Light volume and sideway action ruled for most of the day until there was a surge in the last hour , only to be sold into as the closing bell rang and the2nd quarter ended.  Ending what was the the largest percentage gain in one quarter in a decade.

However, with that being said, it still seems as though the market wants to digest these gains some more and possibly dip a bit further. The SPY closed today at $91.95 ,which is right above the daily 20MA at 91.88. Holding these levels will be crucial to where the market trades from here.  Remember that this is a holiday shortened week and the volume should decrease as the week progresses so we may not see any real significant moves until next week.

In the meantime, remain disciplined and always follow your plan!


Today’s Action

June 29, 2009 1 comment

Today was one of those days where you needed to make a few bucks within the first 45 minutes or so and then sit back and watch as one of the biggest financial criminals of all time was sentenced to the Maximum of 150 years behind bars. Justice was served!

Hopefully this message sent a strong statement to the American people that those who are greedy and want to cut corners to be successful will pay the ultimate price. Hopefully we can start the rebuilding process and more importantly we can begin to trust Wall Street again. Confident people will create confident markets, ultimately leading the markets higher. To see Dow 10000, once again would be the least that we can ask for.

Again trading today, was more of a lesson what is right and what is wrong! The market itself did not feel as strong as the numbers may have indicated, but you can only expect that the market would feel good on a day like this!

Have a nice life Bernie!

day trading lessons

To day trade consistently profitable requires you learn the skill of determining if you have an OBVIOUS edge. Every day is not a day for full share size nor should you expect max profits every day.

Too many traders spend a lot of time (too much in my opinion) looking for a spot to enter a new trade. You should spend most of your time determining if you have a reason to enter. Don’t confuse momentum with order flow. If the edge is weak no reason to commit capital.


June 24, 2009 1 comment

The 2:15pm announcement came as no surprise today as most wall street traders and the like expected the FOMC to keep rates unchanged. The FOMC said interest rates would remain low for an extended period. They also said that inflation is likely to remain subdued for some time and noted that the pace of the economic contraction has slowed.  The vote to hold its target range unchanged at 0.00-0.25% was unanimous.

As day traders our job is to not try to interpret what is being said but rather to adjust are trading decisions based on order flow and momentum. Typically when the FOMC meetings occur we get some wild gyrations within the first 30 minutes after the announcement. In these early minutes, most technicals are out the window. A time when new traders or trainees should be on the sidelines watching and observing. An experienced trader can many times fade these moves until the market settles in and picks a direction.

Today’s announcement was pretty much a yawn. The markets had a hard time moving at all. The $SPX at 2:15 was trading at 903.25 and closed at 900.94. The market saw a bit of selling pressure but was met with some buying as the bulls try hard to keep the Dow above 8300 closing at 8299 and the $SPX above 900, both psychological levels.

Tomorrows trading can prove critical if we break below 889 on the SPX which is its 20MA on the Weekly chart.  Our traders will be watching that level and will continue to trade what they see and not what their opinion is!


get involved to earn money day trading$

Day trading believe it or not requires patience. The most difficult thing to do in this instant gratification world is nothing. Can you wait for an edge to be obvious or do you get involved because you have an account. In my experience most unprofitable traders or inconsistent traders choose the second one.

If you want to earn enough money to pay your bills you must get involved when there is an edge and simply manage risk. When you get a head start on a trade build a position. Have the patience to let it play out, bigger profits take time to grow.

It takes a skill to learn when to get involved and when to sit on the sidelines. Get some screen time and learn the difference.

Market Breaks Down$$

After a historic 10 week climb to the upside, the markets took a deep breath (for about 10 days ago) , remained in a tight consolidation pattern and over the last 6 trading sessions has provided a pullback that many have been anticipating for the last 6 weeks or so.

Today’s trading session provided us with some of the best follow through we have seen in quite some time, Order flow was negative throughout the session. It was what our traders have patiently waited for. the opportunity to build a position on the short side and to hold for bigger gains. We shorted AMZN early this morning which was good for over 3 points. Both the Dow and Spy closed below their 200MA. Next level for the SPY is around 88.32 and around 8263 on the Dow.

We will continue to monitor the market closely for support levels as we have moved off a bit from our highs but will continue to use the bounces for shorting opportunities.

proper share size is the key to day trading profits

Proper share size is the key to consistent profits Every good trader I have ever traded with had a monitor outlined with Post-It pads at the beginning of their career. There are simply too many things to remember for a newbie. The goals is to have all of those pieces of the decision making process eventually become second nature so one by one the Post-It’s will come off the monitor.

The two that I think are the most important are getting the sequence correct for developing a trade scenario (read my BLOG post here about this) and the other is having the right shares at the right time. Everyone knows the cliche or trading rule never average down, I can tell you from experience that averaging down (adding to a losing position after you have the amount of shares you planned to have before the trade) is the fastest path out of the business. Think about what you are telling yourself, “hey this trade stinks, its not working out, lets get more.”

I can tell you from my experience the advent of Supermontage (NASDAQ) and especially Hybrid trading on the NYSE it is much harder these days to trade out of a bad position. There are so many buy/sell programs that kick in these days that a flood of money hits the market at these levels and if you are wrong, you are wrong by a mile! This is why we never suggest anyone add to a losing trade.

Your goal as a trader should be to have the most shares when you have a profitable trade and the least shares when the trade is not working out. It is the perfect math equation. There are two big things you must firmly believe to make this work though. It is going to be common for you to take quite a few small losses and small profits until 3-4 times per week a trade will follow through and you will be able to add to it as it confirms your trade scenario. These 3-4 trades will pay your bills.

You must be diligent cutting small losses and never adding to a position until it confirms your idea. The math does not work if you are allowing yourself to take losses as big as your largest gains. The exciting thing about this key part of the trading process is that it is completely under your control. No matter what happens in the market you have control over how many shares and when you go get them.

When you truly understand and believe this simple but powerful concept your risk management will be stress free and your profits will skyrocket when a few good scenarios follow through! Start applying this on your next trade and you will be living large.