Commodity Day Trading - Special Patterns In The S&P 500 Futures Contract - PART 2
Most commodity futures markets will tip their hand when it's time to reverse direction.
Knowing how to read its language is the challenge.
It's not easy.
This is important information, since this is all you really need to know!Volatility is a clue as well as price synchronization.
Read on about these unique observations.
This information can be applied to most any freely traded market of any time frame.
If you are real confident and have a good reason to stay in after a violation of the first low you bought, averaging in once and possibly twice can be a good technique.
This is done into the next lower spike and it takes nerve to do.
If the futures market then breaks the second low you just bought, liquidate and take some time off.
Obviously you are not seeing well, trading well and need to get away for a while.
I have a rule that if I am feeling frustrated and cannot understand what is going on, it usually means I am fighting against the trend.
The "trend" of the market can also be a chop.
The frustration is a sign I am trying to force my will on the market.
There are days to just stay away.
It's so easy to give back money quickly when doing "drunken sailor" trades.
Knowing when NOT to play the commodity futures contract and options game is as important as knowing when.
It's normal NOT to know what's going on all the time in the futures markets.
Sometimes we think we need to understand what the market is doing at all times.
But if you can let it go when it talks in strange tongues and patiently wait for it to talk to you again in your native language, you will be rewarded with fewer losses.
I can still remember a drunken sailor trade I made about 10 years ago.
The S&P 500 futures contracthad rallied all day and it was about 15 minutes before the close.
It was a roaring bull market, up maybe 20 points that day.
I was having a poor day trading and couldn't resist forcing one more try.
This is usually a big mistake.
In those days you had to call the trading desk to place an order.
The futures market was touching a big resistance area as shown by a technique I still use today.
I figured it had to have a pull back.
I didn't consider the power of the last half hour on a Friday afternoon, nor used the futures time cycles I use today.
I got the desk on the phone and said, "I want to sell one S&P 500 maxi at the market.
" The order guy said in a loud, surprised voice, "you want to SELL one S&P ?????? !!!" I said, "Yes, I want to SELL one.
"He said, "are you sure you want to SELL one?"For some reason, every time I got that particular guy on the phone I had a loser, so I told him to forget the order and hung up.
As a fitting epitaph, the futures market blew through the highs and it would have been an instant loser.
Yes, I've made plenty of stupid trades.
I've had my fair share.
I've made every mistake a trader can make.
As one wise commodity futures trader once said, your success will depend on how you lose and how it affects you.
Some commodity traders are devastated, while others bounce back.
But then, some never learn from their mistakes and keep blowing themselves out.
A trader that can pull the trigger, handle losses well and remain patient to take only the best set ups is the person to model yourself after.
These trading skills will come and go.
We are never always on top.
Being human and a discretionary, intuitive commodity futures trader can sometimes be tough.
But I wouldn't have it any other way.
Good Trading! There is substantial risk of loss trading futures and options and may not be suitable for all types of investors.
Only risk capital should be used.
Knowing how to read its language is the challenge.
It's not easy.
This is important information, since this is all you really need to know!Volatility is a clue as well as price synchronization.
Read on about these unique observations.
This information can be applied to most any freely traded market of any time frame.
If you are real confident and have a good reason to stay in after a violation of the first low you bought, averaging in once and possibly twice can be a good technique.
This is done into the next lower spike and it takes nerve to do.
If the futures market then breaks the second low you just bought, liquidate and take some time off.
Obviously you are not seeing well, trading well and need to get away for a while.
I have a rule that if I am feeling frustrated and cannot understand what is going on, it usually means I am fighting against the trend.
The "trend" of the market can also be a chop.
The frustration is a sign I am trying to force my will on the market.
There are days to just stay away.
It's so easy to give back money quickly when doing "drunken sailor" trades.
Knowing when NOT to play the commodity futures contract and options game is as important as knowing when.
It's normal NOT to know what's going on all the time in the futures markets.
Sometimes we think we need to understand what the market is doing at all times.
But if you can let it go when it talks in strange tongues and patiently wait for it to talk to you again in your native language, you will be rewarded with fewer losses.
I can still remember a drunken sailor trade I made about 10 years ago.
The S&P 500 futures contracthad rallied all day and it was about 15 minutes before the close.
It was a roaring bull market, up maybe 20 points that day.
I was having a poor day trading and couldn't resist forcing one more try.
This is usually a big mistake.
In those days you had to call the trading desk to place an order.
The futures market was touching a big resistance area as shown by a technique I still use today.
I figured it had to have a pull back.
I didn't consider the power of the last half hour on a Friday afternoon, nor used the futures time cycles I use today.
I got the desk on the phone and said, "I want to sell one S&P 500 maxi at the market.
" The order guy said in a loud, surprised voice, "you want to SELL one S&P ?????? !!!" I said, "Yes, I want to SELL one.
"He said, "are you sure you want to SELL one?"For some reason, every time I got that particular guy on the phone I had a loser, so I told him to forget the order and hung up.
As a fitting epitaph, the futures market blew through the highs and it would have been an instant loser.
Yes, I've made plenty of stupid trades.
I've had my fair share.
I've made every mistake a trader can make.
As one wise commodity futures trader once said, your success will depend on how you lose and how it affects you.
Some commodity traders are devastated, while others bounce back.
But then, some never learn from their mistakes and keep blowing themselves out.
A trader that can pull the trigger, handle losses well and remain patient to take only the best set ups is the person to model yourself after.
These trading skills will come and go.
We are never always on top.
Being human and a discretionary, intuitive commodity futures trader can sometimes be tough.
But I wouldn't have it any other way.
Good Trading! There is substantial risk of loss trading futures and options and may not be suitable for all types of investors.
Only risk capital should be used.
Source...