brownsfan019

And the daily ES chart...

And out of curiosity, I decided to see how a daily YM chart looked. Big surprise. Now, before anyone goes out and starts trading the YM on a daily chart, keep a few things on mind when swing trading the YM: 1) Overnight margins apply, which are set by the exchange. 2) Make sure your risk is planned out in advance. On this trade, I would have my initial stop at the bottom of the hammer. In our example here, that's literally an approx 400 pt stop. Yes, 400 pts. 3) B/c of that leverage and risk in this trade, the DIA trade may be more appropriate based on account size. Or a mix of vehicles could have worked too - some DIA shares, some call options and some YM contracts. My best guess is that the best risk/reward was probably in the DIA call options on a per share/contract basis.

One follow up to my DIA post b/c it got me thinking... This is the beauty of the forum - I did not play either of those hammers in my personal accounts as I was too wrapped up in to the day-to-day moves on the ES. Now think about this - had I just loaded the boat on the DIA hammer (buying the DIA, options, maybe the YM....) I could have had a stress free trade for DAYS. Just something to think about. The candles are very powerful on a daily chart in my opinion. And the reason I say this is that on a daily chart, you just need an EOD software to quickly scan these and then you have all night and the next morning (until 9:30am EST) to plan your trade out. That's pretty powerful stuff if you ask me. Bottom line is that we are all here to make money. I'm not saying candlestick analysis is perfect, but when you get a hammer like that DIA trade, that can literally make your YEAR if played properly. It's all about risk and how much you are willing to take on a trade like that. In my opinion, trading on a daily chart with that type of a hammer just requires you to pull the trigger and let it rip. I'm of the belief that if you are swing trading (which I don't blame you) and a pristine setup appears, you have to be willing to 'load the boat'. I learned that phrase from another trader that I worked with years ago that would routinely make large 'bets' using the daily charts. He could afford to do this b/c he had plenty of time to do his homework and plenty of time to allocate his accounts and manage the risk. VERY different than day-trading futures. Some food for thought today class.

James, Here's some follow up to our discussion here. DAILY DIA CHART On the daily chart, we had a hammer that you simply do not see that often occur around August 20th. I don't trade stocks/etf's anymore, so I was just using the free version of stockcharts.com here. But look at that hammer - monster volume, right @ the 200 SMA... WOW. ONE VERY IMPORTANT NOTE ON THIS CHART - Look at the next day after the hammer. NO RETRACEMENT into the body of the hammer. If you saw this and said 'I'll wait till it comes down a little to go long...' you are still waiting. THIS IS WHY PLANNING YOUR ENTRIES IS VITAL. If you saw that hammer and did not play it b/c of poor planning, you just cost yourself a gorgeous trade. WEEKLY DIA CHART Here's the weekly chart James. As you can see, we have some bullish confirmation here. I personally was never a fan of trading off the weekly as I thought that was just too much time to elapse (or wait!). No matter how you planned to enter this trade, you *should* be long. Again, planning is key here b/c there was a retracement on the next candle to just below the real body of the hammer. If you were waiting to cherry pick it at the bottom, you are still waiting... IN SUMMARY We have two very nice hammers on the DIA daily and weekly charts. I would much prefer to play the daily as I think it's easier to manage the trade each day and use the weekly as some help or guidance. In my opinion, the daily DIA hammer trade has been a success. Again, it's all about how you MANAGE the trade once the hammer has done it's job. There's a million ways to manage this trade, so we'll leave that part up for discussion elsewhere on the forum.

Tor, It happens to every trader. Problem is, as soon as you adjust your next stop by 1 or 2 more ticks, you start going down a slippery slope... These type of trades, suck, I know but it's the cost of doing business. My only suggestion is to take a close look at the market(s) you are trading to see if your levels are respected more often than not. For example, I mainly just trade the ES now and part of that is due to the fact that I know getting those 'ticked out' trades are less common here since there is some serious volume needed to push through certain levels, aka where my stops could be resting; whereas on the ER2, I could get ticked out like crazy. So, sometimes it's just the way it is, but sometimes it could be just changing the market being traded to see less of these type of trades.

Abe, When using the OEC software, there are a number of protections on the DOM to avoid this. You can use either of the cancel buttons (each above the bid and ask) or the cancel all, which I use a lot to be safe. So once I am completely out of a trade, I will hit the Cancel All Button to avoid the situation you just described. I would get in the habit now of hitting that button. On the DOM as well at the bottom are any resting orders as well: Also, you should be using the main screen on OEC - the part that is separate from the DOM and you can have an Open Orders window up. If you see something there, you can also hit cancel all there as well!

I hear ya, it was a late night for me as well. Should have been... :sleep:

Cooter - doesn't the 'Go To Last' button the DOM do exactly what you are asking here? And if you just want to center it manually, you could just turn off the 'Auto Center Price' in the setup:

One idea Abe that just hit me - you *could* take a look at reversing a position when you take a loss. I'm just looking at your previous chart, but had you reversed and gone short on that failed long, you would have had a nice short trade. Again, this would require more testing and such, but just an idea to consider. Sometimes being 'wrong' can turn into being 'right'.

Abe, One request if I may - can you please turn of the shadowing on your text? It makes it very hard to read. Just uncheck the 'Drop Shadow' box on SnagIt and it should keep that format going forward until you change it again.

Cooter - you will be happy to know that OEC is aware of the situation you have outlined here and Rob is working on the fix. It has something to do with time stamps. No ETA given at this point.

Sorry guys, my bad. It was late last night and I thought that read TradeStation. My bad.

One last thing Abe - the reason I suggest looking at these reports is to get a feel for the broker you will be dealing with. The last thing you want is to become a part of the next Refco. Unfortunately, with as much due diligence as we are able to do, you just simply do not know who, where, and when will be the next Refco. That's why I suggest reviewing that report throughout the year. If you see customer assets dropping swiftly, that should throw up a red flag, esp in the futures biz since it's a zero sum game in the end. In other words, every day money is exchanging hands and you'd like to see the money your broker is handling getting larger over time, which means that broker is attracting serious traders. What would be interesting though, is to see how deep into a broker's financials you can get... Since many are not publicly traded, a lot of that is private... It would be nice to be able to dive into the numbers even more...

Abe, Take a look at TS's financial data on that report... You know what I immediately see? A bunch of ZERO's in the customer segregated columns... You will also see that TS futures division has LESS net capital than OEC. I'd be curious to know WHY there are zero's listed on this CFTC report. In case you're not sure why this part is important, check this link out - http://www.cftc.gov/tm/tmint-14.htm Now, the securities division (stocks) of TS is large - $65mill of net capital. The futures division has less than $1mill. You have to remember that TS has a large STOCK business. That's their bread and butter, which is obvious on this report. You are looking at trading futures, so make sure you are comparing apples-to-apples.

It's pretty simple Abe - if you want to use VBC's, you simply cannot do that @ TradeStation. Their version of VBC's are not accurate in the least bit. As you've seen, trading is hard enough as it is w/o having worry if your charts are accurate or not. If you decide to not use VBC's, TS is not bad at all. I've used them for charting before (not to trade thru) and their charting software is nice. If the VBC's were true, I'd probably still be using them for charting to be honest. I've read mixed reviews on their DOM software and I was not impressed the last time I looked at it.

Here is what I found out tonight regarding the capital that is reported on the CFTC report: We have the same question from most of the larger clients or IBs we are in talks with. We basically keep a bit more than the minimum requirement. We have ready capital in reserve that we can / do bring in to support additional business as required. Now, I've dealt with this contact since day one of my talks with OEC in considering brining my biz there, so I trust his word. This is not just a regular broker you deal with at OEC.

I was more concerned about the segregated accounts number since that represents client assets. $29 mill is not a ton, but enough for my consideration. As for the net capital, it is above the requirement set by the CFTC and NFA. I'll email my contact and see what the response is to that number and let you know what I find out. My biggest concern would be that NFA report. If there were a ton of cases and arbitration, I would not even bother looking at the CFTC report, regardless of how much money is at the firm. Like I said, I think with OEC you are getting a firm that is constantly improving their software for their traders and large enough to be a player, small enough for you and me to trade there at competitive commission rates.

Good question cooter. For the most part, it's on par or exceeding previous softwares that I've used, including the $500/mo T4 that I was on. I have one thing that I am working on getting them to change though - I would like the DOM to re-center more quickly. In a volatile time, the price can be off-centered quite a bit and I don't care for that. I'm hoping they can consider at least giving the user the option to re-center more often. What are your thoughts on that?

I thought a thread that discusses the different ways to perform due diligence on futures brokers that do business in the US could be of use. After compiling the info, it might be a good idea for one of the mod's to sticky this. Here are a few ways I will check on a broker that I may be considering doing business with: =================================== NFA Background Affiliation Status Information Center (BASIC) Search: http://www.nfa.futures.org/basicnet/ This search will present to you regulatory actions, NFA Arbitration Awards, and CFTC cases among other things. YOU MUST PERFORM THIS BASIC SEARCH WITH ANY BROKERAGE FIRM AND/OR BROKER YOU ARE CONSIDERING DOING BUSINESS WITH. If you have questions after seeing the report, feel free to contact the NFA directly as they are VERY friendly and full of information! NFA Contact link: http://www.nfa.futures.org/contact/indexContact.asp =================================== Financial Data for Futures Commission Merchants http://www.cftc.gov/marketreports/financialdataforfcms/index.htm This report will show how well (or not so well) a FCM is capitalized. Here's a link to how the report is broken down - http://www.cftc.gov/marketreports/financialdataforfcms/fcm_aboutreport.html You'll want to reference this report from time-to-time to check in on the financial condition of your current broker(s) and/or potential futures broker(s). Again, if you have questions, contact the NFA and the CFTC. Keep in mind that these regulatory agencies are there to help you, so use them. =================================== Those are the more 'formal' ways that I conduct some easy searches. Other things I would do are: > Google search on the firm. > Check Traders Laboratory and Elite Trader for reviews. > The internet is a wonderful tool to do research on a firm or broker, so use it. Just keep in mind that message boards are only so useful as there is plenty of misinformation out there. > And always trust your gut. If things look great, but you just don't have a good feeling, there's plenty of other brokers out there to chose from.

Good post Tin.

In another thread, I posted some info on OEC and thought I'd duplicate it here for reference. NFA BASIC details - http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0326789&rn=Y RESULT: VERY CLEAN SHEET. That's important to me and hard to do in the futures biz. FCM Capital Data direct from the CFTC - http://www.cftc.gov/marketreports/financialdataforfcms/index.htm I attached the June 2007 FCM Financial Data Report to this post. As you will see, segregated customer funds totaled over $29 million as of this report. Is it the most? Nope. Are they as tiny as you may be implying here? I don't think so. For me, working with OEC has been the best broker I've EVER dealt with. This includes going from Alaron, to ProActive Futures and Mirus Futures. The only one I will warn of is Alaron. I just didn't like what I saw (and paid). ProActive and Mirus are good, but as an IB, there's only so much they can do on commissions to be competitive. With OEC, I feel I get a broker that is 'small enough to care, but large enough to not worry about'. I know, sounds corny. Maybe I should write a jingle for them. FCM Data July 2007.pdf

Couple things Abe, RE: OEC. What do you mean by 'relatively new company' and 'with not many clients'. Here's what my due diligence on OEC has shown: NFA BASIC details - http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0326789&rn=Y RESULT: VERY CLEAN SHEET. That's important to me and hard to do in the futures biz. FCM Capital Data direct from the CFTC - http://www.cftc.gov/marketreports/financialdataforfcms/index.htm I attached the June 2007 FCM Financial Data Report to this post. As you will see, segregated customer funds totaled over $29 million as of this report. Is it the most? Nope. Are they as tiny as you may be implying here? I don't think so. For me, working with OEC has been the best broker I've EVER dealt with. This includes going from Alaron, to ProActive Futures and Mirus Futures. The only one I will warn of is Alaron. I just didn't like what I saw (and paid). ProActive and Mirus are good, but as an IB, there's only so much they can do on commissions to be competitive. With OEC, I feel I get a broker that is 'small enough to care, but large enough to not worry about'. I know, sounds corny. Maybe I should write a jingle for them. FCM Data July 2007.pdf

Abe, I agree with Tin - if your daily loss limit is $200, you either need to respect that or change it. I understand that you are just testing things out right now, but you are going to build a bad habit rather quickly - to not respect your rules.

Abe, My suggestion is that you email your contact when it's close to expiration and just explain that you are still demo'ing the software and would like an extension. If/when you decide to trade live and they see commissions coming in, you can always request that the demo be extended. At most brokers, incl OEC, there are the 'standard business replies' and there are the replies you get if you ask the right people after showing you are going to do business there. The bottom line is that OEC is in the business of making money and they would prefer to get it on the commissions, but they also can't provide unlimited use demo's for people that are not trading there. $24.95/mo is not much in my opinion if you still need more time to paper trade.

Not necessarily. I guess it depends on who you talk to and how much business you are doing with them. I have a total of four demo's, all of which are non-expiring, and do not pay a dime for them.