cuttshot

JLJ...I will take AmCan and worldtraders comments a step further. Most systems out there are going to based off of technical indicators like MACD or Stochastics to name a couple. Before you go out and buy a system you will want to do some basic research to learn a little about the basics of technical analysis. You will want to get a feel for what basic indicators like the ones I mentioned above are telling you. Also look to see what it is traders are looking at when they load up a chart. Using a system without an understanding of the basics will just lead to frustration. If you are a reader and motivated to get a background on technical analysis take a look at Technical Analysis of the Financial Markets by John J. Murphy. It is a large book but does cover many of the basic principles of technical analysis.

I currently have 3 monitors at the moment and it just isn't enough. In the process of getting a second computer with 4 more monitors. Will go down to 2 monitors on the old computer for a total of 6. To start out you should be fine with 2 monitors as it will force you to focus on just a few markets (in your case it will also give you more cash to trade with). However as you continue to branch out with your trading you will find the most frustrating situation is when you have to scroll between charts. I have missed numerous trades here recently because of a lack of screen real estate. To answer your question I would definatelt go with multiple smaller monitors. They are so cheap these days that it really doesn't take much to get a 4 screen setup.

I personally have tried many different techniques for exiting trades. Going for a fixed target has produced the best results for me by far. Just because I say fixed targets doesn't mean they won't ever change. I want my fixed targets to reflect current market conditions. This may sound like adjusting targets defeats the idea of fixed targets but I'm not adjust targets on a daily basis. If I see volatility picking up over a period of time then I will make adjustments to reflect those changes. For example, the NQ has been a very active market over the past number of weeks. I decided to push my targets out from 3 to 3.5 points to try and capture a slightly larger piece of the moves. While this may not seem like a big change, I'm using more of a scalping approach so getting 2 extra ticks on each trade really does make a difference in the bottom line. The problem I have with trailing approaches is I find most to be way too discretionary. This can lead to me second guessing myself many times. For me I would rather have a set plan in place that I can stay disciplined to. I really like AmCan's 3-bar stop method. If I were to trail this would be an idea I would look into. It provides a framework that you can follow each time.

Jajuanm2, I am using a scalping strategy at the moment. I'm using a range chart of 1 going for 3.5 points on a target. Your longer term charts are on my list of things to look at. Had 3 trades on the NQ today all for winners. Took a partial winner on one of them so total for the day was 9 points. The NQ continues to be a hot market to trade. With the Russell products rebalancing this week the NQ is my index future of choice.

I agree worldtrader there are a lot of systems and educational programs out there for sale and a lot of them are junk. However, if you look hard enough you will find some systems that have proven to be successful over time. I would also make sure to stay clear of autotraded systems and robots. If you want to become a successful trader yourself then you need to take the time to learn how the markets move. Robots might work for a period of time but markets change over time. You need a system that is able to adjust to the changing market conditions.

thanks jajuanm2. I will have to look into those volume charts. Have you found consistent price action over time? The begining of 2010 was very choppy on the index futures. How did the NQ hold up? I haven't had a chance to work back that far in my testing.

I think you will find that the 260/month you pay for tradestation will be well worth it. If this is the extent of your expenses to run a business I would consider it very minimal. Like you said one winning trade will pay for this fee. I have not used optionsXpress to trade futures. You might want to take a look at Interactive Brokers. They offer a universal account which might come in handy down the road as you consider different markets.

I agree with MMS that thinkorswim is a nice option. They aren't going to be the cheapest with commissions up front but you can usually negotiate a lower rate with them. Their active trader platform has come a long way over the last year or so. It might be worth a look. Cuttshot

Are you locked in to the forex markets? Would you be intresting in the futures markets at all? If you would be I might have a lead for you. Cuttshot

Dinerotrader, I guess my response would depend on which market and time frame you are looking at. One indicator that I use is the 144 EMA. Depending on your market and time frame you could take a look at this and work around it as much as possible. For example, you could avoid trades that go against the 144 EMA all together. Or you could make sure if you do take a trade against it that your entry point is on the other side (short entry below 144 EMA, long entry above 144 EMA). I know this is very basic but it might be something to build around or use as a starting point. Cuttshot

In my opinion if you want to be successful in the daytrading world you need to follow a few important steps... First you need to find a system that puts the odds in your favor. While there are many systems out there that have been proven to be successful you need to make sure you find one that fits your style. You could have 5 different people trading the same system on the same market with different results. Everyone is going to trade a little differently. Once you find a system that fits your style and has been proven to put the odds in your favor then you need to also find a market (or markets) that fit your style. There are many markets out there that are really profitable that I just can't trade. The ES is probably the most popular futures market out there. However, I can't trade it successfully. It just doesn't fit my trading style. After finding a system that puts the odds in your favor and a few markets that fit your style you need to build a trade plan that you can follow each and every session. This trade plan needs to include your start time, end time, rules for entry, rules for exit, money management rules, rules for news events, and anything else that might come up throughout the session on your given market. Basically my goal is to have a rule for every situation that comes up so I don't sit there frozen in real time not knowing what to do. All of the above steps will help build your confidence in your system. Trading with confidence is one of the most important factors in trading. Daytrading forces you to make quick decisions and having confidence in your system and trade plan will allow you to do just that. Hope this helps. Cuttshot

Thanks daedalus. I wasn't able to make it to Chicago to see it. Will have to watch it over the weekend. Cuttshot

This is a great thread to read through. I have a couple of rules that are really important to my success as a trader. 1) Trade my system as it was designed to be traded. What I mean by this is to try and avoid discretionary decisions while trading. If my system was designed to put the odds in my favor then I need to trust those odds. The minute I try to outsmart the system I might as well throw those odds out the window. A rule that I have in place for myself is to track my little system tweaks if you want to call them that. If I can't be right 2/3 of the time on any filter our discretionary decisions then I need eliminate those ideas from future sessions. 2) This one might be the most important to me. I have to analyze my performance after each session. This goes for both the winning sessions and the losers. Trading gives me great flexibility in that I don't have a boss sitting there telling me what to do. Problem with that can be I don't have a boss there telling me what to do. It is up to me to hold myself accountable. It's easiest for me to do this by documenting my trades in a spreadsheet at the end of each session. I walk through each trade in detail. Did I execute my system correctly? Did I follow my trade plan religiously? These are a few questions that I ask each day. I will also write a few quick notes analyzing my perormance including giving myself a grade for the day. It is important to review this journal often to make sure you can correct any bad habits that begin to form. I try to do this on a weekly and also end of the month basis. If you can't be disciplined in your trading you won't be around for long. You might get lucky for a few weeks or months but it will eventually catch up with you. I could go on and on with this topic but I'll stop here. Cuttshot

Great question MadMarketScientist. To be honest, this one has made me think and has caused some internal conflict. Part of me wants to say CL for many of the same reasons stated above. I have traded CL since early 2010 with great results. I took a different road than you did. Looking back at where I have come from, I used to lean towards the slower markets because I was able to really think things through. However, like most traders the attraction of getting done with my trading in 20-30 minutes opposed to 2-3 hours really got me hooked on CL. On the other hand, I love to swing trade. One stock that has treated me great over the years is Apple. Swing trading Apple using options might even top CL as my top choice. I have traded Apple for so long I have a really good feel for how it moves. Daytrading CL is fun and very profitable but I don't always feel as comfortable with the volatility that I do trading Apple. So all that to say I'm going to go with swing trading Apple using options as my market of choice. I can just about guarantee I'm the only one that is going to answer this question with swing trading a single stock. Cuttshot

For long term investing I think William J. O'Neil is the best out there. Most of his material is very easy to read and his methods are very good. For starters pick up a few days worth of Investors Business Daily. This will give you an idea of what type of work he does. I would also agree with an earlier comment on Stan Weinstein's book Secrets for Profiting in Bull and Bear Markets. It is an older book but it is filled with good content that is still relevent in today's markets. Finally I would recommend looking into some books on basic fundamentals of technical analysis. You will want to be familiar with the basic concepts. Cuttshot

So over the past few weeks I have really been getting hooked on the NQ. This market seems to move great on a daily basis. I'm in the process of doing an extended backtest to see how well it holds up in different market conditions. I'm curious if anyone has traded the NQ for an extended period of time. If so, does it seem to be a streaky market over time? From what I have seen going back a few months it has held up nicely over an extended period of time. I have been leaning towards looking at range charts. At the moment the candidates are a range of 1 or 2. Any input from NQ traders would be appreciated. I would be interested to hear what other ranges, tick intervals, or time frames that traders are using on this market. Cuttshot

Ricky, I use Tradestation for all of my charting. There is a fee to use Tradestation however once you start trading live the monthly fee can be waived if you place 10 trades per month. I am able to do this in the first couple days of the month. In my experience their charting platform is right up there with the best. Along with tick charts you might want to take a look at range charts as well. I have just started using range over the past few months and really like how smooth they can be at times. I would also agree with an earlier comment on trading the NQ over the YM. The NQ has been moving great lately. More volatility on this market and you still have your $5/tick. Take a look and let me know what you think. I have been able to get done in the first 30 minutes of the equity session just about every day over the past few weeks. Cuttshot

I have traded options for a number of years now with various strategies. With the volatility that we are seeing these days I'm curious as to what other options traders are doing. I tend to stick to a small universe of stocks that I consider but am always looking for a new hot name to look at. I have found the best success here lately with trading spreads. Hedging my risk in these up and down markets has helped out. With that being said I would ask the following questions: What stocks are you finding to have good success with in these markets? What strategies are you using in this volatility? Cuttshot

Chaotic, thinkorswim is great for options trading. They aren't the cheapest on the commissions but the tools that they make available on their platform are fantastic. I have traded with them for 6 years now/ Interactive brokers would be my second choice. Cuttshot

Snitzer, How long are you planning on holding on to these positions? Your holding time will really effect what is on your checklist. If you are thinking a shorter term trade like a few weeks to a few months then I would focus more on technical analysis. If you are talking about taking a position for an extended amount of time then the fundamentals could come into play. I have found that most traders will eventually become either fundamental traders or technical traders. For me I focus on the technicals. The buy and hold markets based off of fundamentals are gone in my opinion. Being able to play the markets on the upside and downside is crucial in todays environment. The only way to do this is to watch the price action. Cuttshot

b4gt, There have already been some good responses to your post. I would agree with some of the earlier responses in that you need to have a plan before you get into the trade. That plan starts with having a system that tells you where you are going to get in and then where you are going to place the target and stop. If you wait until you are in the trade before you decide your exit strategy, you are going to be influenced by other factors (emotions, direction of the overall market). One indicator that might be useful in determining your targets and stops is an ATR (average true range). Typically the default length setting is 14. This could give you a starting point for your trade profile. For example, you could target 2 times the ATR. Obviously you will have to do some testing on the different markets you are looking at to determine the settings for the ATR (2x atr for target? 3x?). You will also want to come up with a stop management plan for the trade. You might decide that once the trade goes into profit by 1x the ATR value you move the stop to break even. This way you have a road map to guide you through the trade. The only way you will see consistent results is to have a plan in place and stay disciplined to that plan. Hope this helps. Cuttshot

StevenSJC, I would agree that the open of the equity session is the best time to trade the index futures. With the volatility that we have seen over the past number of weeks I have been able to get done with my trading within the first 30 minutes of the equity session on most days. The mini nasdaq (NQ) has been a market that has caught my eye here recently. Starting right at the open at 930 EST has produced some really nice results. Of course the many gaps that we have seen lately have helped out. I would say from 930-1100 EST is going to be the sweet spot for futures. The TF is another market that has been on fire lately. Again the first hour of the session is key to trading this market. Something to keep an eye on is an 11:00 EST reversal time. This is something that I have kept an eye on since my stock trading days way back when. I'm typically done trading by this time but if for whatever reason I'm trading later into the session I will look for this 11:00reversal. Finally the afternoon session on the index futures tends to be very streaky as far as movement goes. When it's on it can produce some nice moves but when the market slows down it can be like watching paint dry. Of late I have found coming back at 2:00 EST has given some nice results. Don't know how long it will last but it's been giving some nice movement. Cuttshot

AmCan1, It depends on the pair that you are looking at. I have found a good place to start would be a 6 range. Since this is a EURJPY thread I can tell you that the 6 range works well for what I try to do on that pair. Cuttshot