Trading Emotions

Todays Index’s were down across the board, with the NASDAQ getting the worst, followed by the S&P -10 points and the Dow, -30 points. We are very close to the extended March 6th trend line support on these index’s. If that support breaks, it will be the first clue that we may have turned the corner on the rally. But still it remains intact and all is well.

As I had thought, today we saw the first signs of life in the futures market, with volume coming in at over 2 million contracts. Just what I was saying yesterday, that 2 million contracts traded in the emini futures market is considered good volume and we hit it today. It has been a long time, probably longer than a month with this kind of volume.

As day traders, we need volume to push the market around, otherwise it becomes more difficult for traders to make money. It is always easy for them lose money and with low volume, bingo, you are there.

Most traders do not know how to trade in shallow trading ranges and end up getting beat up pretty bad. But if you know how to Scalp Trade this market, taking a little out of the middle, you can survive in any kind of trading environment. That is not easy to do for most people and there will be those that say it is foolish to try. Probably because they were not able to make it work for them. Traders are doing this all across the globe and they are taking it from those who think they can.


Some people only scalp trade and that term can mean different things for different people. To me, taking 2,3 or 4 ticks, will qualify as a scalp. Others will call taking a 2-4 point profit on the S&P emini’s, a scalp. So, the term is used widely. If I can make a profit on these small trades while keeping my losses to an equal amount 1 to 1, I am doing OK, because my percentage is pretty high. You need to have 60% or better with the better being more like 75 and up.

When I trade, I look for both kinds of trades. If the market will give me an extended move, often I position myself to capture it. At times I take half off early which gives me the extra ability to ride the move out. It’s a good way to trade.

In my trading today, I did not do as well as I had wanted, but I had a few bigger trades to cover myself. I came in late in the day and missed some big moves short. Overall I think a came a little short of my daily goal because of commission, but close. I had 10 trades 5 gains 5 losses, but had a few trades for higher point returns. As I said I was off. Lack of concentration and I did not take a break from a training session I had with a student.

My timing and concentration was off, with the first two trades as loses. They were not good entries and it cost me. I could have avoided  some of the lose by closing the trade out early as I normally would do once I start to lose the edge. To me and my method, the Trading Edge, is clearly defined and when I lose it, I need to get out, often avoiding  my full stop out of 1 S&P point. I start out with a 1 point stop on all trades, but it almost instantly goes to three ticks when I get one tick of movement in my favor usually when I am in scalp mode.

Often times I am able to catch trades for several points as I did last Friday with a 4 and 5 point gain. It does depend on the price action and what the market gives you. If the markets clamed up and its daily trading range shrunk, many traders would suffer, because they only know how to trend trade. When its choppy, they often stay out, but only after they got burned by non directional non moving market. Being able to Snipe or pick off a few trades makes life a lot easier, providing that you can do it. You end up having the ability to pull a few points a day out of the market, no matter what kind of market you have.

I will make a few comments from where I left off yesterday, about needing all three components to become successful as a trader. It does not matter what you trade, these are things everyone in this business needs.

We all need to know how to trade, by following a methodology or system of some kind. Next you need trading discipline, as it is often talked about.  The last thing is, you need to be aware of the forces that are naturally working against you. What forces are you talking about?  Well, for starters, yourself. When trading, there is something called our human nature. That nature says many things about us and our ability to become profitable. It is to often, the unseen things that holds us back from realizing our dreams.                                                                                                                         ————————————————————————————————————————————————-Let me focus on one point and see how far we go. GREED. That is a human emotion that all of us are faced with. We did not learn it, it comes very natural for most of us. I believe, we need to unlearn it or decide ahead of time, by an active decision to not allow this emotion to take root in us. If we can, it will make so many things better not only for our trading endeavors, but in every other area of our lives, good stuff.

The only way we can ever address it, is if we are first aware of it. After that, what are we going to do, to get a handle on it?  This emotion has been one of the leading causes for traders to blow up there accounts.

We need to be content with modest gains when we have them. The opposite of content is discontent and the twin brother of discontent is greed.

Unless you are content with your piece of the market, you will continue to strive for more. In trying to get more, you will lose what you have. Take control of your trading and your emotions. Trade with a purpose and a goal.

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