The markets can be VERY chaotic for a new trader, and there’s no wonder why…
• Lots of different markets to trade
o E-Mini: ES, YM, TF, NQ
o Currencies: Euro, Pound, Yen
o Commodities: Gold, Crude Oil, Corn, Wheat
o Fixed Income: Bonds & Notes
• Different timeframes to trade
o Scalper on a fast timeframe
o Day Trader on a medium timeframe
o Position trader on a slower timeframe
• Different levels of support & resistance
o HOD/LOD
o OPEN/CLOSE
o Moving Averages
o Pivots
o Fibonacci’s
o The list goes on…
• Different Times to trade:
o Breakouts
o Failed breakouts
o Buy Pullbacks
o Sell Retracements
o At the Open (or) At the Close
o During News events (or) after news events
o US Session, Euro Session, Asian Session…which is best?
With all of this to learn…how does the SchoolOfTrade.com make this learning process so simple?
Its as easy as 1…2…3
Step #1: Identify the Patterns Set-Ups at IMPORTANT PRICE LEVELS
Finding the Price Levels:
Price levels are located for us automatically using our proprietary indicators, such as the AUTO-LEVELS Indicator, which makes these levels VERY easy to locate.
Assuming we have our levels properly identified with our indicator, we then watch for these simple patterns AROUND these levels.
Watch for these 3 simple PRICE PATTERNS:
Wave Pattern Set-up
• Trend-Continuation Pattern
• Watch for the Trigger-Line to make new Highs/Lows to take trade.
• 80% Winning Ratio
The Wave Set-up is a trend-continuation pattern that works best on trending markets. This entry pattern looks to capitalize on a moving market, look for Swing-Highs & Swing-Lows as well as a steep slope to our Trigger Line for entry.
Beware taking Wave Set-Ups in low volume, or sideways markets, as it has a tendency to reverse direction.
Breaker Pattern Set-Up:
• Trend-Continuation Pattern
• Watch for the Swing Indicator to mark our Swing-High/Low levels for entry
• 85% Winning Ratio
The Breaker Set-up is a trend-continuation pattern that works best on Sideways & Trending Conditions. This entry pattern looks to capitalize on a moving market, look for Swing-Highs & Swing-Lows around the major levels of Support & Resistance which are market for you automatically using our AUTO-LEVELS INDICATOR.
Beware taking Breaker Set-Ups in the CHOP ZONE & around low volume times in the market.
2-Step Pattern Set-Up:
• Counter-Trend Pattern
• Watch for the Swing Indicator to mark our Swing-High/Low levels for entry
• Profits taken slightly tighter b/c of Counter-trend pattern
• 75% Winning Ratio
The 2-Step Set-up is a counter-trend pattern that works best on Sideways markets. This entry pattern looks to capitalize on a choppy market, look for Swing-Highs & Swing-Lows marked with our SWING INDICATOR to identify your entry.
Don’t forget!! You need to see FOLLOW-THRU to confirm your entry.
Beware taking 2-Step Set-Ups without identifying the Short term Trend, because this pattern should be taken against the trend, looking for a reversal in price action.
Watch out for our next email…where we will cover the ENTRY RULES, the 2nd important step to your trading success.
See you tomorrow @ 745am EST for the live trade room session!
Today was a challenging day in the markets, well, it started out that way, but it soon got pretty easy once the day began to develop.
We opened the charts @ 745am EST and noticed the following:
• Red Pace of Tape Indicator, slow price action
• Wide Trading Ranges: High ATR Reading
• Steep Slopes to our Trigger Lines, market was moving
• Momentum was very choppy, back and forth, shows indecision in the market
So with slow price action, but wide ranges and ‘confused’ momentum, the market was pretty off-balance and we had to wait a little to let the traders decide which direction they wanted to trade with.
While we were waiting for some consistency we watched as our patterns set up, but with no consistency in momentum, it was difficult to have confidence entering a trade in the early part of the morning.
This changed eventually, but we had to wait until after 930am EST to really begin seeing a market we could trade confidently.
Once the Natural Gas Inventories came and went @ 1030am EST, it was all downhill from there.
We saw only small winners until 1030am EST, and then we started seeing some BIG runners that really added to our bottom line today.
8 total trades, 8 winners, another day filled with winners!
It doesn’t ALWAYS happen this way, remember, losses happen almost every day, its how we MANAGE those losses and move forward is the key to success.
No need for a stop loss today, all winner
Total today was 129 ticks, or $1365usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Today was FOMC Day, which is the day in which the Federal Reserve announces if they will be changing interest rates for the United States.
This type of news event is a MAJOR event that literally determines the entire day of trading activity.
FOMC days are always on Wednesdays, and they are always characterized by the following:
• Slow start to the morning
• Small window of good volume and price action
• Morning session ends early, much like a Friday
• The market tends to ‘flutter’ to the up-side in anticipation of the announcement
• Lunch time lasts until 215pm EST
• The announcement is released @ 215pm EST or a few minutes thereafter
• The market goes CRAZY for 5 minutes
• The market decides on a general direction
• 230pm EST through 400pm EST is high volume, very volatile
On days like FOMC day, we have to be careful.
We know we need to get into the market early today b/c it wasn’t going to last very long.
We also had to use patience to wait for the announcement to be released. This can be tough, b/c the market loves to make head fakes and try to get us to jump into the market on lower volume, but we must stay focused on trading AFTER the 215pm announcement is made.
Once the announcement is made, we STILL need to wait and see if the market will get into any real “form” or trend as it finishes the day’s trading.
All too often we make money in the morning, and then we can’t resist the price action moving so fast post-announcement and we give most of the profits back!
A wise trader knows what he/she does not, so stick to the sidelines on days like today, and know WHEN to be trading, and WHAT to look for to enter in this challenging environment.
We took 5 trades today before the morning finished up.
5 trades, 5 winners = Total of 68 ticks or $680usd.
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Another great day of trading in our LIVE TRADE ROOM!
Today was Tuesday, and we had a big day trading yesterday, so we knew we had some room to breathe for the week, but we didn’t want to get sloppy and make a mistake.
We opened the room @ 745am EST and we saw…
• Red Pace of Tape Indicator
• 3 of 4 markets trading at their opens/closes
• Flat Trigger Lines across all timeframes
This told us very quickly that we had to wait for the price action to gain some speed and momentum, and wait we did.
Our first potential set-up of the day was one of the most common we see across all the markets we trade..
As price falls, we look for a BREAKER SHORT PATTERN, and then once that pattern is exhausted we see a REVERSAL 2-STEP LONG PATTERN.
This combination of trend-continuation and then immediately into the trend-reversal is one of the easiest ways to get off to a GREAT start in the day!
• 7 total trades today!
• 6 winners, 1 loss
• +79ticks, $790usd
• 4 contracts…only 4 contracts!
See you tomorrow @ 745am EST for the live trade room session!
We opened our week today with another profitable day trading futures!
Today was Monday, we expected it to take a little longer to get moving this morning, just like everything on a Monday, we wait for people to get into work and get started for the week!
So we had to be patient…but not for long...
We saw Gold & Crude Oil Futures moving the most today, so we watched them closely and made a total of 6 trades, including 1 loss:
• 945 +20ticks
• 1017 +4 ticks
• 1019 +44ticks
• 1047 Scratch
• 1058 -4ticks
• 1145 +19ticks
So we made a good amount of money before 1030am est, gave back a little bit of it on a small loss, and then were able to focus on the very best opportunities and made back a good amount of that small loss.
TOTAL = 83 TICKS … $830USD….only 4 contracts!
At the end of the day we made a bunch of points, and we were very satisfied with these results, especially since we took that loss, and losses often times results in less confident trading, which can be difficult on a Monday.
Our mission was to get started on the right foot this week.
Mission…accomplished.
See you tomorrow @ 745am EST for the live trade room session!
What an amazing week in the live trade room! Another week filled with winners & PROFITS!
We had a few moments this week that were tough..
We had to get passed the Martin Luther King Holiday on Monday
On Tuesday we started the day with a LOSS, and had to overcome our emotions to avoid getting any deeper in the hole…we certainly did…and ended Tuesday with $500!
Wednesday and Thursday were HUGE! Lots of price movement, green pace of tape indicator, and both our guests and members ALL made extraordinary gains in their trade accounts!
Today, Friday, we had to be careful…
Friday’s are always a mixed bag of expectations. Here’s why…
o We want to finish up our week on a strong note
o We don’t want to give back any hard-earned profits
o We have to be aware the day will end early, as people leave early for the weekend
o We need to follow our rules explicitly to make sure we don’t make any careless mistakes.
Today was even more potentially dangerous b/c it was a Friday without any major news events, so we didn’t have the ‘catalyst’ we look for to get prices moving!
So with a Friday w/out any major news, we had to stay patient.
We started off trading Gold (GC) Futures:
• 901: +21ticks
• 1006 +12ticks
• 1007 +10ticks
• 1012 +20ticks
• 1022 +4 ticks
We were on a roll!
Everything was going perfectly until we started looking at Crude Oil (CL) futures around 11:00am EST.
At 1100am est I made a comment to…”be careful trading after 11am est on a Friday!”
Sure enough, the next 2 trades we took were small losses or scratches.
• 1101 -20ticks…Ouch!
• 1104 +0ticks…scratch.
So, as you can see, we made great money in the early morning, but as expected, and as ANNOUNCED LIVE IN THE TRADE ROOM, price action becomes VERY unpredictable after 11am est on a Friday.
Next time, I will listen to my own advice and head to the gold course @ 1100am est, rather than the market!
We made over $1000 today in the live trade room on only 4 contracts.
We took our first trade of the day on the Gold, and honestly, we jumped the gun a little. Yes, we are all human, and sometimes we make mistakes.
The pattern looked perfect, we had lots of support from the BIG buyers, but we didn’t have enough Pace of the Tape, which is why we decided to cut the trade early for a small loss.
Once we got into the trade, I noticed right away that we made a mistake…
Red Pace of Tape, and it was DECREASING
Momentum Curled over from being OVER-BOUGHT (oh no!) and pointed down against our position
Once we saw that, we knew we made a mistake, and had to aggressively get out of the position, which meant moving my stop from 6-ticks below my entry up to my initial point of entry, costing us a few ticks of valuable profits.
Here’s a Good Rule of Thumb…
AGGRESSIVE ENTRIES REQUIRE AGGRESSIVE EXITS.
You simply cannot have one without the other.
This first trade on Gold was an excellent example of that…in order to be able to confidently enter an aggressive trade, I must first identify confidence in using my EXIT rules to cut the trade early if I don’t make the right trading decision.
Sure enough, after this minor mistake, we settled down, focused on our mechanical rules, and stuck to following them 100%.
Losses are a part of trading, it’s how we HANDLE those losses is the difference between going home in the RED or the GREEN
The day started off with a very slow and sluggish market…it looked like a Tuesday, but it FELT like a Monday!
Remember, we didn’t have any action on Monday (yesterday) b/c of the MLK Holiday, so we were eager to get back into trading today, and we sure got our opportunities!
Once again, patience pays off when you focus on following rules, avoiding the trades that DO NOT fit the rules, and taking the trades that DO fit them exactly.
One VERY important thing that was missing from today was a term we call “Follow-Through” which means that the patterns are setting up, AND the traders push those moves more than 10 ticks.
We DID NOT see any follow through until after 1000am EST today…
We had to wait for the market to give us something to work for, and around 10:30am EST we got the price action we needed:
- Green Pace of Tape Indicator
- Lots of Large Buyers/Sellers
- Plenty of Room to let the trade run
- Momentum on our side
When these all lined up, the trades came quite quickly, and we took the following trades with confidence!
- 1029 CL BREAKER SHORT @ 77.77; 4(2)/1(2)=+10TICKS
- 1057 GC BREAKER SHORT @ 1132.9; +1(4)@ ENTRY-1
- 1117 6E BREAKER SHORT @ 4266; 4(2)/8/5 = +21TICKS (263)
- 1136 CL 2-STEP SHORT @ 77.91; 4(2)/1(2) = +10TICKS
Total for the day = $503.00 A great total for a challenging day today!
Today was Martin Luther King Jr. Holiday here in the United States, which meant Bond & equity Markets were closed or closed early today.
Whenever you have a day with a Holiday, you will typically see less-than-desirable trading volume and will want to use EXTRA caution.
Most professional traders will opt for the GOLF CLUBS rather than the trading charts on a Holiday, but we chose to use this time productively for our members today, and did some education and lots of training.
One of the most important aspects of any traders’ skills is the morning routine.
Our morning routine is intended to do a few things:
• Physically Prepare us for the day ahead (wake us up!)
• Identify the News events for the day ahead
o Set our alarm clock to budget our time wisely around those news events
• Identify the market as either High/Low Volume, Sideways or trending
• Identify the most important levels of support and resistance
o We use our SLOW timeframes for the MAJOR levels of S/R
• Adjust our trading style to fit today’s market environment
• Mentally prepare for the day ahead
o Think like a trader
o Review notes from Yesterday
o Review your trading rules so they are FRESH in your mind
Today was a Holiday, so we spent the majority of the morning talking about this ROUTINE, and the many different things we look for during this time.
Once we had our routine completed we talked about our high-percentage trade set-ups:
• Wave: Trend-Continuation Pattern, 85% win ratio
• Breaker: Trend-Continuation Pattern, 80% win ratio
• 2-Step: Trend-Reversal Pattern, 75% win ratio
After reviewing the details of these set-up patterns we saw a few examples in the markets (which weren’t moving too well today due to the Holiday) and took as many questions needed from our Members & Guests.
We then went into our Webinar, which is normally ONLY on Tuesday and Thursdays, but today’s Holiday meant we wanted to offer some more opportunity to LEARN today (since there wasn’t much market to watch), and this was on “Growing Your Account from 1-Contract to 100 Contracts!”
This is always one of my FAVORITE webinars, 1 contract trading and growing your trade account, mostly because we have ALL been there before.
Almost every long term success story with our members BEGINS with 1-contract and the goal of building that account by aggressively searching for conservative, high-percentage set-ups.
Most guests are always a bit surprised when they see the details of this webinar, in fact, many traders disagree with how we structure 1-contract account growth, but when they SEE what the REASONS are behind it, it all starts to make sense…
• Focus on Consistency & Building Confidence….not buying the new Ferrari!
• No Trade Management, 1 target, 1 stop loss
• 1:1 Risk Reward Ratio
• Plan on Making Mistakes!
• Focus on adding 1 new contract every 4-6 weeks
• Focused on consistency in your results at each level of your trading.
If you missed this webinar on Growing your account from 1 to 100 contracts, be sure to join the FREE 3-WEEK TRIAL and attend our trade room where you will be able to see the NEXT webinar in real time…you won’t be disappointed!
09:00 BoC Rate Decision, Nov Net Long-Term TIC Flows (last $20.7B), Nov Total Net TIC Flows (last -$13.9B)
13:00 Jan NAHB Housing Market Index (last 16)
Todays Headlines
8:30:01 AM
*(US) INITIAL JOBLESS CLAIMS: 444K V 437KE; CONTINUING CLAIMS: 4.596M V 4.750ME
- Prior Initial Claims revised from 434K to 433K
- Prior Continuing Claims revised from 4.802M to 4.807M
- 4 week average for claims at 441K v 450K prior (lowestest since mid 2008)
1:00:08 AM
(IT) Italy Nov Total Trade Balance: -€790M v -€500Me; Trade Balance EU: -€760M v -€750Me
- Prior Total Trade Balance revised from -€710M to -€727M
- Prior EU Trade Balance revised from -€825M to -€841M
3:00:30 AM
(GE) German Bundesbank Monthly Report: Recovery in German economy expected to have contiunued in Q4; Outlook for exports improving
- Recovery in economy remains fundamentally intact
- Expansion in Q4 expected to be slower than in Q3
- Foreign sales seen as holding up through Q4
2:33:29 AM
Analysts at Credit Suisse initiate European Airlines sector Overweight
- British Airways, EasyJet, Iberia, Ryanair rated new Outperform
- Lufthansa, AirBerlin rated new Neutral
- AirFrance rated new Underperform
2:58:37 AM
(FR) French Fin Min: FY10 GDP forecast at 1.4% v 0.75% prior
***Reminder: On Jan 15 - France Fin Min Lagarde: French growth accelerated in Q4; guides 2010 inflation at 1.2%
3:55:01 AM
Standard Life: UK AAA credit rating is "extremely vulnerable"; Current mix of economic and political factors seen as 'toxic'
**Note similar comments made on Dec 15th - Moodys said the UK is running out of time in its battle to keep AAA sovereign rating - London Independent (Update)
- According to Moodys, buyers of gilts were not likely to continue supporting the UK, if a credible plan to retore the UK's public finances to health was not unveiled before the end of next year.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
January 18, 2010
Market Commentary 1-15-10
SchoolofTrade.com Daily Commentary 01-15-10
We didn’t really know what to expect on Friday, except for some slightly lower volume due to the Holiday coming on Monday, however, any concern over what the day looked like was answered soon after we opened our charts.
What we saw was an example of what most new traders MISS when they begin their trading day…the market was SCREAMING at us its intentions, and we were able to ‘interpret’ those intentions based on a few simple technical indicators.
Here’s what we saw @ 745am EST:
• Most markets were sitting on their previous close levels
• Most markets were trading in a narrow trading range
• Very little LARGE orders on the Time & Sales Window
• Our Pace of Tape ® indicator was all VERY low and RED
When we see days like these we know one thing is for certain….BEWARE.
When the markets open and sit on their previous close level that alerts us that there is very LITTLE conviction in the market as to whether we will go UP or DOWN.
Think of it this way…
• The SELLERS tried to move it DOWN…nobody there.
• The BUYERS tried to push it back UP….nobody there either…
• So price sits there, flat, on the close of the previous day.
In addition to sitting on its close, we saw a very narrow trading range, which gave us a heads up that even if we DID see anything worth trading today, the potential for profit would be less b/c the market simply wasn’t moving with any range.
We also noticed there were NO big money traders in the market b/c the FILTERED time & sales window was almost empty across the board…where WAS everyone?
And lastly…the Pace of Tape was RED, and VERY low… time to grab the GOLF CLUBS!
Days like today come around at least 2-3 times a month, and when they do, they threaten to TAKE BACK all the money we worked so hard for throughout the week.
Did you see these vital signs of the market?
Did you miss what the market was telling you?
If so, be sure to come join us on Monday, and we’ll show you EXACTLY what to look for next time!
We finally got into a rhythm this morning on a day filled with important news events and political figures speaking.
With the ECB Interest Rate Decision @ 745am EST, Jobless Claims Report @ 830am EST, and Natural Gas Inventories @ 1030 we had lots of activity to be watching, and the day went very well.
We new when we opened the trade room we were looking for volume to pick up after 830’s Jobless Claims report, and it did, and we were able to make some money BEFORE 930am, which is always a good sign of things to come!
One of the best learning opportunities came when we took our 2nd trade on Crude Oil Futures. We entered the market using our specific trading rules, which means we made the correct decision to enter the market. Sometimes however, the market doesn’t agree, and in this case, the market sat on our entry and didn’t go anywhere.
At that point we had waited for 5 seconds to see if the buyers would help us out, but they were nowhere to be found, so we followed our rules once again and exited the trade for a scratch trade, no profit, no loss.
Trades like that happen ALL THE TIME and we are very successful in preventing losses b/c we know what to look for when we EXIT the trade, and we did so with confidence, and that is the difference between NO LOSS and a SMALL LOSS.
Last day of trading for the week is tomorrow, don’t miss it!
905 CL BREAKER LONG @ 79.50; 5(2)/3(2) = +16TICKS
906 CL RE-ENTRY LONG @ 79.57; EARLY EXIT SCRATCH
1100 CL 79.19 2-STEP SHORT; 4(2)/8/10 = +26TICKS
1128 CL BREAKER LONG @ 79.44; 4(2)/2(2) = +12TICKS
When we opened our trade room today we quickly saw a VERY different market environment that we saw Monday and Tuesday this week.
We had good volume, the market was moving, but we were still missing something…follow-through.
“Follow-through” is a term used to describe the process of confirming the move in the market. For example, we see a pattern develop on the Gold futures Market, the volume is good, lots of interest in the market at that area, but the momentum doesn’t confirm, so we have to wait.
Later in the morning on Crude Oil futures market we see an almost perfect pattern develop, moment is there, plenty of room to let the trade run, but the large buyers/sellers never showed up to confirm the trade…that means NO follow-through, the traders in the market didn’t finish the job and we had to wait on the sidelines to wait for confirmation.
Its important on days like today that we remember we need to use 100% of our rules, and when we try to “cut corners” in our trading, the markets have a very efficient way of telling us we made a mistake, causing us to lose money, and more importantly, confidence.
Today was a day that appeared to be filled with opportunity, but if you are a rule-based trader like we are, it was a very tough day b/c we did a LOT of work watching patterns that went nowhere.
Remember, the highest % trades are the ones we want, which means that our rules need to be 100% satisfied. Anything less means you are playing with the potential of a reversal b/c its NOT a high-percentage trading opportunity.
Our 5th video completes our Discipline Cycle, and the cycle returns 360-degrees to its beginning
Where did we leave off last time?
In Video #1 we heard from Joseph James himself as he shared his story of how he developed the Discipline Cycle itself, and we were introduced to the First Phase, which is Discipline, to follow your rules and only take the very best trade set-ups according to your mechanical rules.
In Video #2 we were introduced to Consistency, the second phase of this 360-degree cycle. This Consistency in your trading comes from seeing the same patterns and the same set-ups with ‘consistency’ you will begin to see the same ‘consistency’ in your trading as well.
In Video #3 we learned about Confidence, the Confidence in our Set-Ups, Rules and entries
In Video #4 Video we develop a sense of Patience in our trading, which allows us to wait for the very best opportunities to present themselves in the market
In this 5th video lets wrap up the Discipline Cycle:
Profits!
Remember…
Discipline Cycle® begins with Discipline to follow those rules,
Discipline leads to Consistency in your trading,
That Consistency leads to Confidence in your trading!
Confidence develops the Patience to wait for the best trading opportunities!
Patience to wait leads to Profits!
More video series to come in 2010!
Happy Holidays to All!
Do you have a suggestion for another video series? E-Mail
