Emini Day Trading

NEB says cold winter could raise heating oil and natural gas prices
The agency says if those weather predictions are correct, there will be higher demand for heating oil, natural gas, and electricity. With the price of home heating oil closely tracking the rising price of crude, average heating oil prices are expected …
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Heating Oil Rises to Six-Month High on Europe Debt Optimism
11 (Bloomberg) — Heating oil rose to a six-month high as Italy and Greece are poised to get new leadership and approve austerity measures, easing concern that Europe's economic crisis will spread, threatening the global recovery. Futures advanced as …
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After doing a lot of research about which contract allows the most flexibility in trading, I have decided to focus my efforts on one single futures contract: The e-mini S&P 500 Futures Contract:

Here is why:

· The e mini S&P futures contract tracks the common cash index of the S&P 500.

So instead on focusing on specific stocks, which there are way too many, I like trading the overall direction of the market.

· The liquidity is sufficient enough for the small and the large trader, and one  could easily trade in and out in seconds.

· No shorting restrictions, and there are no “borrowing fees” associated with shorting the contract.

· Margins are a fraction compared to stocks, especially when you consider the entire value of the contract. So essentially, you don’t need a fortune to trade the markets.

However, my favorite feature is the ability to trade the E-minis without the same old traditional indicators.  You can trade the contract utilizing price action.

Let me explain:  I have found that because of the liquidity, the rapidness of the market, and the support and resistance that is formed throughout the day, I don’t have to clutter my charts with the old indicators that many stock traders use.

The size of the contract is as follows: X the level of the Index, so one full point is equivalent to , while the tick value is .5 (4 ticks per one full point).

This is obviously done on one contract. 

The ranges on the E-minis could be rather high throughout the day, which allows some traders to take out many points out of the markets; however my own method allows me to just take 2 to 4 points on a daily basis.

Consider that I could so do this on 5 to 10 contracts.

The method of “Price Action” and the ability to pick a small number of points, in my personal opinion, are rather the way to go, instead of waiting for larger moves. Consistent small moves that lock in profits, is something that many traders should utilize because it will allow for account growth and hopefully avoid the huge high volatility in the account equity.

Another thing to consider is that traders that go for large and extend moves typically have a much higher risk when it comes to the ratio of risk/reward.

Lastly, the advent of the internet and online software for traders allowed me to automate my methodology, so my numbers of the buy and sell, appear in front of me daily without my effort. Naturally, due to the morning volatility in the market, I am typically done by lunch time. Please take a look at my video: http://www.daytradetowin.com/videos.php 

TradeStation Announces Launch of All-New Options Trading Platform
17, 2011 (GLOBE NEWSWIRE) — TradeStation, the award-winning broker-dealer for stock, options, futures and forex traders, today announced the launch of its all-new OptionStation Pro options trading platform. The launch will coincide with the …
Read more on GlobeNewsWire (press release)

U.S. Regulators' Epic Fail
There is no guardian angel for futures traders who's ready to step in and backstop the customer accounts of a failed futures broker. There's no insurance fund sitting around waiting to make right the wrongs of that failed broker. …
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MF Global theft has destroyed the confidence in the futures and options markets
After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as …
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When the economy starts to slide, people are always on the lookout for new ways to make money. This might be because they have lost their job or their spouse has lost their job and they need replacement employment. Even if everyone’s job is secure, when things start to get dicey in general, you may want a few extra dollars to put towards your debt or put into savings. There are several ways you can generate this income and one of them is by taking a day trading course that will teach you to make the stock market work in your favor. Having a day trading education enables you to participate in a money-making venture that scares a lot of people off, especially when the economy is stormy. If you are knowledgeable and understand how the market works, you can use it to get a quick return on your investments that can help you with your financial worries.

Those who are currently employed and want to supplement their full-time income with something part-time may not have a desire after a long day of work to go stand at a cash register or gardening work on the weekend.

However, if you are working in the stock market, you can work from the comfort of your own home. You can get up an hour earlier or work on things after the kids go to bed. Playing the stock market is convenient and can be done from the comfort of your own home.

If you choose to do it full-time, you can certainly make a great deal of money. Working full-time from home is the dream of many people and if you know how to make investments and capitalize on them, you can grow that knowledge into big money. Focusing on the market full-time gives you an edge on those who do it only part-time because you have time to study and you see opportunities others might miss.

Investing in a class to help you learn how to manipulate and work the market in your favor gives you valuable information even if you never intend to use it for a full or part-time career.

It is good to have some knowledge of how the stock market works. Most people have some money in stocks via their 401K or pension and knowing how it operates will help you make knowledgeable decisions, even if it is not a job for you.

Finally, understanding the market is a great way to help you anticipate problems and make moves with your money before it is too late. Too many people leave the decisions up to other people, which sometimes ends up costing them big. Even if you leave the minor decisions up to a professional, it is still important for you to know what is going on. Learning about the market enables you to supervise someone who is handling your money. Knowing the right questions to ask; can save you a bundle and taking a class online can help you understand how the market works.

I was recently reading some articles on Bloomberg.com and came across one which referred to Ms. Rosabeth Moss Kanter.  Ms. Kanter is a professor at the Harvard Business School.  Following the links in the article led me to this interview which I thought was interesting and I would like to share with you. http://www.managementconsultingnews.com/interviews/kanter_interview.php

One of the things she is known for is her Kanter Law.  This law states that, “everything can look like failure in the middle.”  If you have been following our S&P500 emini trading system you will know that we are currently in a drawdown period.  Drawdowns can feel like failure.  The feelings they create are difficult to describe, but if you trade you should be able to immediately relate to these undesirable feelings.  Nonetheless, Ms.

Kanter’s law states that it is helpful to look at the situation as if you are in the middle of a process when things are not going well.

As a systematic trader, I find this perspective useful.  By considering drawdowns as if I am in the middle of them, gives me perspective, and allows me to have confidence going forward.  Being in the middle of a drawdown period is rough, but having the right emotional and financial tools gives one the confidence to manage it.  Faith, confidence, and perspective are your emotional tools as a systematic trader.   Disciplined money management is your financial tool to get through drawdown periods.

Drawdowns are similar to being in the middle of a process.  As systematic traders, we must always be ready to face drawdowns and the feelings they create.  Solid trading models, confidence, faith, and the Kanter Law can all help pull us through the middle of this process called drawdown.

All successful traders have trading plans for both good trading times and the negative periods.  Negative trading periods are known as drawdowns.  I wonder how the term came about, but one can guess that these periods are called drawdowns because they not only reduce our accounts, but that they also draw us down emotionally.

So how can we handle “draw us down” periods?  In my humble opinion, the best way to handle drawdown periods is through confidence, faith, and disciplined money management.  Confidence and faith are interrelated.  Confidence increases over time.  The longer we successfully trade our models, the more confident we become.  Prior drawdown periods and negative emotional experiences also can help us better manage and understand current drawdown periods. “What doesn’t kill us makes us stronger” and “diamonds are made under pressure,” are two sayings I like to think about when I am in drawdown periods.

Ms.

Rosabeth Moss Kanter, a Harvard Business School professor, was asked about what  confidence is in an interview.  Her response was, “confidence is a situational expectation—an expectation of a positive outcome.”  This is relevant to traders who use trading systems and models.  Every time we trade we have a situation where we should have an expectation of a positive outcome.  Our trading models should have positive expectation.  Positive expectation can be calculated from our trading research.  But positive expectation cannot, however, be calculated in our emotional states.  This comes from faith; faith in our selves, faith in our trading models, and faith from above.

Technical Analysis: DIRECTV Breaches Key Support Level
NEW YORK (AVAFIN) — During Thursday's trading session, DIRECTV shares closed below the 200-day moving average of $ 46.50. Based on technical analysis, as long as prices remain below the moving average then investors will view this as a sign of weakness …
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Technical Analysis: Direxion Daily Financial Bull 3X Shares Breaches Key …
NEW YORK (AVAFIN) — Shares of Direxion Daily Financial Bull 3X Shares closed below the 50-day moving average of $ 63.34 on Wednesday. When analyzing trading patterns, technical analysts and investors will view this development as a sign of weakness. …
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Forex Daily Outlook November 18 2011
ForexCrunch is a site all about the foreign exchange market, which consists of tutorials, basics of the forex market, daily and weekly forex analysis, technical analysis, forex software posts, insights about the forex industry and whatever is related …
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TPLM Crosses Critical Technical Indicator
In trading on Thursday, shares of Triangle Petroleum Corp (AMEX: TPLM) entered into overbought territory, changing hands as high as $ 6.30 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis …
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Trading system analysis: Learning from perfection
Many trades lasted from 200-300 seconds to one-two hours. Some trades took just a few seconds, perhaps because a quick liquidation was necessary to avoid a big loss. Trades stagnating for two to three hours are found for the E-mini S&P 500 (results of …
Read more on Futures Magazine

Ever see the movie, the Untouchables? It’s about a government agent, Eliot Ness who, along with his band of G-men (Government men), fights gangsters (like Al Capone) during prohibition. There are great shots in the film, guys hanging from moving cars, holding onto swinging doors while they shoot up restaurants with Tommy guns. Today we have our own Untouchables. We’ve replaced Tommy guns for computers and trading platforms. We sit in chairs instead of swinging from moving cars. And the killing, well, we’ve traded in the G-men for the G-word: Greed.

What is greed? Wikipedia defines greed as “an excessive desire to possess wealth or goods with the intention to keep it for one’s self.” Probably the operative word here is “excessive”. To investors day trading or night trading, the G-word may as well be 4 letters.

Lets look at how insane greed can be as it affects futures trading, especially emini futures.

Emini futures, just like stocks, trade in price fluctuations, but with futures, price fluctuations are known as ticks. In the world of stocks, one price fluctuation is 1 penny. Generally, 1 tick, 1 price fluctuation, pays out about .50…that’s correct 1 tick. Futures trade in contracts not shares. Investors can easily find futures brokers who allow you to trade for 0 per contract. Stocks trade in multiples of 100 shares. Stocks that have enough volatility to day trade start anywhere from /share to /share and more. Even on the low end, realistically, you need 00. Then when your 100 shares move 1 penny, you make .00. But compare that to trading with emini’s. For 00, you can trade 5 contracts. For each tick movement, you make . So it’s a 60 to 1 ratio, perhaps a bit less, given that the commission for trading futures is a bit higher than stock trading, so call it 50 to 1 ratio.

Want to make 0 a day….make 5 ticks. Watch this. 5 ticks X .50 = .50 x 5 contracts (00) = 2.50. Now take off for commission and say for losses = 5 (give or take). 5/day x 20 days a month is a nice ,500 a month, or just over ,000 a year. Futures are unique when it comes to taxes. They were originally designed for farmers. Over the years, farmers ended up with some very sweet IRS deductions, called the 60/40 split. When you trade futures, 60% of the capital gains is considered long term and 40% is considered short term. At the end of the year, your futures broker sends you a one-liner, a net price, of the amount of wins or losses. It is not itemized by transaction. Since it is a net figure, the IRS can’t tell if you are a farmer or a speculator trading crude oil futures. So everyone enjoys the 60/40 spilt. For taxes, that puts you in about a 20% tax bracket. Since you are trading and that is your business, you can deduct business expenses from that figure (part of your house, your phone, internet, computer, car, etc.) lowering that tax rate to more like 15%. So 15% of ,000 gives you around ,000 spendable a year.

Lets compare that with working 8 hours a day at a job. To make ,000 a year, first of all your job needs to be paying you about / hour. Why? Most Americans pay an overall tax rate (Federal, State, Local, and Withholding) of about 40%. If you make / hour and say work 2,000 hours a year, that comes to ,000. Take off ,000 in taxes, so now you’re at ,000. In order to work, you have commute expenses to deal with. With the price of gas and oil, if you drive 20 miles a day, we’ll there is 1 gallon, so call it /day or 0/month, so there goes 00 just to commute. You’ve got wear and tear on your car, so that will cost another 00 a year. With a ,000 a year job, chances are you can’t be driving some clunker, so that will cost you another 0 a month, so lets take 00. While at work, you’re probably going to have to eat out, add another, conservatively /day (coffee and sandwich), another 00. And of course you need clothes, unless you are fortunate to work in a place that allows you to work in jeans. Add another 00 for that. All in all, say that’s 00 and that’s on the low end, assuming you only use 1 gallon a day, eat cheaply, and buy simple suits. To be on the safe side, say 10k. So for working 8 hours a day, you net around ,000 spendable.

Of course, something must be wrong with this calculation, because the average median income in America is not ,000. It is more in the range of ,000, more like /hour, grossing 0 per day, not spendable.

0 / day spendable is a lot of money. That puts you WAY above normal by about 35%. Just 0 / day. And here’s the best part, to make your 5 ticks, 0 / day, it doesn’t take 8 hours, working bell to bell. You can make those ticks in as little as 15 minutes of trading a day, on the high side, maybe an hour and a half. There is no commuting, no wear and tear on your body, no boss, no clients or customers, no specific time you need to be in the office, etc.

So why are Emini Futures killing investors who are day trading or night trading? Because of the illusive G-word….Greed. We have all seen extreme damages that greed can cause. In 2008, larger brokerages created collateralized debt obligations, packaging and repackaging mortgages until they were trading nothing but air, sending the entire world into financial collapse from which we are still not recovered (job wise or housing wise). The problem for day traders and night traders is not that you can’t make 5 ticks, it is that you can’t stop after you have made them. If you can make 0 in 15 minutes, you tell yourself, well, then I can make 0 in 30 minutes, 0 in an hour, etc. etc. etc. Maybe you can and maybe you can’t. The longer you trade, the more mistakes you are bound to have. People say…I am trading in a zone, I can do no wrong today, and boom…loss. Why? There seems to be a direct relationship between the number of wins and the degree of cockiness: the more wins, the more cocky traders become, the more they trade without their own rules and by the seat of their pants.

Investors who are day trading or night trading beware, lest the swinging doors and Tommy guns get you! By the way, while writing this article, I did one trade, made 0 in 43 seconds, and now I am ready to trade again.

Another advantageous session for E-mini day-traders
Tuesday morning began with strength after the index futures sold off in response to European weakness in premarket trade. Downside gaps filled quickly, but the market had been down even further in early trade, leaving the indices at resistance fairly …
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