When day trading futures, you enter and exit all positions in the same day - never carrying a position overnight. Since the overnight moves of the market are difficult to predict, many traders avoid risk by day trading. Ironically, the public believes that day trading is the riskiest way to trade.
THIS IS A MYTH !
Some traders day trading futures, make 1 to 3 trades per day, trying to catch the major intraday moves. Others trade in-and-out very frequently, trying to “scalp” a small profit on each trade. (My style uses a unique blend of these two strategies.)
For those day trading futures, the Emini Stock Index Futures have become the most popular day trading vehicle because of their liquidity, leverage, and the ease of trading them online. You can go short or long with equal ease – unlike stocks where it’s easier to go long than short due to the “up tick” rule.
The time relationship of the eminis (and the “big contracts”) to the cash indices is important to understand. Let’s start from square one.
The S&P 500 stock index (the cash index, symbol SPX) is central to day trading futures. It has an Exchange Traded Fund (the “Spyders,” symbol SPY) that trades like a stock, but without the “up tick” rule. The price of the S&P 500 cash index moves up and down with the 500 stocks that make up the index. The SPYders follow the S&P 500 cash index very closely. You can trade Exchange Traded Funds such as the SPY (and QQQQ for the Nasdaq 100) online from home. But for day traders, they are not as favorable as day trading futures.
The concept of “futures” is a little confusing, but it boils down to this: the financial industry has turned the S&P 500 cash index into a “contract” that trades like a stock. The contract (or futures contract) has a price that goes up and down from one moment to the next. It has a chart that looks just like stock chart, and you can make money with it by buying low and selling high, or vice versa. That’s a complicated as it needs to be for now.
The “big contracts” or SP Maxis were invented first and they’re still around. With the big contracts, a lot of money changes hands. When the price of the SP Maxis moves one point, $250 per contract moves with it. The SP Maxi contracts trade in a literal “pit” where the traders, called “locals,” shout at each other, buying and selling for everyone who wants a piece of the action.
The locals are not public servants, of course, they make money for their own accounts. They have the advantage of being able to read each other’s body language and the tone of the other trader’s voices. They see what the strongest traders in the pit are doing. They have several other advantages too, their costs per trade are tiny compared to the public’s commissions.
The “locals” aren’t born as professional traders though, they learn to trade like everyone else, except they have a huge advantage in learning as well because they learn to scalp first! Their instant access and low commissions make this possible compared to others, but those day trading futures online can take advantage of scalping trades as well.
Scalping is basically limiting your losses to only one or two ticks while taking any profit you get as you get it. It’s easier than going for several points per trade, I’ve been using this strategy day trading futures with much success.
Locals also use the spread (the difference between the bid and ask price), to grab quick profits from orders that come in on either side of the market. This makes scalping easier for them.
In the past, all these advantages made it impossible for a “retail” day trader to be a successful scalper. It was insane to try. And to this day many traders have the idea that scalping is too difficult for the public because you have to compete against traders with an unfair advantage.
But all that has changed now. If you follow some simple, yet important guidelines then you too can be successful scalping and day trading futures online.
They took the concept of the Maxi futures contracts and came up with smaller contracts (the eminis) that move $50.00 per SP point instead of $250.00. This allows all traders, big and small, to trade the stock index futures.
But even more radically, they set it up so that the smaller contracts (the eminis) are traded only through computers. This was revolutionary, they bypassed the pit, taking away the advantage of the “locals,” and leveling the playing field in a way that has never been done before. And to level the field even more, retail commission costs fell like a rock. Today, any trader day trading futures with a small account can pay $4.80 per round turn (entering and exiting a trade).
This means that scalping is open to the day trading public for the first time in history. But most people who are day trading futures don’t even realize where the new advantage really is.
Scalping is one of the keys to making a living day trading futures as I do, because I follow a simple rule: "Every trade starts out as a scalp until proven otherwise" .
The SP emini futures became more and more popular and more liquid, breaking a lot of records along the way.
The SP Maxis futures and the SP emini futures are both derived from the S&P 500 index (symbol SPX), which, as I said, has an ETF that trades like a stock (symbol SPY).
So the question is - which of these is the leader and which are followers?
Today the emini futures track the Maxi contracts almost tick for tick, with the emini’s beginning to lead the Maxi’s at times, and also “overshooting” the Maxis at emotional extremes, such as the at the top of an intraday rally.
Both the SP eminis and the SP Maxis (the futures) lead the S&P 500 cash index by a variable amount of time, often in the range of a fraction of a second. Some people call this “the tail wagging the dog,” because the futures are derivatives of the stock indices, but call it what you want, the futures are leading the way.
The fact that the futures lead the markets makes their chart patterns more “pure” and reliable for support and resistance trading. This makes a huge difference to me.
I use the stock index futures (the eminis and Maxis) for calculating daily support and resistance areas, which are the basis of my own trading style – a style of trading that has paid my bills and built my financial security for about 20 years now.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. His support and resistance numbers have been published on the internet since 1996. Mike's nightly support and resistance zones are specific and incredibly
accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. http://www.TradeStalker.com
Copyright 2005 TradeStalker.com and Mike Reed
Monday, October 03, 2005
Tuesday, September 13, 2005
Day Trading Tips Worth Reading
By Mike Reed
Are you tired of the same old day trading tips? Like, “cut your losses and let your profits run.” “Never let a gain turn into a loss.”, or the most repeated tip, “Buy low, sell high.”
So how about something new? Let me give you some specific day trading tips that will turn your trading around.
A good defense beats a good offense over the long haul. If you want to stay in the Trading "game", then developing a good defense is a MUST.
Rule Number One: Cut your losses immediately when the trade doesn’t go your way. There’s nothing harder to learn and nothing better. I’ll be even more specific. The average “run of the mill” day trading advisor will tell you to enter a trade, place a stop of 2 to 4 points, place a target that’s equal to your stop, or 2 to 3 times greater, and then wait for your stop to get hit. This is a big mistake that is going to end up costing *you*.
The time to wait is before you enter the trade, not after.
I’ve been trading for over 20 years, and I don’t trade like the crowd. The crowd waits for their stops to get hit. They sit there hoping their trade comes back from negative to positive territory, but it usually doesn’t and they lose money. They believe that the edge (probability of success) isn’t good enough on their entries. This is the crowd’s approach and it just doesn’t work.
My day trading advice for you is to use radical soft stops that go against human nature.
I write an emini day trading newsletter each day, my forecast for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides *you* with great trade set ups nearly everyday.
In trading, your entries and your exits must NOT come naturally at first. Human nature is responsible for the fact that 90% of those day trading eminis lose money. If you follow the herd, you’ll lose money too.
Some of my subscribers tell me it seems impossible to get out of a trade early, just because it doesn’t move immediately into a profit. They worry about commissions. They worry that the trade will turn around and go their way in a few more seconds and they’ll lose opportunity. In fact most of the people reading this right now will try it for a few minutes (hopefully on a trading simulator) and decide it can’t be done.
Like I said, my techniques and day trading tips fly in the face of the untrained “gut feeling.” And that’s precisely why they work.
Exiting my way is not the whole picture when it comes to the method I use for day trading support and resistance.
Any complex process has to be broken down into small chunks at first, a person has to learn one thing at a time, especially when you want to learn day trading.
First I teach my traders a way to demand that the trade goes profitable immediately. When it doesn’t, I teach them to get out immediately.
Radical, but it works.
My day trading advise for them is don’t wait for the market to prove you wrong, instead, if the market doesn’t immediately prove you right, run for the exits.
Example: Let’s say you enter a day trade. In the first 5 seconds it goes 3 or 4 ticks against you.
What is your course of action?
a. Give it a chance, don’t waste the commission.
b. Sit and hope that it turns around before it hits your stop.
c. “Knowing” your entry was excellent, sit tight and / or move your hard stop away.
d. Add to the position (scale in) to bring your break-even point closer.
e. Get out of the position NOW!!! Don’t think about it, just get out.
Believe it or not, “e” is the right answer in my book.
You have to be flexible with everything, but this is the foundation of my trading style. This is the default procedure.
Does it work?... YES it works! This is how I’ve been day trading for the past 20 + years. But it only works IF you know where and when to enter.
Let me show you how it’s done. Want more day trading tips that work ? Put my experience to work for you!
Sign up for my free trial subscription today.
copyright 2005 TradeStalker.com and Mike Reed
Are you tired of the same old day trading tips? Like, “cut your losses and let your profits run.” “Never let a gain turn into a loss.”, or the most repeated tip, “Buy low, sell high.”
So how about something new? Let me give you some specific day trading tips that will turn your trading around.
A good defense beats a good offense over the long haul. If you want to stay in the Trading "game", then developing a good defense is a MUST.
Rule Number One: Cut your losses immediately when the trade doesn’t go your way. There’s nothing harder to learn and nothing better. I’ll be even more specific. The average “run of the mill” day trading advisor will tell you to enter a trade, place a stop of 2 to 4 points, place a target that’s equal to your stop, or 2 to 3 times greater, and then wait for your stop to get hit. This is a big mistake that is going to end up costing *you*.
The time to wait is before you enter the trade, not after.
I’ve been trading for over 20 years, and I don’t trade like the crowd. The crowd waits for their stops to get hit. They sit there hoping their trade comes back from negative to positive territory, but it usually doesn’t and they lose money. They believe that the edge (probability of success) isn’t good enough on their entries. This is the crowd’s approach and it just doesn’t work.
My day trading advice for you is to use radical soft stops that go against human nature.
I write an emini day trading newsletter each day, my forecast for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides *you* with great trade set ups nearly everyday.
In trading, your entries and your exits must NOT come naturally at first. Human nature is responsible for the fact that 90% of those day trading eminis lose money. If you follow the herd, you’ll lose money too.
Some of my subscribers tell me it seems impossible to get out of a trade early, just because it doesn’t move immediately into a profit. They worry about commissions. They worry that the trade will turn around and go their way in a few more seconds and they’ll lose opportunity. In fact most of the people reading this right now will try it for a few minutes (hopefully on a trading simulator) and decide it can’t be done.
Like I said, my techniques and day trading tips fly in the face of the untrained “gut feeling.” And that’s precisely why they work.
Exiting my way is not the whole picture when it comes to the method I use for day trading support and resistance.
Any complex process has to be broken down into small chunks at first, a person has to learn one thing at a time, especially when you want to learn day trading.
First I teach my traders a way to demand that the trade goes profitable immediately. When it doesn’t, I teach them to get out immediately.
Radical, but it works.
My day trading advise for them is don’t wait for the market to prove you wrong, instead, if the market doesn’t immediately prove you right, run for the exits.
Example: Let’s say you enter a day trade. In the first 5 seconds it goes 3 or 4 ticks against you.
What is your course of action?
a. Give it a chance, don’t waste the commission.
b. Sit and hope that it turns around before it hits your stop.
c. “Knowing” your entry was excellent, sit tight and / or move your hard stop away.
d. Add to the position (scale in) to bring your break-even point closer.
e. Get out of the position NOW!!! Don’t think about it, just get out.
Believe it or not, “e” is the right answer in my book.
You have to be flexible with everything, but this is the foundation of my trading style. This is the default procedure.
Does it work?... YES it works! This is how I’ve been day trading for the past 20 + years. But it only works IF you know where and when to enter.
Let me show you how it’s done. Want more day trading tips that work ? Put my experience to work for you!
Sign up for my free trial subscription today.
copyright 2005 TradeStalker.com and Mike Reed
Day Trading Advice: Identifying and Exiting Losers
Day Trading Advice:
Identifying and Exiting Losers
by Mike Reed
The majority of traders are looking for entries with a very high probability of success. Web sites and book stores are loaded with day trading advice to fill this “need.” Some of it’s pretty good entry advice. A lot of it is average, which is actually not a good thing. But good or average, if they are leading you to believe that “If you can find better entries, you’d be making money.” Than this is poor day trading advice, it’s a lie and they are taking your money and they are taking you for a ride.
Well, it’s time to stop believing the lie. Stop paying for “sure thing” entry methods.
I write an emini day trading newsletter each day, my forecast for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides you with great trade set ups nearly everyday.
I’ve been day trading futures for more than 20 years and I’ve developed a strategy that makes money consistently. I don’t promise overnight success, anyone who is really serious about wanting to learn day trading, realizes that it’s not a get rich quick profession. Yes, my method does include great entries, but most losing traders have decent entry strategies. My experienced day trading advice doesn’t focus as much on entries as it does on exits…
Offense doesn’t win this ballgame, defense does.
If you’re going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you’ll program your reflexes to follow your knowledge.
Think of it this way…large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can’t tell which products will make money. If they take all their new products to market, and only a few sell, the few won’t offset the losers, and the company will go under.
Most new companies (about 95% by some estimates) fail. The same is true of traders, they want to be successful, but just don’t know how to go about it, which day trading advise should they believe, and who’s just trying to take their money .
But there is an upside to all of this, successful companies know a secret. They find a way to identify their losers in the early stages… and close the projects down quickly before losing a lot of money in the marketing process.
As James Surowiecki puts it in his book, “The Wisdom of Crowds”
“…companies place huge bets on losers all the time. What makes a system successful is its ability to recognize losers and kill them quickly.”
The same is true of stock trading strategies. Experienced professional traders place bets on losers all the time, but they know how to identify losers and kill them quickly before much (if any) money is lost.
I close bad trades well before my hard stops are hit, but anyone can do that. But, you also have to recognize your losers early. Otherwise you’ll be killing your good trades along with the bad ones.
Every successful trader I’ve met has a way of getting out early on bad trades. If you are day trading support and resistance, I can teach you how I do it. You may be able to find a way to do it on your own, but it will probably take years. I’ve been trading for more than 20 years, and publishing my day trading advice on the internet since 1996.
No matter which route you take, Identifying and exiting losers is the key to trading.
I can give you day trading advice and specific trading tips to improve your entries. My strategies are time tested and I have been successful with my methods of trading for over 2 decades. What’s even better, I can show you intra-bar timing of your entries. And it’s true that the timing of entries affects your ability to recognize the losers before they hurt you. But it’s your ability to kill those losers quickly that really counts.
Be sure to sign up for my Free delayed RBI Updates before you leave our web site. Follow these for a few days, and you’ll understand how helpful my day trading advice can be to your trading.
Or if you want to jump into a winning strategy right now, go ahead and subscribe to my “Real Time” Daily RBI Trader’s Updates, they are delivered each trading day complete with the most accurate and powerful support and resistance areas in the business, as well as my own daily trading plan and how I am going to trade the market the following day.
Copyright 2005 TradeStalker.com and Mike Reed
Identifying and Exiting Losers
by Mike Reed
The majority of traders are looking for entries with a very high probability of success. Web sites and book stores are loaded with day trading advice to fill this “need.” Some of it’s pretty good entry advice. A lot of it is average, which is actually not a good thing. But good or average, if they are leading you to believe that “If you can find better entries, you’d be making money.” Than this is poor day trading advice, it’s a lie and they are taking your money and they are taking you for a ride.
Well, it’s time to stop believing the lie. Stop paying for “sure thing” entry methods.
I write an emini day trading newsletter each day, my forecast for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides you with great trade set ups nearly everyday.
I’ve been day trading futures for more than 20 years and I’ve developed a strategy that makes money consistently. I don’t promise overnight success, anyone who is really serious about wanting to learn day trading, realizes that it’s not a get rich quick profession. Yes, my method does include great entries, but most losing traders have decent entry strategies. My experienced day trading advice doesn’t focus as much on entries as it does on exits…
Offense doesn’t win this ballgame, defense does.
If you’re going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you’ll program your reflexes to follow your knowledge.
Think of it this way…large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can’t tell which products will make money. If they take all their new products to market, and only a few sell, the few won’t offset the losers, and the company will go under.
Most new companies (about 95% by some estimates) fail. The same is true of traders, they want to be successful, but just don’t know how to go about it, which day trading advise should they believe, and who’s just trying to take their money .
But there is an upside to all of this, successful companies know a secret. They find a way to identify their losers in the early stages… and close the projects down quickly before losing a lot of money in the marketing process.
As James Surowiecki puts it in his book, “The Wisdom of Crowds”
“…companies place huge bets on losers all the time. What makes a system successful is its ability to recognize losers and kill them quickly.”
The same is true of stock trading strategies. Experienced professional traders place bets on losers all the time, but they know how to identify losers and kill them quickly before much (if any) money is lost.
I close bad trades well before my hard stops are hit, but anyone can do that. But, you also have to recognize your losers early. Otherwise you’ll be killing your good trades along with the bad ones.
Every successful trader I’ve met has a way of getting out early on bad trades. If you are day trading support and resistance, I can teach you how I do it. You may be able to find a way to do it on your own, but it will probably take years. I’ve been trading for more than 20 years, and publishing my day trading advice on the internet since 1996.
No matter which route you take, Identifying and exiting losers is the key to trading.
I can give you day trading advice and specific trading tips to improve your entries. My strategies are time tested and I have been successful with my methods of trading for over 2 decades. What’s even better, I can show you intra-bar timing of your entries. And it’s true that the timing of entries affects your ability to recognize the losers before they hurt you. But it’s your ability to kill those losers quickly that really counts.
Be sure to sign up for my Free delayed RBI Updates before you leave our web site. Follow these for a few days, and you’ll understand how helpful my day trading advice can be to your trading.
Or if you want to jump into a winning strategy right now, go ahead and subscribe to my “Real Time” Daily RBI Trader’s Updates, they are delivered each trading day complete with the most accurate and powerful support and resistance areas in the business, as well as my own daily trading plan and how I am going to trade the market the following day.
Copyright 2005 TradeStalker.com and Mike Reed
Saturday, September 03, 2005
TRADING Servive, EN FUEGO
This is the TradeStalker's Trial delayed edition.
Resistance to support, and back up again...
You can subscribe to the real time version of TradeStalker
at http://www.tradestalker.com/order-page.htm or call us
at 866-438-3244 (toll free).
.................................................
TradeStalker's
R.B.I. Trader's Update
09 / 01 / 2005
(Published Since 1996)
...............................................
Dateline: 8:19 pm eastern time, 09/01/2005
Early strength was sold on Thursday and the market backed
off in the first hour of trading. The SP fell to 1216.75
while the Nasdaq futures touched its 1575 support, and then
the market turned up. In a mini parabolic run to the upside,
both the SP and Nasdaq futures peaked just under the
1229.75-1230.50 and 1591-1593 resistance zones and stalled.
The day's ranges were in place by noon, as the market
drifted lower into 2 pm. After getting down to 1218.75 on
the SP futures and 1577 on the Nasdaq futures, the market
bounced back to the middle of the days ranges and then
chopped sideways into the close.
The market is acting soggy and it looks like we could be in
for another early sell-off if Thursday's close is an
indication. Both the SP and Nasdaq futures were turned down
from pretty strong resistance areas on Thursday, and they
both settled at discounts to the cash indices.
It will likely be quite with thin conditions on Friday, not an ideal
environment. In any case, after the morning action it might be
good to get away early for the weekend.
If there is early weakness, the market should get its
footing on a test of the initial support areas and restart
its uptrend. If that doesn't occur, then things will have
changed and we may have seen a short term top on Thursday.
However, if the market *can* get down there early on Friday
and turn back up, then another run towards the Thursday
highs may be in the cards going into the long weekend.
Initial resistance is at the 1224.75-1225.25 area on the SP
futures and the 1584.50-1585.50 area on the Nasdaq futures.
The market needs to get over and hold those areas in order
to get out of the late trading range. A move up here that
gets reversed could set up a rough day for the market.
However, if those areas are cleared, then a run up to test the
1229.75-1230.50 and 1591-1593 areas is likely coming. If
the market gets up there again, and the move fizzles, it's a
gift on the short side.
The first good support is at the 1217.50-1216.75 area on the
SP futures and the 1575-1573 area on the Nasdaq futures. If
the market gets down here, and cannot turn around, the
downside could pick up some stream. The next good support
would be down around the 1211.75-1210.50 area on the SP
futures and/or the 1565-1563 area on the Nasdaq futures.
The next update will be on Monday night. Everyone have a
safe and enjoyable holiday weekend.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract =SPu5
1224.75-1225.25
1229.75-1230.50
September 2005 SP futures support
symbols: emini = esu5 / big contract =SPu5
1217.50-1216.75
1211.75-1210.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1584.50-1585.50
1591-1593
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1575-1573
1565-1563
September 2005 Dow futures resistance
symbols: emini = ymu5
10479-10487
10528-10636
September 2005 Dow futures support
symbols: emini = ymu5
10427-10419
10371-10355
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without permission.
www.TradeStalker.com
PO Box 9783, Ft Wayne, IN, 46899
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
Resistance to support, and back up again...
You can subscribe to the real time version of TradeStalker
at http://www.tradestalker.com/order-page.htm or call us
at 866-438-3244 (toll free).
.................................................
TradeStalker's
R.B.I. Trader's Update
09 / 01 / 2005
(Published Since 1996)
...............................................
Dateline: 8:19 pm eastern time, 09/01/2005
Early strength was sold on Thursday and the market backed
off in the first hour of trading. The SP fell to 1216.75
while the Nasdaq futures touched its 1575 support, and then
the market turned up. In a mini parabolic run to the upside,
both the SP and Nasdaq futures peaked just under the
1229.75-1230.50 and 1591-1593 resistance zones and stalled.
The day's ranges were in place by noon, as the market
drifted lower into 2 pm. After getting down to 1218.75 on
the SP futures and 1577 on the Nasdaq futures, the market
bounced back to the middle of the days ranges and then
chopped sideways into the close.
The market is acting soggy and it looks like we could be in
for another early sell-off if Thursday's close is an
indication. Both the SP and Nasdaq futures were turned down
from pretty strong resistance areas on Thursday, and they
both settled at discounts to the cash indices.
It will likely be quite with thin conditions on Friday, not an ideal
environment. In any case, after the morning action it might be
good to get away early for the weekend.
If there is early weakness, the market should get its
footing on a test of the initial support areas and restart
its uptrend. If that doesn't occur, then things will have
changed and we may have seen a short term top on Thursday.
However, if the market *can* get down there early on Friday
and turn back up, then another run towards the Thursday
highs may be in the cards going into the long weekend.
Initial resistance is at the 1224.75-1225.25 area on the SP
futures and the 1584.50-1585.50 area on the Nasdaq futures.
The market needs to get over and hold those areas in order
to get out of the late trading range. A move up here that
gets reversed could set up a rough day for the market.
However, if those areas are cleared, then a run up to test the
1229.75-1230.50 and 1591-1593 areas is likely coming. If
the market gets up there again, and the move fizzles, it's a
gift on the short side.
The first good support is at the 1217.50-1216.75 area on the
SP futures and the 1575-1573 area on the Nasdaq futures. If
the market gets down here, and cannot turn around, the
downside could pick up some stream. The next good support
would be down around the 1211.75-1210.50 area on the SP
futures and/or the 1565-1563 area on the Nasdaq futures.
The next update will be on Monday night. Everyone have a
safe and enjoyable holiday weekend.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract =SPu5
1224.75-1225.25
1229.75-1230.50
September 2005 SP futures support
symbols: emini = esu5 / big contract =SPu5
1217.50-1216.75
1211.75-1210.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1584.50-1585.50
1591-1593
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1575-1573
1565-1563
September 2005 Dow futures resistance
symbols: emini = ymu5
10479-10487
10528-10636
September 2005 Dow futures support
symbols: emini = ymu5
10427-10419
10371-10355
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without permission.
www.TradeStalker.com
PO Box 9783, Ft Wayne, IN, 46899
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
Saturday, July 30, 2005
TradeStalker's RBI 07/31/05
.................................................
TradeStalker's
R.B.I. Trader's Update
07 / 31 / 2005
(Published Since 1996)
...............................................
Dateline: 7:54 pm eastern time, 07/31/2005
The early pop to the 1248.00 resistance level on the SP
futures and 1626.50 level on the Nasdaq futures was quickly
sold on Friday, and the market chopped steadily lower in to
noon. After trying to get a rally going just after lunch
time, this time the bounce didn't stick.
The cash indices closed on their lows for the day, while the
futures bounced back in the last 20 minutes. However, with
the goofy "end of month settlement at fair value" policy,
the SP and Nasdaq futures actually "settled" just 1 tick off
of the lows on Friday. (For more info on this see
http://www.cme.com/trading/prd/equity/fairvaluefaq2544.html
). To get to where the last trade took place on Friday, the
SP futures need to open up 2.75 points and the Nasdaq
futures need to open up 4 points.
So far the action is yet ANOTHER fake-out breakout. The
market was up all week, then in one day gave back all of its
gains. The SP500 popped out of the top of a rising wedge
pattern on the daily chart, then got pulled right back in to
the week's trading range.
Contrary to what some pundits will tell you, steady "drip,
drip, drip" type of moves higher tend to be a lot LESS
sustainable, as the volatility contraction usually leads to
complacency. When the "group think" gets shaken, and bids
dry up and the ultimate sell off occurs. The highs become lids
until the market regroups. Since the "tree has been shaken",
the bulls and bears will likely do battle until a new "group
think" stage sets in.
It's doubtful that the market is going to go down easily.
What we are likely going to see is a volatile trading range
for a bit. There should be decent moves in both directions
while the market sorts out last week's action. So, try to
only get involved at extremes in this environment. The short
side on the emotional run up's that fizzle should offer the
better setups for now. On the flip side, a lower open that
reverses on Monday should offer a good trade on the long
side.
There is initial resistance up at the 1242.50-1243.75 area
on the SP futures and 1619-1621 area on the Nasdaq futures.
Those areas were trouble on Friday afternoon. So, if the
market pushes through and holds those areas without a
problem, then we could rally back to test the 1247.50-
1248.00 and 1626.50-1627.50 areas.
The initial support is at the 1237.00-1236.50 area on the SP
futures and 1611.50-1611.00 area on the Nasdaq futures. If
broken by much, then the 1232.25-1230.75 and 1603-1602 zones
are next. If the market fails to turn around from down here,
then the 1228.25-1227.50 and 1598.50-1597.50 zones appear to
be huge. If those areas are reached, and the market doesn't
make a quick U-Turn higher, then the 1220 level on the SP500
cash might be a magnet before the market is in a good spot
for a rally.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract =SPu5
1242.50-1243.75
1247.50-1248.00
September 2005 SP futures support
symbols: emini = esu5 / big contract =SPu5
1237.00-1236.50
1232.25-1230.75
1228.25-1227.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1619-1621
1626.50-1627.50
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1611.50-1611.00
1603-1602
1598.50-1597.50
September 2005 Dow futures resistance
symbols: emini = ymu5
10698-10708
10727-10734
September 2005 Dow futures support
symbols: emini = ymu5
10652-10647
10616-10601
10588-10579
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Abilene, TX.
TradeStalker Updates may not be redistributed without
permission.
www.TradeStalker.com
401 Pine Street Ste 102, Abilene ,TX, 79601-5163
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates Specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP 500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
TradeStalker's
R.B.I. Trader's Update
07 / 31 / 2005
(Published Since 1996)
...............................................
Dateline: 7:54 pm eastern time, 07/31/2005
The early pop to the 1248.00 resistance level on the SP
futures and 1626.50 level on the Nasdaq futures was quickly
sold on Friday, and the market chopped steadily lower in to
noon. After trying to get a rally going just after lunch
time, this time the bounce didn't stick.
The cash indices closed on their lows for the day, while the
futures bounced back in the last 20 minutes. However, with
the goofy "end of month settlement at fair value" policy,
the SP and Nasdaq futures actually "settled" just 1 tick off
of the lows on Friday. (For more info on this see
http://www.cme.com/trading/prd/equity/fairvaluefaq2544.html
). To get to where the last trade took place on Friday, the
SP futures need to open up 2.75 points and the Nasdaq
futures need to open up 4 points.
So far the action is yet ANOTHER fake-out breakout. The
market was up all week, then in one day gave back all of its
gains. The SP500 popped out of the top of a rising wedge
pattern on the daily chart, then got pulled right back in to
the week's trading range.
Contrary to what some pundits will tell you, steady "drip,
drip, drip" type of moves higher tend to be a lot LESS
sustainable, as the volatility contraction usually leads to
complacency. When the "group think" gets shaken, and bids
dry up and the ultimate sell off occurs. The highs become lids
until the market regroups. Since the "tree has been shaken",
the bulls and bears will likely do battle until a new "group
think" stage sets in.
It's doubtful that the market is going to go down easily.
What we are likely going to see is a volatile trading range
for a bit. There should be decent moves in both directions
while the market sorts out last week's action. So, try to
only get involved at extremes in this environment. The short
side on the emotional run up's that fizzle should offer the
better setups for now. On the flip side, a lower open that
reverses on Monday should offer a good trade on the long
side.
There is initial resistance up at the 1242.50-1243.75 area
on the SP futures and 1619-1621 area on the Nasdaq futures.
Those areas were trouble on Friday afternoon. So, if the
market pushes through and holds those areas without a
problem, then we could rally back to test the 1247.50-
1248.00 and 1626.50-1627.50 areas.
The initial support is at the 1237.00-1236.50 area on the SP
futures and 1611.50-1611.00 area on the Nasdaq futures. If
broken by much, then the 1232.25-1230.75 and 1603-1602 zones
are next. If the market fails to turn around from down here,
then the 1228.25-1227.50 and 1598.50-1597.50 zones appear to
be huge. If those areas are reached, and the market doesn't
make a quick U-Turn higher, then the 1220 level on the SP500
cash might be a magnet before the market is in a good spot
for a rally.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract =SPu5
1242.50-1243.75
1247.50-1248.00
September 2005 SP futures support
symbols: emini = esu5 / big contract =SPu5
1237.00-1236.50
1232.25-1230.75
1228.25-1227.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1619-1621
1626.50-1627.50
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1611.50-1611.00
1603-1602
1598.50-1597.50
September 2005 Dow futures resistance
symbols: emini = ymu5
10698-10708
10727-10734
September 2005 Dow futures support
symbols: emini = ymu5
10652-10647
10616-10601
10588-10579
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Abilene, TX.
TradeStalker Updates may not be redistributed without
permission.
www.TradeStalker.com
401 Pine Street Ste 102, Abilene ,TX, 79601-5163
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates Specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP 500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
Wednesday, July 27, 2005
10 Steps To Professional Day Trading
Everyone trades a little differently. The trading method outlined below is MY personal approach to trading. This method has worked for me for the last 20 years, and has helped me to avoid big draw downs since the mid 1980's. My trading strategy has helped me to make a good living trading.
It takes some time to learn my method of trading because it's based on tape reading and getting a "feel" for the market. This is *not* about a fast,easy formula to "get rich quick" while you sweat out every trade. Instead, this is about developing confidence and trading consistently without fear and without big draw downs.
Here is my 10 Step Approach to Learning My Style of Trading:
1. Practice exiting trades at break-even, using a one-tick target, a two or three tick soft stop (mental stop) and a 1.5 point hard stop. Never *allow* the market hit your hard stop. Exit by moving your target toward your hard stop, not by moving your hard stop towards your target. With time, all of this must become a reflex. You won't always be able to keep your losses down to 2 ticks, but only on rare occasions should you find yourself letting the market hit your hard stop. ("Rarely" means only about once every 50-100 trades after you get the hang of it.)
Even though your entries won't be good enough in the beginning to make a profit trading these tight soft stops, your entries will gradually improve until you turn the corner and become profitable.
Learn exits and entries separately. Don't let the one influence the other.
Taking losses this way takes dedication and discipline, so stick with it. It's the key to confident trading. If you never take large losses (and rarely medium size ones), the fear of loss pretty much goes away, and your confidence grows. Especially after your entries improve enough to support a "scalping" type exit strategy.
2. Every trade *in all market conditions* begins as a scalp. Let me clarify this: if you're in a choppy market and you're looking to get small gains, like a point or so, manage your initial hard and soft stops *exactly* the same way you would in a quick trend or any other type of market. That means keeping losses as close to 2 ticks as possible, taking lots of break even trades and exiting every time the market doesn't give you *instant gratification* (within a minute or so).
No matter what the market is doing, you must demand that it moves in your favor right after you enter, otherwise you get out as close to break even as possible. This means you'll be closing a lot of trades near break-even within the first minute. This is the foundation of learning to trade for consistent gains.
3. Don't worry about the commissions on break-even trades. If you do, you'll hold on to losing positions, begging them to turn around for you. This is called *hoping.* In this business, this type of *hoping* is the kiss of death. Your money-making trades must move your way in the first minute or less. When trades don't act right in the first minute, most of them will hit your hard stops.
So don't get hung up on the fact that your broker loves you. Who cares if he/she makes a living?
Your concern is *limiting losses*. I care more about this than anything else in trading. (Well-timed entries make my tight soft stops possible, so they're almost as important as the exits.)
4. Practice your entries until your timing is so good that you can *reasonably expect* the market to go your way immediately, before it goes more than 2 ticks against you. This is not easy at first, but if you stick with it, you'll get it.
5. Practice fading the emotional extremes on your entries. (Fading means entering in the opposite direction of the market's last move.) When an extreme NYSE-Tick (often above 1000 or below -1000) occurs at the same time the market accelerates into a support or resistance area, look for a price stall or reversal and fade the move. Fade the emotion.
6. Rarely, if ever, *chase* the market on your entries. Wait for a pullback to get onboard a trend.
I favor shorts over longs... I can get out of a short position quicker than I can get out of a long position. I don't know why. I like to say that I "see gravity better than helium." In the rare strong-trending markets where I may chase an entry, it's going to be a down trend, not an uptrend. I don't trust up trends enough to chase them. Maybe it's just a personal quirk and maybe not. I honestly don't know.
But it's interesting to note that most (not all) professional traders I've met are Bears and prefer short positions over longs. You should give it some thought and find out which direction works better for you. Are your losses bigger on shorts or longs? Specialize in one direction and trade the other direction only when things are looking real good.
7. Never let a gain turn into a loss. This will mean getting out of most trades a little (or a lot) too soon. You just have to live with it. Swing for home runs (greed) will ruin your trading. There is no mechanical formula that I know of, (such as, "move your stop to break even after you get 3 ticks gain") that will work. You have to develop a feel for how the market is acting at the moment, and use your feel to reduce your target or advance your hard stop. This comes with experience.
8. Develop a feel for the big picture movements of the market, not just the intraday action. Use the end-of-day market internals to analyze the market's mood and develop a daily bias.
9. Practice does *not* make perfect. Only *perfect practice* makes perfect. I learned this in my younger years, pursuing a professional
baseball career. Perfect practice will keep your losses smaller than your gains in the trading business.
There are a lot of things involved in perfect practice. When you get tired, or when the phone rings, or whatnot, *don't trade*. Always, *always* exit trades exactly the way I've outlined above on every trade in every market condition. Always *wait* for your pitch, the well-timed setup for entering. Don't practice sloppy entries just because you're bored. Only perfect practice will help you. Anything else just amounts to practicing bad habits.
10. Get a mentor. I traded for 6 years before I learned to keep my losses small. My trading turned around immediately after I met my mentor and talked to him on the phone for one week. Is there any serious profession that you can learn without a mentor? Maybe there is, but I don't know of any. It's certainly not trading.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. His support and resistance numbers have been published on the internet since 1996. Mike's nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. He will be offering "live" training online as well. http://www.TradeStalker.com Copyright 2005 Mike Reed
It takes some time to learn my method of trading because it's based on tape reading and getting a "feel" for the market. This is *not* about a fast,easy formula to "get rich quick" while you sweat out every trade. Instead, this is about developing confidence and trading consistently without fear and without big draw downs.
Here is my 10 Step Approach to Learning My Style of Trading:
1. Practice exiting trades at break-even, using a one-tick target, a two or three tick soft stop (mental stop) and a 1.5 point hard stop. Never *allow* the market hit your hard stop. Exit by moving your target toward your hard stop, not by moving your hard stop towards your target. With time, all of this must become a reflex. You won't always be able to keep your losses down to 2 ticks, but only on rare occasions should you find yourself letting the market hit your hard stop. ("Rarely" means only about once every 50-100 trades after you get the hang of it.)
Even though your entries won't be good enough in the beginning to make a profit trading these tight soft stops, your entries will gradually improve until you turn the corner and become profitable.
Learn exits and entries separately. Don't let the one influence the other.
Taking losses this way takes dedication and discipline, so stick with it. It's the key to confident trading. If you never take large losses (and rarely medium size ones), the fear of loss pretty much goes away, and your confidence grows. Especially after your entries improve enough to support a "scalping" type exit strategy.
2. Every trade *in all market conditions* begins as a scalp. Let me clarify this: if you're in a choppy market and you're looking to get small gains, like a point or so, manage your initial hard and soft stops *exactly* the same way you would in a quick trend or any other type of market. That means keeping losses as close to 2 ticks as possible, taking lots of break even trades and exiting every time the market doesn't give you *instant gratification* (within a minute or so).
No matter what the market is doing, you must demand that it moves in your favor right after you enter, otherwise you get out as close to break even as possible. This means you'll be closing a lot of trades near break-even within the first minute. This is the foundation of learning to trade for consistent gains.
3. Don't worry about the commissions on break-even trades. If you do, you'll hold on to losing positions, begging them to turn around for you. This is called *hoping.* In this business, this type of *hoping* is the kiss of death. Your money-making trades must move your way in the first minute or less. When trades don't act right in the first minute, most of them will hit your hard stops.
So don't get hung up on the fact that your broker loves you. Who cares if he/she makes a living?
Your concern is *limiting losses*. I care more about this than anything else in trading. (Well-timed entries make my tight soft stops possible, so they're almost as important as the exits.)
4. Practice your entries until your timing is so good that you can *reasonably expect* the market to go your way immediately, before it goes more than 2 ticks against you. This is not easy at first, but if you stick with it, you'll get it.
5. Practice fading the emotional extremes on your entries. (Fading means entering in the opposite direction of the market's last move.) When an extreme NYSE-Tick (often above 1000 or below -1000) occurs at the same time the market accelerates into a support or resistance area, look for a price stall or reversal and fade the move. Fade the emotion.
6. Rarely, if ever, *chase* the market on your entries. Wait for a pullback to get onboard a trend.
I favor shorts over longs... I can get out of a short position quicker than I can get out of a long position. I don't know why. I like to say that I "see gravity better than helium." In the rare strong-trending markets where I may chase an entry, it's going to be a down trend, not an uptrend. I don't trust up trends enough to chase them. Maybe it's just a personal quirk and maybe not. I honestly don't know.
But it's interesting to note that most (not all) professional traders I've met are Bears and prefer short positions over longs. You should give it some thought and find out which direction works better for you. Are your losses bigger on shorts or longs? Specialize in one direction and trade the other direction only when things are looking real good.
7. Never let a gain turn into a loss. This will mean getting out of most trades a little (or a lot) too soon. You just have to live with it. Swing for home runs (greed) will ruin your trading. There is no mechanical formula that I know of, (such as, "move your stop to break even after you get 3 ticks gain") that will work. You have to develop a feel for how the market is acting at the moment, and use your feel to reduce your target or advance your hard stop. This comes with experience.
8. Develop a feel for the big picture movements of the market, not just the intraday action. Use the end-of-day market internals to analyze the market's mood and develop a daily bias.
9. Practice does *not* make perfect. Only *perfect practice* makes perfect. I learned this in my younger years, pursuing a professional
baseball career. Perfect practice will keep your losses smaller than your gains in the trading business.
There are a lot of things involved in perfect practice. When you get tired, or when the phone rings, or whatnot, *don't trade*. Always, *always* exit trades exactly the way I've outlined above on every trade in every market condition. Always *wait* for your pitch, the well-timed setup for entering. Don't practice sloppy entries just because you're bored. Only perfect practice will help you. Anything else just amounts to practicing bad habits.
10. Get a mentor. I traded for 6 years before I learned to keep my losses small. My trading turned around immediately after I met my mentor and talked to him on the phone for one week. Is there any serious profession that you can learn without a mentor? Maybe there is, but I don't know of any. It's certainly not trading.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. His support and resistance numbers have been published on the internet since 1996. Mike's nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. He will be offering "live" training online as well. http://www.TradeStalker.com Copyright 2005 Mike Reed
Thursday, July 21, 2005
Did the Stock Market TOP on Thursday???
This is the TradeStalker's Trial delayed edition. This
publication was delayed.
Real Time members were handed a gift this morning. They were
told:
"The first hurdles on Thursday are at the 1239.00-
1240.00 area on the SP futures and the 1614-1616 area
on the Nasdaq futures... If the market reaches or pops
just over these areas on Thursday and then turns down,
it sets the stage for a shakeout to begin."
The pop up open peaked at 1238.75 on the SP futures and 1614
on the Nasdaq futures (just 1 tick shy on the SP futures,
but a direct hit on Nasdaq futures), and that set the stage
for a tradeable shakeout.
You can subscribe to the real time version of TradeStalker
at http://www.tradestalker.com/order-page.htm or call us
at 866-438-3244 (toll free).
.................................................
TradeStalker's
R.B.I. Trader's Update
07 / 20 / 2005
(Published Since 1996)
...............................................
Dateline: 7:17 pm eastern time, 07/20/2005
The gap down opens on Wednesday were bought and the market
bounced right to the 1231.50 level on the SP futures. That
bounce was sold and the market chopped its way lower. After
making lows at 1225.50 on the SP futures and 1586 on the
Nasdaq futures, there was fast market conditions as the
market bounced back to the 1132.00 and 1598.50 levels before
noon. Another dip followed and then around 1 pm the market
took off to the upside.
After running straight-line up to the 1238.50 level on the
SP futures and 1606 level on the Nasdaq futures, the market
pulled back over the next 30 minutes. The market turned back
up at 3 pm and rallied to new highs at 1240.00 and 1614
before pulling back into the close.
The ranges sure expanded on Wednesday and there was good
volatility. However, unless one was long early, it was a
tricky trading environment. On Thursday we get Initial
Claims before stocks open, the Leading Indicators at 10 am,
the Philly Fed at noon, and the FOMC minutes from June at 2
pm.
It looks like, with the market at new highs and all that
economic data coming out, we can expect more volatility. The
market is currently in a mania where folks are feeling
invincible on the long side. All dips have been absorbed and
then the market gets a rally going. It's beginning to "feel" like
it did going into the 2000 top. In any case, unless this
changes real soon, and the bounces don't stick, the market
*may* have its eye on the 1248-1252 area on the SP500 cash
before the melt-up is over. The upside has a head of steam,
that's for sure.
The futures settled well below fair value on Wednesday. On
Thursday, expect the "sell early, buy the first decent
pullback" type of pattern early. Traders aren't comfortable
buying the new highs. So, if there is an early rally and it
fizzles, it should set up a tradeable pullback. On the other
side of the coin, a pullback to initial support that holds
should set up a good entry on the long side. My focus early
will be on the short side.
The first hurdles on Thursday are at the 1239.00-1240.00
area on the SP futures and the 1614-1616 area on the Nasdaq
futures. That area on the SP futures was heavily sold late
on Wednesday. If the market reaches or pops just over these
areas on Thursday and then turns down, it sets the stage for
a shakeout to begin. However, if these are cleared and held,
then look for resistance around the 1242.25 and 1622 levels.
If the market gets up around here, and the market doesn't
show any signs of turning, then we could see the melt-up
extend towards the 1248.00-1248.50 area on the SP futures
and the 1630-1631 area on the Nasdaq futures.
There should be strong support around the 1234.00-1233.50
area on the SP futures and the 1602.50-1601.00 area on the
Nasdaq futures. If those areas are not held, then there
should be support at the 1229.50-1129.25 and 1594-1593
areas. If the market gets back down here and cannot rebound
per usual of late, then we could undo the Wednesday gains
and revisit the 1225.75-1225.50 and/or 1587-1586 areas.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract = SPu5
1239.00-1240.00 ** gift short early
1242.25
1248.00-1248.50
September 2005 SP futures support
symbols: emini = esu5 / big contract = SPu5
1234.00-1233.50 ** key early
1229.50-1129.25
1225.75-1225.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1615-1616 ** gift short early
1622
1630-1631
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1602.50-1601.00 ** key early
1594-1593
1587-1586
September 2005 Dow futures resistance
symbols: emini = ymu5
10708-10711
10734
10778-10781
September 2005 Dow futures support
symbols: emini = ymu5
10661-10654
10621-10619
10601-10593
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Abilene, TX.
TradeStalker Updates may not be redistributed without
permission.
www.TradeStalker.com
401 Pine Street Ste 102, Abilene ,TX, 79601-5163
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates SPecify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
publication was delayed.
Real Time members were handed a gift this morning. They were
told:
"The first hurdles on Thursday are at the 1239.00-
1240.00 area on the SP futures and the 1614-1616 area
on the Nasdaq futures... If the market reaches or pops
just over these areas on Thursday and then turns down,
it sets the stage for a shakeout to begin."
The pop up open peaked at 1238.75 on the SP futures and 1614
on the Nasdaq futures (just 1 tick shy on the SP futures,
but a direct hit on Nasdaq futures), and that set the stage
for a tradeable shakeout.
You can subscribe to the real time version of TradeStalker
at http://www.tradestalker.com/order-page.htm or call us
at 866-438-3244 (toll free).
.................................................
TradeStalker's
R.B.I. Trader's Update
07 / 20 / 2005
(Published Since 1996)
...............................................
Dateline: 7:17 pm eastern time, 07/20/2005
The gap down opens on Wednesday were bought and the market
bounced right to the 1231.50 level on the SP futures. That
bounce was sold and the market chopped its way lower. After
making lows at 1225.50 on the SP futures and 1586 on the
Nasdaq futures, there was fast market conditions as the
market bounced back to the 1132.00 and 1598.50 levels before
noon. Another dip followed and then around 1 pm the market
took off to the upside.
After running straight-line up to the 1238.50 level on the
SP futures and 1606 level on the Nasdaq futures, the market
pulled back over the next 30 minutes. The market turned back
up at 3 pm and rallied to new highs at 1240.00 and 1614
before pulling back into the close.
The ranges sure expanded on Wednesday and there was good
volatility. However, unless one was long early, it was a
tricky trading environment. On Thursday we get Initial
Claims before stocks open, the Leading Indicators at 10 am,
the Philly Fed at noon, and the FOMC minutes from June at 2
pm.
It looks like, with the market at new highs and all that
economic data coming out, we can expect more volatility. The
market is currently in a mania where folks are feeling
invincible on the long side. All dips have been absorbed and
then the market gets a rally going. It's beginning to "feel" like
it did going into the 2000 top. In any case, unless this
changes real soon, and the bounces don't stick, the market
*may* have its eye on the 1248-1252 area on the SP500 cash
before the melt-up is over. The upside has a head of steam,
that's for sure.
The futures settled well below fair value on Wednesday. On
Thursday, expect the "sell early, buy the first decent
pullback" type of pattern early. Traders aren't comfortable
buying the new highs. So, if there is an early rally and it
fizzles, it should set up a tradeable pullback. On the other
side of the coin, a pullback to initial support that holds
should set up a good entry on the long side. My focus early
will be on the short side.
The first hurdles on Thursday are at the 1239.00-1240.00
area on the SP futures and the 1614-1616 area on the Nasdaq
futures. That area on the SP futures was heavily sold late
on Wednesday. If the market reaches or pops just over these
areas on Thursday and then turns down, it sets the stage for
a shakeout to begin. However, if these are cleared and held,
then look for resistance around the 1242.25 and 1622 levels.
If the market gets up around here, and the market doesn't
show any signs of turning, then we could see the melt-up
extend towards the 1248.00-1248.50 area on the SP futures
and the 1630-1631 area on the Nasdaq futures.
There should be strong support around the 1234.00-1233.50
area on the SP futures and the 1602.50-1601.00 area on the
Nasdaq futures. If those areas are not held, then there
should be support at the 1229.50-1129.25 and 1594-1593
areas. If the market gets back down here and cannot rebound
per usual of late, then we could undo the Wednesday gains
and revisit the 1225.75-1225.50 and/or 1587-1586 areas.
September 2005 SP futures resistance
symbols: emini = esu5 / big contract = SPu5
1239.00-1240.00 ** gift short early
1242.25
1248.00-1248.50
September 2005 SP futures support
symbols: emini = esu5 / big contract = SPu5
1234.00-1233.50 ** key early
1229.50-1129.25
1225.75-1225.50
September 2005 Nasdaq futures resistance
symbols: emini = nqu5 / big contract = ndu5
1615-1616 ** gift short early
1622
1630-1631
September 2005 Nasdaq futures support
symbols: emini = nqu5 / big contract = ndu5
1602.50-1601.00 ** key early
1594-1593
1587-1586
September 2005 Dow futures resistance
symbols: emini = ymu5
10708-10711
10734
10778-10781
September 2005 Dow futures support
symbols: emini = ymu5
10661-10654
10621-10619
10601-10593
---------------------------
REMINDER:
Real Time subscribers can view these updates on
the web at this site:
http://www.tradestalker.com/members
---------------------------
Good Trading,
Mike Reed
Copyright (c) 2005 by TradeStalker.com, Abilene, TX.
TradeStalker Updates may not be redistributed without
permission.
www.TradeStalker.com
401 Pine Street Ste 102, Abilene ,TX, 79601-5163
Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates SPecify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
*************************************************
Sunday, July 17, 2005
Where the Edge Begins: The SP Futures lead the Pack
Question: Can you talk about the effect of the cash market?
Frankly I have trouble even finding what its symbol is...
SPY??
I’m glad you don’t know the cash symbol yet. It means
you’re probably watching something better. But before I
tell you about it, here’s your answer:
The symbol for the S&P 500 cash market is SPX ($SPX on
eSignal’s data feed). And incidentally, the symbol for the
Nasdaq 100 cash market is $NDX. These go with the SP
futures and the Nasdaq futures contracts.
The cash markets are important because they give the actual
cash prices where the markets are trading. All the stocks
that make up the S&P 500 index are factored into the cash
price of the SPX. It’s the same deal for the Nasdaq 100 and
the NDX.
The symbol you mentioned, SPY, is for the “Spyders” which
are an Exchange Traded Fund (ETF). It’s also based on the
S&P 500 stock index. The Spyders trade just like a stock.
Some people say that the cash markets don’t gyrate as much
as the futures markets do. That’s probably a valid point.
But here’s a better point:
The futures lead the cash markets by a fraction of a second
or so. This is huge because it makes the futures charts
give better support and resistance levels… much better than
anything else.
This is where my trading edge begins.
Also the futures have gigantic leverage, which is exactly
what you want IF, by some small miracle you actually *know*
how to trade… Very few people do, and it’s not getting any
easier to learn because there’s so mush noise out there from
“experts” who can’t trade. I’ll say a little more about
this in a second. Someone sure needs to say it.
Because of the advantages of the futures, a lot of pros
trade them exclusively, staying pretty much out of the
ETF’s, the index options, stock options and individual
stocks.
And even the ones who trade other things watch the futures
like a hawk, waiting for a specific pattern or event that
gives them their edge.
Every professional trader I know (or have ever met) uses the
support and resistance (s/r) levels of the SP Futures.
These s/r zones lay the groundwork for their trading edge…
the edge that took them from rookie to pro.
The SP and Nasdaq futures have stationary as well as dynamic
s/r levels. When taken together, these are one of the keys
to making money consistently and avoiding big draw-downs.
You can’t get s/r accuracy on the cash indices, the ETF’s or
the stock index options because they don’t lead the fleet.
The old saying, “a rising tide lifts all ships” applies
here.
When the futures rise, all the related stock-based stuff
follows… but with less precise support and resistance
levels. This is because the big arbitragers and other
traders of size are taking cues from the Futures markets.
They move fast, but not instantly and not consistently.
The time you put into learning an edge on the SP and Nasdaq
futures will pay off in a huge way no matter what you’re
going to trade - stocks, stock options, ETF’s – it makes no
difference.
I make my living daytrading the SP and Nasdaq futures, and I
can tell you this:
If you’re going to day trade for a living, you need to learn
as much as you can about the stock index futures…
To do this right, you need someone who trades for a living
to teach you.
Strong sales people who have been in and out of the markets
for many years and can’t trade still want to put their
knowledge to work. They know a lot of information, why
waste it? So they “teach” trading. Some of my subscribers
tell me this is the rule, not the exception. It’s basically
outrageous, if you ask me.
If the “guru” can’t hack it, their students won’t do any
better.
Here’s reality…
There are *very* few who day trade consistently enough to
live off the income that are going to show you, or anyone
outside his/her own family, how they get their edge.
But I’m an exception. I’ll show you every detail of how I
have made my living by day trading since the 1980’s and have
avoided big draw-downs all this time.
I’ll teach you the most reliable trading technique you’ll
ever see. We won’t be swinging for home runs, but for
consistency.
I’ll show you the RBI support and resistance zones, the
stuff my pro subscribers quietly rave about. You’ll learn
how I find these zones.
You’re fortunate to have bumped into my web site right now
because I’m setting up the software right now that I’m going
to use to teach my real-time subscribers everything -
including my entries and exits in real-time while I’m
trading…
You can be part of it. But it’s only fair to take my loyal
subscribers first. So…
Click through to my site, subscribe to my time-tested RBI
Updates, and get your foot in the door right away while it’s
still open.
The sooner you’re on my subscriber list, the sooner I’ll be
able to invite you to learn my way of getting consistent
gains with no back-breaking draw-downs. I’m only going to
teach a few at a time, so move on this as soon as you can.
You don’t need a pro trader in your family anymore. You’ve
got one if you click through and join my trading “family.”
Here’s where your success can begin: www.tradestalker.com
Frankly I have trouble even finding what its symbol is...
SPY??
I’m glad you don’t know the cash symbol yet. It means
you’re probably watching something better. But before I
tell you about it, here’s your answer:
The symbol for the S&P 500 cash market is SPX ($SPX on
eSignal’s data feed). And incidentally, the symbol for the
Nasdaq 100 cash market is $NDX. These go with the SP
futures and the Nasdaq futures contracts.
The cash markets are important because they give the actual
cash prices where the markets are trading. All the stocks
that make up the S&P 500 index are factored into the cash
price of the SPX. It’s the same deal for the Nasdaq 100 and
the NDX.
The symbol you mentioned, SPY, is for the “Spyders” which
are an Exchange Traded Fund (ETF). It’s also based on the
S&P 500 stock index. The Spyders trade just like a stock.
Some people say that the cash markets don’t gyrate as much
as the futures markets do. That’s probably a valid point.
But here’s a better point:
The futures lead the cash markets by a fraction of a second
or so. This is huge because it makes the futures charts
give better support and resistance levels… much better than
anything else.
This is where my trading edge begins.
Also the futures have gigantic leverage, which is exactly
what you want IF, by some small miracle you actually *know*
how to trade… Very few people do, and it’s not getting any
easier to learn because there’s so mush noise out there from
“experts” who can’t trade. I’ll say a little more about
this in a second. Someone sure needs to say it.
Because of the advantages of the futures, a lot of pros
trade them exclusively, staying pretty much out of the
ETF’s, the index options, stock options and individual
stocks.
And even the ones who trade other things watch the futures
like a hawk, waiting for a specific pattern or event that
gives them their edge.
Every professional trader I know (or have ever met) uses the
support and resistance (s/r) levels of the SP Futures.
These s/r zones lay the groundwork for their trading edge…
the edge that took them from rookie to pro.
The SP and Nasdaq futures have stationary as well as dynamic
s/r levels. When taken together, these are one of the keys
to making money consistently and avoiding big draw-downs.
You can’t get s/r accuracy on the cash indices, the ETF’s or
the stock index options because they don’t lead the fleet.
The old saying, “a rising tide lifts all ships” applies
here.
When the futures rise, all the related stock-based stuff
follows… but with less precise support and resistance
levels. This is because the big arbitragers and other
traders of size are taking cues from the Futures markets.
They move fast, but not instantly and not consistently.
The time you put into learning an edge on the SP and Nasdaq
futures will pay off in a huge way no matter what you’re
going to trade - stocks, stock options, ETF’s – it makes no
difference.
I make my living daytrading the SP and Nasdaq futures, and I
can tell you this:
If you’re going to day trade for a living, you need to learn
as much as you can about the stock index futures…
To do this right, you need someone who trades for a living
to teach you.
Strong sales people who have been in and out of the markets
for many years and can’t trade still want to put their
knowledge to work. They know a lot of information, why
waste it? So they “teach” trading. Some of my subscribers
tell me this is the rule, not the exception. It’s basically
outrageous, if you ask me.
If the “guru” can’t hack it, their students won’t do any
better.
Here’s reality…
There are *very* few who day trade consistently enough to
live off the income that are going to show you, or anyone
outside his/her own family, how they get their edge.
But I’m an exception. I’ll show you every detail of how I
have made my living by day trading since the 1980’s and have
avoided big draw-downs all this time.
I’ll teach you the most reliable trading technique you’ll
ever see. We won’t be swinging for home runs, but for
consistency.
I’ll show you the RBI support and resistance zones, the
stuff my pro subscribers quietly rave about. You’ll learn
how I find these zones.
You’re fortunate to have bumped into my web site right now
because I’m setting up the software right now that I’m going
to use to teach my real-time subscribers everything -
including my entries and exits in real-time while I’m
trading…
You can be part of it. But it’s only fair to take my loyal
subscribers first. So…
Click through to my site, subscribe to my time-tested RBI
Updates, and get your foot in the door right away while it’s
still open.
The sooner you’re on my subscriber list, the sooner I’ll be
able to invite you to learn my way of getting consistent
gains with no back-breaking draw-downs. I’m only going to
teach a few at a time, so move on this as soon as you can.
You don’t need a pro trader in your family anymore. You’ve
got one if you click through and join my trading “family.”
Here’s where your success can begin: www.tradestalker.com
Saturday, July 16, 2005
How to Judge Good Entries when Day Trading the Index Futures
Hey Mike. If the SP futures fall through support and go
straight down for another two points, and I want to get
short, should I enter immediately, two points below support,
or should I wait for a pullback and then try to get short?
Well, you've got to be patient enough to wait for entries
that have two things: first - a high probability of
immediate gain; second - a small potential for loss if the
worst happens and your hard stop gets hit. This principle
applies to all entries and it's useful to think about it
when you're trying to decide whether to enter on a pullback
or a continuation of a move.
Entering on a pullback offers less dollar risk than chasing
the market because you can place your hard stop on the other
side of support or resistance and risk only a point or two.
(Of course, this doesn't mean you're going to hang around
and let the market hit your hard stop if things go wrong.)
Entering on a pullback also gives you a better chance of
gaining a point or so in the first 30 to 60 seconds of the
trade. This is important, though very few people seem to be
talking about it. perhaps it's a well kept secret.
I rarely (almost never) chase the market. Here's why.
Usually, if you chase the market for your entry, you'll get
filled about the same time the crowd's emotion is exhausted.
The market will pull back and you'll have to get out
immediately (if you're smart). If you're stubborn and you
don't get out immediately, you'll have to suffer through the
pullback and *hope* that the trend continues before your
stop is hit. If the market gets close to your stop, you'll
be tempted to move the stop away just a little bit. Once you
give in to the temptation, you've got an expensive trading
habit that may eventually take you out of the business.
Whenever you find yourself *hoping* that the market will
come back and get you out of a bad position, you really have
to head for the exits *now*. Don't even think about the
commission, or all the time you spent waiting for the setup.
just get out.
Question: And what if there is no pullback?
If the market breaks through support and keeps going down
without a pullback, you just have to be a pro and let it go.
All the lost opportunity in the world won't take your
account balance down, but chasing high-risk, low-probability
entries will cost you.
Mike Reed
www.TradeStalker.com
straight down for another two points, and I want to get
short, should I enter immediately, two points below support,
or should I wait for a pullback and then try to get short?
Well, you've got to be patient enough to wait for entries
that have two things: first - a high probability of
immediate gain; second - a small potential for loss if the
worst happens and your hard stop gets hit. This principle
applies to all entries and it's useful to think about it
when you're trying to decide whether to enter on a pullback
or a continuation of a move.
Entering on a pullback offers less dollar risk than chasing
the market because you can place your hard stop on the other
side of support or resistance and risk only a point or two.
(Of course, this doesn't mean you're going to hang around
and let the market hit your hard stop if things go wrong.)
Entering on a pullback also gives you a better chance of
gaining a point or so in the first 30 to 60 seconds of the
trade. This is important, though very few people seem to be
talking about it. perhaps it's a well kept secret.
I rarely (almost never) chase the market. Here's why.
Usually, if you chase the market for your entry, you'll get
filled about the same time the crowd's emotion is exhausted.
The market will pull back and you'll have to get out
immediately (if you're smart). If you're stubborn and you
don't get out immediately, you'll have to suffer through the
pullback and *hope* that the trend continues before your
stop is hit. If the market gets close to your stop, you'll
be tempted to move the stop away just a little bit. Once you
give in to the temptation, you've got an expensive trading
habit that may eventually take you out of the business.
Whenever you find yourself *hoping* that the market will
come back and get you out of a bad position, you really have
to head for the exits *now*. Don't even think about the
commission, or all the time you spent waiting for the setup.
just get out.
Question: And what if there is no pullback?
If the market breaks through support and keeps going down
without a pullback, you just have to be a pro and let it go.
All the lost opportunity in the world won't take your
account balance down, but chasing high-risk, low-probability
entries will cost you.
Mike Reed
www.TradeStalker.com
Monday, July 11, 2005
5 Day Trading Tips for Success
By Mike Reed
If someone tells you that you can get rich quick day trading...run for the hills! There are no overnight successes, unless you are very lucky!
Day Trading isn't easy, but with experience, dedication, self- control and hard work, you *can* become a successful day trader.
1. How to Treat Gap Openings
Mike Reed is author of TradeStalker's RBI Trader's Updates. Mike has been trading the Market for 23 years. When he got his start as a trader, Mike was plotting prices on paper tape as the internet had not yet been "born" as we know it today. Years of experience have really given him a feel for the Market action. His support and resistance numbers have been published on the internet since 1996. He has a wide readership that includes day traders, floor traders, locals and hedge fund managers. His nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates.
http://www.TradeStalker.com
If someone tells you that you can get rich quick day trading...run for the hills! There are no overnight successes, unless you are very lucky!
Day Trading isn't easy, but with experience, dedication, self- control and hard work, you *can* become a successful day trader.
1. How to Treat Gap Openings
A gap up or gap down open is an emotional move, and it often will reverse course and turn in to "trap open". Gaps that are less than 4 points on the SP Future tend to get filled in the same day, especially Tuesday through Thursday. Turns will occur within 20 to 40 minutes after the open. A trader must be on the lookout for a reversal as soon as early momentum is lost.2. When the Market Moves Against You, When Do You Exit a Trade?
A gap into a good support /resistance zone is almost always a good "fade" - with stops no more than 1 point on other side of the support /resistance zone.
(A "fade" is simply entering a position opposite of the direction of the gap. If the market gapped down, a "fade" would be enteringa long position (buying) in to the selloff.)
The way I trade, I exit as quickly as possible. There's no sense in waiting around for your "stop-loss" to get triggered when the perceived edge is gone. I like to stay in control of my trades, and if the market doesn’t do as anticipated, I don't wait for my stop to get hit.3. When Are The Best Times of the Day to be Trading?
When there is no longer a high probability situation, exit and take a second look.
For me, the best times of the day for trading are the first hour and the last 2 hours.4. How Can Anyone Trade a Choppy Market?
Here's an old rule of thumb (and this used to work like clockwork in the "old days", and although it has diminished a bit, it stillhappens):
"The Minor Time of Day"-
If the Market opens higher, then there tends to be a pullback within the first 20 to 40 minutes. If the pullback is weak, there will probably be a continuation of rally into the early afternoon. But, if the pullback is sharp, thenyou've likely seen the high for the day and you'll want to be selling the bounces.
"Major Time of Day"-
Around the 2:20pm to 2:40pm time frame, we'll often see moves reverse or gather steam in that timeframe.People that have been holding positions all day long become a bit "antsy" - they have to do something with them before the Marketcloses for the day. When people holding losing positions into late into the day see the time until the close is near, that cancause the market to make some sharp turns in the last 90 minutes. The program gang also likes to get active that time of day.
I take a number of scalps in choppy markets. I time entries with Tick extremes, especially when price pops into previous highareas of congestion, or other intraday support and resistance. Moving averages are not good during choppy days.(Scalps : small profit, "hit and run" type of trades)5. How Do You Measure Pullbacks
In a trend move, I like to see shallow pullbacks to a steeply sloped moving average on one of the 3 time frames I follow. (more time frames, the better) Pullbacks to symmetry in a persistent trend are useful when present.
Example: Rally, dip 2.00 points – Another run up, then a dip of 2.25 points – A another push higher, then a dip 1.75 points. Notecontinued dips of 1.75-2.25 points repeatedly hold. A pattern has developed, and you want to be buying those shallow pullbacks. This works great used in conjunction with a steep slope of the 20 ema on the 5 minutes charts, or slightly bigger picture, the 60 ema on the 5 minute chart.
Mike Reed is author of TradeStalker's RBI Trader's Updates. Mike has been trading the Market for 23 years. When he got his start as a trader, Mike was plotting prices on paper tape as the internet had not yet been "born" as we know it today. Years of experience have really given him a feel for the Market action. His support and resistance numbers have been published on the internet since 1996. He has a wide readership that includes day traders, floor traders, locals and hedge fund managers. His nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates.
http://www.TradeStalker.com
Sunday, July 10, 2005
When to use Moving Averages instead of Support and Resistance for Day Trading
When day trading the SP and Nasdaq futures, do you rely on your moving averages more than your support & resistant areas?
During the first hour of trading, the support and resistance zones on the SP and Nasdaq futures are the most important things to watch. The moving averages have not yet had a chance to come into play.
After that, if a trend is developing I watch several key exponential and simple moving averages on the 2 minute, the 5 minute and the 13 minute SP and Nasdaq futures charts.
These specific moving averages give reliable support and resistance for the market as long as the slope of the moving averages are fairly steep, indicating a trend. When there is no trend, the moving averages are flat and pretty much worthless.
When a trending market makes a countertrend move, and hits a key moving average on two or more different time frames at the same time, the probability of a good trade setup increases dramatically. If you get three hits at the same time, it’s even better. Sometimes you’ll see one key moving average get hit on the five minute SP chart at the same time another moving average is hit on the 13 minute Nasdaq chart. This also gives a good trade setup.
Eventually a trending market will reach the next major support or resistance zone. At that point the zones once again become more important than the moving averages.
In afternoon trading, the market has often broken through a support or resistance zone several times. In that case, the zone is no longer useful, and new areas of support and resistance can usually be found. When I find them, I send my subscribers an RBI Intraday Update with the new support or resistance areas, and a description of what I think the market will do if it moves above or below them.
My subscribers often say my support and resistance zones are extremely accurate. If you want, you can come check them out for free at my web site: http://www.TradeStalker.com.
Stop by and sign up for my FREE (one-day delayed) RBI Updates. After you’ve seen them for yourself, you may want to become a real-time subscriber.
Read the Tape,
Mike
During the first hour of trading, the support and resistance zones on the SP and Nasdaq futures are the most important things to watch. The moving averages have not yet had a chance to come into play.
After that, if a trend is developing I watch several key exponential and simple moving averages on the 2 minute, the 5 minute and the 13 minute SP and Nasdaq futures charts.
These specific moving averages give reliable support and resistance for the market as long as the slope of the moving averages are fairly steep, indicating a trend. When there is no trend, the moving averages are flat and pretty much worthless.
When a trending market makes a countertrend move, and hits a key moving average on two or more different time frames at the same time, the probability of a good trade setup increases dramatically. If you get three hits at the same time, it’s even better. Sometimes you’ll see one key moving average get hit on the five minute SP chart at the same time another moving average is hit on the 13 minute Nasdaq chart. This also gives a good trade setup.
Eventually a trending market will reach the next major support or resistance zone. At that point the zones once again become more important than the moving averages.
In afternoon trading, the market has often broken through a support or resistance zone several times. In that case, the zone is no longer useful, and new areas of support and resistance can usually be found. When I find them, I send my subscribers an RBI Intraday Update with the new support or resistance areas, and a description of what I think the market will do if it moves above or below them.
My subscribers often say my support and resistance zones are extremely accurate. If you want, you can come check them out for free at my web site: http://www.TradeStalker.com.
Stop by and sign up for my FREE (one-day delayed) RBI Updates. After you’ve seen them for yourself, you may want to become a real-time subscriber.
Read the Tape,
Mike
Day trading the SP Futures with Initial Support and Resistance using the NYSE TICK
A question that comes up often is "Does the area of support or resistance that is hit FIRST in the morning have special significance?"
What is the "TICK"? The TICK is simply the difference between the number of stocks that last traded on an "up-tick" versus the number of stocks that last traded on a "down-tick". When the TICK reaches +1000, the market has reached a short term overbought extreme and when the TICK reaches -1000, the market has reached a short term oversold extreme.
When the SP futures make a quick surge to a strong resistance zone, and then loses momentum at or near the zone, while concurrently the TICK registers an extreme high reading (usually over +1000), this sets you up for a high-probability short entry, with a hard stop just above the resistance zone.
In most cases, the area of support or resistance that is hit FIRST in the morning has special significance. In the first hour of trading, the market's reaction to initial support or resistance is a good "tell" for the strength of the next move.
For instance, if the market moves up in the first 20 minutes of trading, touches the initial resistance zone, and then turns down, this implies that a good tradable downtrend move is likely to develop.
How strong that new trend becomes is market-dependent. As the market falls, its reaction to each new support zone gives an indication of how weak or strong the new downtrend is. If the market falls to initial support and breaks down through it without a stall or a bounce, it will probably continue down to the next level of support. But, if the market loses downside momentum near the initial support zone, the downtrend may well be over.
When price comes into a resistance or support area, the NYSE TICK is by far the best indicator of what price may do from this point.
What is the "TICK"? The TICK is simply the difference between the number of stocks that last traded on an "up-tick" versus the number of stocks that last traded on a "down-tick". When the TICK reaches +1000, the market has reached a short term overbought extreme and when the TICK reaches -1000, the market has reached a short term oversold extreme.
When the SP futures make a quick surge to a strong resistance zone, and then loses momentum at or near the zone, while concurrently the TICK registers an extreme high reading (usually over +1000), this sets you up for a high-probability short entry, with a hard stop just above the resistance zone.
These counter-trend trades "fade" (meaning to enter a trade against the trend) the intraday emotional extremes, and may come at the beginning of a new trend - giving you a chance to hit a "home run." More often, however, they become scalp trades that don't last long, sometimes less than a minute. Either way, they are high probability trades if you time your entry well.
It takes a lot of practice to time your entries just right on these trades, and you have to be ready to get out immediately (before your hard stop is hit) if you sense that your edge has disappeared. It is difficult to sense when the edge (probability of success) of a trade is gone *before* the trade changes from a small gain to a small loss. Practice will help *if* you know what you're looking for.
Most traders believe you have to wait for your hard stops to be hit before you can know that a trade's edge is gone. This may be true for most traders, but it doesn't have to be true for you.
Mike Reed is author of TradeStalker's RBI Trader's Updates. Mike has been trading the Market for 23 years. When he got his start as a trader, Mike was plotting prices on paper tape as the internet had not yet been "born" as we know it today. Years of experience have really given him a feel for the Market action. His support and resistance numbers have been published on the internet since 1996. He has a wide readership that includes day traders, floor traders, locals and hedge fund managers. His nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates.
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