.................................................
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.
*************************************************
Saturday, July 30, 2005
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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