| The Tick Stop |
| For Active Traders |
Some of the best setups and strategies are known to work in any market.
Why is that? Because a market is a market and all markets are driven by buyers and sellers.So if you are developing your own trading system, using someone elses trading system, or just relying on some reliable trade setups, the really robust ones will stand the test of working in all markets.
Check out these and see if they fit with your trading makep
Are you looking for tips and tricks to drive your day trading results.
Check out these offers
What is the best emini trading time frame?
Not all trading is created equal. Different profit objectives and certainly different time horizons means that no 2 traders are created equal.
Let me elaborate
Trader number 1 trades on a 1 minute time frame and seeks a 1 point profit many times throughout the trading day.
Trader number 2 thinks this is an absurd approach as she trades and a 15 minute chart and will hold a trade for 2-3 days in order to capture outsized gaps that can produce 10- 20 points of profits
So while I have heard the mantra that futures trading is a zero sum game, i.e. for every buyer there is a seller, and thus for every winner there is a loser, that statement is far too simplistic and does not accurately convey the truth about the markets
There is no right and no wrong profit objective for a trader, and there is equally no right or wrong time frame. The parameters a trader sets out are more closely related to a trader’s personality than anything else.
Trader #1 goes long at a price of 805 in the Emini SP with a 1 point stop and a 1 point target on the trade. A pure scalp
Trader #2 goes short at 805 effectively selling the position to trader #1. She has a 10 point stop at 815 and a 3 day profit target of 780.
The markets ebbs and flows grinding its way up to 810 allowing trader #1 3 more opportunities to lock in single point wins, while trader #2 holds her trade and waits.
Which trader is right?
Both traders are right. For each time frame and for each profit / stop parameter there is a profitable and a non profitable trader.
Select a time frame that is compatible with your personality, obey your time frame, and learn to recognize the markets ability to provide opportunity in your time frame.
Some popular time frames for emini SP trading
Scalping
Day Trading
Swing Trading
Scalpers or Active intra day trader who like to take multiple trades in a single day also favor Tick Charts.
A tick chart is based on market activity and not time frame. A tick chart will not print additional bars in a slow market but will print more bars in a fast market. The bar or candle is printed depending on the parameter set. E.g a 300 tick chart will print a candle or bar after 300 ticks have traded
(more on tick charts in my next article)
When traders are under the gun financially they make mistakes, they try and rush the learning process and wind up never making it through the learning curve.
Other than a black box trading system where a computer makes the decisions and enters trades, no trading that I know of is 100% mechanical, if I found a way to make mine 100% mechanical I would have done it by now.
I have worked and continue to work on automating it, but I cannot get beyond 68-70% win rate.
While that is still profitable when I execute on my own I can do better.
That having been said, the goal of TheTradingZone, is to make the trades as objective and rules based as they can possibly be.
We know we cannot achieve 100% but we must strive to put concrete If > Then rules around trade entries, exits and management. And this is precisely what we do.
I too have seen far too many so called systems that are really nothing more than trading information.
We give you all the information, how to read charts, determine direction..Etc… and from there we use only 3 setups.
Only 3 because it takes focus and concentration to trade and limiting our setups to 3 makes it easier to follow.
We use these 3 particular setups because they deliver a higher % win rate for quick profits and they are setups that allow for tight stops.
I am confident that I can impart my knowledge about trading and the markets as I have with many others.
I am confident that the methodology works, not just for me but for many others who have learned it and continue to use it.
But… the truth about trading ( and I am always brutally honest about this. I would rather turn away a potential student than have an unhappy one) is that not everyone is cut out to be a trader.
This is true about every profession in the world. Not everyone is cut out to be a Doctor, a Lawyer, entrepreneur, etc…. so why should trading be any different.
Trading is not different. The obstacles however that prevents a trader from succeeding are very different from those that prevent others to succeed in other professions.
What I mean by that is, trading unlike many other professions that offer similar financial rewards does not require any advanced skills. The education is the simple part. I have taught my 10 year old son to recognize all the setups we use.
The reasons why traders fail are:
But trading unlike other professions requires that we take losing trades, it’s simply part of it.
Traders beat themselves up after a loss, because they cannot face the fact that they lost real hard earned cash.
I hear traders tell me all the time that they understand that there is no such thing as a 100% system, but even when given a 75% system they continue to beat themselves up over a losing trade. It’s statistics, plain and simple some trades will fail
OK here is the #1 thing about TheTradingZone method that differentiates us from all the others.
All our patterns, all our entries, all our stops placements, all our trade management, all our money management, is designed to give the trader a psychological edge.
Notice I said psychological and not financial.
I am asked over and over again, I cannot even tell you how often, but I can tell you as recently as yesterday.
“Greg if you held all you contracts for X points wouldn’t you make more money?”
YES I would. On paper, or in a spreadsheet but not in real life.
But the truth about trading is that once you take a stop you ARE emotionally affected, 2nd stops multiply the emotional effect x4, 3rd stop ….
When the big trade shows up every small trader does the same thing. Gets back to even on the day and bails out.
That is not trading, that is making your broker rich!
You have successfully put yourself in a financial, emotional and psychological disadvantage and could not participate in the big trade
Everything we do is designed to do just the opposite.
Wait for better trades, take partial profits, and use tighter stops…
Now, when the big trade shows up you are emotionally and financially prepared to participate. The result is that our member hold winners for 10- 15 even 20 points where they never could before.
Put another way, every traders wants to make $1,000 a day. If I delivered to you a system that had a daily drawdown of -$2,000 and a win loss rate of 45% wins, NO small traders that I know could ever make that work.
But if I deliver to you a system that earns only $750 / day, with a $200 drawdown and a 78% win rate…….
So the bottom line is that the psychological cannot be completely removed from that statistical.
If a system cannot be followed for whatever reason, (and as I’ve explained, most of the time the reason is negative psychological impact of losses) then the stats are irrelevant.
I hope this was informative
Greg W
It finally came to a head last night on the Daily show where John Stewart confronted Jim Cramer.
I had hoped for a real cage match, a throw down the gloves kind of battle. Instead what I witnessed was an unprepared, scared former hedge fund manager, turned advisor, turned entertainer, looking apologetic and somewhat pathetic
John Stewart the host of the daily show is a self proclaimed satirist and serves up some fantastic jokes and a daily dose of political and current event commentary. He is clearly in the entertainment business, and there can be no mistaking the cable channel “The Comedy Network” as being anything other than what the name suggests.
Classifying Jim Cramer however leads to a host of other questions and concerns. Is he an advisor, is he strictly an entertainer? Can he be both or switch hats at will? Is he held to a higher standard because of his past as an integral part of the financial system that he now points an accusing finger at. Must he be held to a higher standard because his show airs on CNCB, the so called ‘world leader in business news”, and authority on all matters of the financial markets.
I do not hide the fact that I have never been a Cramer fan, and it’s about BOUYA time that someone said something about all the nonsense and theatrics of his Mad Money show. The videos I have seen claim to be edited and taken out of context, to me the context could not be more plain and obvious.
The beauty of the modern day media, and in this case the ugliness as well, is the ability to revisit the events as if they just happened and let the viewer decide on the contextual accuracy.
A date and time stamped TV show, or video blog laid up against the Stock price chart goes a long way in defining the context in which statements were made.
In other words there is nowhere to hide.
Here is the dilemma. First lets put aside the question, ‘is Cramer an advisor or an entertainer’. I think given his past as hedge fund manager, his current role at www.TheStreet.com his Mad Money show on CNBC, his numerous news letters and stock advisory services, it would be a stretch to say he is strictly an entertainer. Perhaps entertaining to some…
But the real dilemma here, in my own opinion, is; What is the role, responsibility and ultimate accountability of Market related reporting on TV stations like CNBC.
Don’t get me wrong I love CNBC and it has been a constant companion throughout my career as a trader, even though I find some segments hard to take.
Jim Cramer did make 1 very good point in the interview, he said “we have 17 hours of live airtime to fill” Very true and no easy task I am sure.
But when it comes to reporting the financial news, are we getting facts or opinions? I think that is the issue touched on by John Stewart, and I think it is worth a deeper look.
Assume 16 of those 17 live airtime hours are filled with cutting edge reporting of the facts, events and goings on in the financial world. We have certainly seen David Faber, Joe Kernen and Charlie Gasparino, blow the lid off of some major events in the financial world, and traders have to love the straight no bull talk of Rick Santelli.
But when does the reporting of facts become opinion and how does the viewer distinguish reporting from entertaining? Should viewers have assumed that the stage props and antics of Cramers’ Mad Money meant that the reporting was over and the entertaining had begun?
One more issue to ponder, and I readily admit that I don’t have the answers. What if Cramer had actual evidence at the time that Bear Sterns was a bad investment choice. His ‘commentary / advice’ could be seen as the cause of sell off in the price of the stock. What would be the consequences of that? He then becomes the cause of the problem in the eyes of the stock holder, even though he was merely reporting what he knew.
I am NO fan of Cramer, not a fan of Mad Money and the CNBC double talk of blaming day traders for the 2001 tech crash and then following that up with a show called Fast Money really gets my goat.
The relentless and shameless pumping or should I say pimping of Cramer and Cramerica was incredibly effective at distancing CNBC from every serious trader and investor, who I naively believed to be their demographic.
It’s time to get back to the serious cutting edge financial reporting that I know CNBC is capable of, and time to toss the Cramer Bobble Head doll in the trash.
Just my opinion
Greg
if you would like to respond to this blog post, please visit www.TheTickStop.com
It seems there is a real fine line between reporting the facts, and coloring the facts with personal opinion.
Today’s Stock Market Report
Helium was up, feathers were down. Paper was stationary.
Fluorescent tubing was dimmed in light trading. Knives were up sharply.
Cows steered into a bull market. Pencils lost a few points.
Hiking equipment was trailing.
Elevators rose, while escalators continued their slow decline.
Weights were up in heavy trading.
Light switches were off.
Mining equipment hit rock bottom. Diapers remain unchanged.
Shipping lines stayed at an even keel.
The market for raisins dried up.
Coca Cola fizzled.
Caterpillar stock inched up a bit.
Sun peaked at midday.
Balloon prices were inflated.
And Scott Tissue touched a new bottom.
And batteries exploded in an attempt to recharge the market…
A rock solid day in the Emini Chat room.
I wrote about the reaction rally last night and like clockwork the TTZ methodology delivers. We had volume and we had buyers, and getting long from the open was THE trade
I will say that we fell a bit short of the 723 target, and that leaves the 724-734 gap unfilled for now
A slight retrace into the close today is more evidence of the reluctance for traders to hold long positions overnight
We should still see a 2nd leg up in this move, but we are still a far way from calling a bottom.
OK SP emini traders here is the deal.
The SP 500 market showed a very lackluster attempt to break a critical upside level at 694.
If your a Market Profile watcher then you had that price level in your sights as the early trade attempted to break above and take on the 700’s
It was not to be however, the nature of the market has simply been an inability to find any longer time frame buyers who are willing to hold the bid into the close. And for that reason we have seen every attempt to break even the slightest high pivot, simply fail and retrace back to it’s mean
This is not to suggest a lack of trading opportunities, in fact today’s morning trade provide some great setups and early points right out of the gate. The chat room took on a hush as the traders sat on their morning profits and waiting out the midday chop zone.
Counter trend reactions are normally much quicker and stronger than the greater trend, and what that means is we are due for a quick almost viscous snap back up through 700, to test 723 and close the gap at 732 ish.
Hold on to your hats, it will be swift, there will be buyers, the volume will be huge, the CNBC talking heads will be screaming recovery, it will make front page news in the daily papers.
But sadly no, it will not mean the market bottom is in. What it does means is that we are oversold and experiencing a reaction counter trend move.
Heads up Market Profile Traders, watch your curves (distribution curves) that is, let the Profile point the way.
More action every day in the emini chat room..
We have not heard much since the original proposal for a user fee or the so called traders tax
Of course this would have some very serious and negative implications for day traders. Specifically active futures day traders would would be faced with a fee calculated on the value of the futures contract.
So our understanding is, with an SP Futures Contract, (or e-mini sp) at a $ 700 level, the equivalent proposed tax would be calculated as
700 points X$50 multiplier = $35,000 Contract Value
$35,000 x .0025 = $87.50
If the calculation and interpretation is correct, every active e-mini futures trader would be looking at $175.00 ($87.50 x 2), as a new fee or tax on each trade
RIDICULOUS!
Sign the Petition, Vote No, Protect the careers of thousands of traders, maybe even your own
