For the past 3 to 4 years, I’ve primarily been an all-in, all-out trader.  Meaning, I get in to a trade with a single entry, then get out with one or two entries.  This has worked well for me, but only because I’ve developed and maintain a disciplined entry strategy.  Those that are using the MAP Trading Strategy know about our 3 entry patterns.

Having developed into sort of a perfectionist with my trading, sometimes I tend to get frustrated if I don’t pick off an entry or exit right at the best price.  Granted, it hasn’t been that big of an issue, but I’m always looking to improve.

One thing that can help take the edge off of having to execute perfect entries and exits, is being able to “glide” into a trade by placing a series of orders throughout a single trade (flat to flat).  If I know the market has the probability to take a few bars (233 tick bars) to pivot, then I’ll hit the bid/ask anywhere in between 2 and 5 times.  Basically, I’m breaking my usual contract load into 3rd’s or 5th’s.  Don’t get me wrong, I’m not scaling in to every single trade; only the ones where I know I have time and don’t need to be extremely precise on the exact entry price and bar.  If I have price that goes a couple ticks against me, I can add to the order, effectively getting a better price.  But I’ll only do this if my entry pattern is still valid, and the original compelling reasons to take the trade are still there.  Sometimes I’ll add if I get a little pop in my favor that breaks a squeeze, but only if I have room for my maximum stop of 1.25 points to be below/above the latest pivot price.

In addition to the softer entry strategy, I’ve been getting better at taking graceful exits.  If I feel like a trade isn’t going to work out, I’ll just close on market.  More times than not my gut is right, but if not, then I have no problem getting right back in.

The exits historically have been pretty clean and clear for me… with the exception of when I’ll get up 2+ points, not hit a target, then have the market come back and take me out.  Sometimes my psyche can take it, other times it really rocks my world.  So, to combat that instinctual drive to maximize my profits, I’ve let myself take about 10%-20% of my trade off prior to my main target.  For any MAP Mastery students reading this, you might be freaking out and saying something like, “But Chris, our baseline trading plans typically say to hold for the target or let the market hit your stop.”  For beginners, that’s absolutely true.  I think it’s vital to gain confidence in whatever targets you’re using.  Also, you need to develop the skill of being able to hold for your target instead of getting shaken out of every tick.  But once you develop that confidence, I think you really need to sink into your own personality and risk tolerance.

To sum it all up, my technical strategy really hasn’t changed.  My setups are the same, my entry patterns and targets are the same… all that’s been adjusted is a few management nuances that I believe will increase my long-term profitability and take some of the edge off.  Like I’ve said a million times, there’s no single “right” way to do this business… Actually, there is a right way.  That way is your way!

Just another personal trading insight…

Chris Dunn

I can only guess as to why it happened… CNBC says there was a mistake made by a Citibank trader, who’s fat finger hit “B” for billion, instead of “M” for million, which assisted in a huge sell-off in Proctor & Gamble’s stock.  Also, there’s been a lot of talk about the financial crisis in Greece and other European countries.  I think all that mess, mixed with emotional selling and stops being hit, sent the market into a frenzy.  

Cramer was live on the air when the Proctor and Gamble sell-off hit.  Historically, I haven’t been a Cramer fan, but I gotta hand it to him.  He made a very timely call live on the air to buy PG at a $49.25 bid, and in less than 3o seconds it was back up to $60.  I’m sure a few quick traders made an easy six figure profit.  Here’s the live Cramer video.

Over the past couple of weeks, I’ve been talking about why we should see a some downside moves in the markets.  As I’ve mentioned on the Emini Academy Blog recap videos, we’ve been in an extremely over-exuberant bullish run since early February of this year.  We’ve seen both retail and institutional investors buying the hell out of the market, which we knew could not be sustained forever.  And as we approached the 61.8% retracement of the bear run from 2008 and 2009, we put in a nice head and shoulders reversal pattern.  We also saw professional traders get net short on the futures markets toward the end of March (another sign that a reversal was coming).  And as the retail investors were buying into resistance, the pros were selling down to support, which made for some nice oscillations and increased volatility.

I think today was a wake up call for people who had a unreasonable bullish bias on the markets.  In only a few short days, we saw the market dip to lows of the year, taking out a lot of stops on the way down.  Who knows what will come out of this craziness?  I’m sure we’ll see some investigations, speculation, and maybe even some regulation… but for the time being, I’m going to stay focused on what I do best and stick to my intra-day trading plan, and let the news anchors stress about where the markets are headed.

Stay profitable, disciplined, and sharp…

Until next time.

- Chris Dunn
E-mini Day Trader & Founder of the Emini Academy

Well, we made it down to Buenos Aires, Argentina and just got through our first trading day.  Thankfully, today was a profitable day for us.  We had a 66% win ratio this morning, and were able to pull out a few points in the e-mini S&P 500.

I wanted to introduce Marcello Arrambide, who has been a long-time trading partner of mine.  He also runs our live trading room with our MAP Mastery students for the Emini Academy.

Anyway, we kicked around a few ideas for our next trading trip, and the winner for this time of the year is Buenos Aires, Argentina! We chose Buenos Aires for a few reasons… First, it’s known as the “Paris of the south”. The rich culture and European influence makes for a really cool experience. Next (and most importantly), the internet is fast and reliable enough to day trade e-minis. We’re taking a few air cards just in case the main cable goes out, but I think we’ll be just fine.

Also, I’ve been wanting to improve my trading via laptop. I usually trade with two 22″ monitors, but I’m only taking a 15″ laptop with an extra 17″ monitor. It takes a day or two to get adjusted, but becomes natural after pegging a few trades.

We locked down a really sweet apartment right in San Telmo. This town square we’re staying around is where tango music was invented. I might end up looking like a dork, but I figure I’ll give it a shot. After all, when in Rome… or Buenos Aires.

So, any ideas where we should head in the summer? For our next trip, we were thinking about Italy or Ireland. I’ve never traded from Europe before, and I’m curious to see how the time change effects my game. Anybody have any experience with this?

Until next time…

The purpose of this article is not meant to give you an all-inclusive list of what you need to have in a winging strategy; however, it’s meant to show you the 6 key components we require of any strategy we choose to trade. Our required components are as follows: price pivot areas, momentum, multiple time frames, profit targets, entry strategy and high probability trade setups.

1. Price Pivot Areas – When we talk about “price pivot areas”, we’re not referring to floor trader pivots or any single way of pre-plotting potential pivot areas. Rather, we’re looking at what the market is doing now to determine current areas where the market has a high probability of changing direction. There are thousands of ways to find pivot areas. For example, you can use basic price support and resistance. Also, there are many indicators and oscillators that, when used properly, can accurately predict when price should pivot.

2. Momentum – It can be extremely valuable to add an extra level of perspective through “momentum” indicators. And since not all price moves are created equal, it’s important to have the ability to measure the strength (or weakness) behind a move in price. Furthermore, gauging momentum into potential pivot areas can help you anticipate if an area should hold or break.

3. Multiple Time Frames – This has been an area of confusion for a lot of traders. I’ve seen people use everything from a single time-frame, up to a dozen time frames on a single market. We typically use two time-frames when trading a single market. This gives us different “zoom levels”, which can help with pin-pointing our entries and managing our exits. We use our “main chart” where we look for our setups to line up. Then, we use a smaller chart as our “entry chart” to help us pin-point the entry and gauge short-term momentum.

4. Profit Targets – We’ve seen a wide range of opinions when it comes to using profit targets. On one side of the fence, you’ve got traders who use automatic profit targets based on pre-determine dollar values. For example, Trader A might use an automatic target of 4 points ($200 per contract) on the S&P 500 e-mini futures contract. The other school of thought says that you don’t need to use any targets, and only close the trade once the market shows conditions favorable to exiting the market. We use “dynamic profit targets”, which give us a way to gauge the initial profit potential on a trade, but also leave us open to take profit prior to or beyond our initial target based on what the market is showing us in real-time.

5. Entry Strategy – Have you ever known that you were looking to go long or short, but didn’t know exactly when to pull the trigger? If you answered yes, then what you are lacking is a structured entry strategy. An entry strategy is simply a set of rules that tells you when to pull the trigger and where to place your entry and stop. This is a vital piece of the puzzle that, if handled properly, can take a lot of the emotions and guessing out of trading. We typically have 3 entry strategies to any system. Basically, we look for entry characteristics that help us to execute a low risk entry and maximize the potential reward.

6. High Probability Trade Setups – When we bring all of the previous 5 components together, we look to structure what we call “high probability trade setups”. Essentially, we’re looking for repeatable, defined patterns that give us a distinct “edge” over the market. We want to know that every time we pull the trigger, we’re going to win more than we lose, and our winners are going to be bigger than our losers. Some traders use fully-automated trading systems to take all the guessing out of their trade setups, while other traders use discretionary methodologies which rely highly on human intuition. At the Emini Academy, we use rules based, structured strategies that take the guessing out of what trades to take, but also allow our traders to trade the markets in a way that fits their personality and risk tolerance.

The most important thing is consistency. When you find something that works, stick with it. All too often, traders spend a lot of time and money “system hopping”, or constantly changing their approach to the markets. The key is to find a strategy that you are 110% confident can pull consistent profits from the market, and then stick to that system.

Best of luck in the markets,

Chris Dunn
Emini Academy

Chris,
Heard the interview on Day Trader Radio today and was impressed. Never traded before and I am having information overload on all that is out there. My current career is stalled out until the economy comes back and that is my biggest reason for looking at other options. I have years of training and education in a field where I have no control over my income. My question is this; Do I need a basic level of knowledge to start this and if so where do I get it? I am coming from a construction management background and have no clue about trading or even the language used in it. I know that can be a benefit in some fields because there are no bad habits to unlearn but I would think having a basic understanding of terms and markets would help. Where do I take this desire I have from here?
Clay

Here’s my response to Clay…

Hi Clay,
You’ve asked some really great questions in this email. I think a lot of new traders are in the same boat; you’ve heard about the incredible opportunity day trading can offer, but there’s just so much information out there you don’t know where to start. I’ll be the first to tell you that most of the trading “education” out there is regurgitated theory that can’t make you money in today’s market. You can go to any book store and learn the basics (terminology, tools of the trade, basics of analysis, etc.), but none of that will really put you in a position to make money trading.

What you really need is a solid trading strategy that will take the guessing out of what trades to take, how to manage the risk on your trade, and when to take profit. You can do what I did back in 2002 and invest the time, money, and effort into developing your own strategy (which can take years), or you can invest in someone else’s system. Most people choose to buy a system since it can offer an income opportunity in a much shorter time period with less effort on your end. The problem is that most systems being sold on the market today just don’t make money. Unfortunately, there’s a lot of people selling these “automated trading robots” that promise you’ll make $1,000,000 while you sleep. And the truth is, those systems are a total scam. Every fully automated trading system eventually fails. For example, I know group of highly intelligent traders who invested years of their lives and hundreds of thousands of dollars into creating a trading system that was fully automated. It worked for about 6 months, then became worthless.

If you want a sure-fire way to make consistent profits in the market, then you need a solid educational foundation and a strategy that can adapt to market conditions. Also, the system needs a statistical “edge” over the market. This “edge” is basically trades that have specific rules and pre-define the risk on every single trade. For example, if you have a system that wins 75% of the time and has winners that are 2X bigger than losses, you’re going to be profitable by default. Here at the Emini Academy, we do both. First, we teach you all the basics of day trading and e-minis, then we teach you how to master a trading strategy that has a very nice “edge” over the market. I’m obsessed with risk management and have incorporated a pre-determined risk strategy into our system.

Best regards,
Chris Dunn

I thought it would be beneficial for other traders who hear Jim’s story and allow him to give some advice to those looking to earn a nice income through day trading… Enjoy this 30 minute interview!

(EXPAND FOR FULL-SCREEN VIDEO)

Jim Steel Interview from Chris Dunn on Vimeo.

Trade with cash money from Chris Dunn on Vimeo.

Here are a couple benefits I really like about NinjaTrader:

1) Super-user-friendly matrix- The NinjaTrader matrix (or dom) is a great tool to quickly and efficiently execute orders.  Unlike TradeStation, you don’t have to worry about “ghost orders” when closing part of a position or reversing.

2)  Chart trading- You can actually place trades from your chart, and manage stops/profit targets from a visual line on your chart.  Watch the trading video below to see this in action.

3) Market replay- Have you ever wanted to go back and “re-trade” an area or an entire day?  Now you can!  Previously we were using Camtasia to record the market and go back to watch areas or “re-trade” a setup.  But with Ninja you can actually use the matrix and chart trader to execute historical charts like it’s real-time.  Oh, and the fast-forward feature is really nice… if you’re a slow period in the market you can fast forward up to 500x market speed to move to a tradeable area.  Talk about cutting down your learning curve!

4) Zen-fire data feed- It’s no secret that TradeStation’s data feed is a dinosaur compared to the Zen Fire feed.  If you’re trading “tick charts”, then Zen Fire gives you the most accurate information coming from the exchange.

A few of our students have asked if they should make the switch to NinjaTrader or just stay with TradeStation.  If you like TradeStation and have no desire to learn another platform then by all means, stay with TradeStation.  But if you want to take advantage of the benefits listed below, why not give it a shot?  You can actually get NinjaTrader for free!  Granted, the free version is missing a couple features like automatic stops, but it’s great for testing out the feed.

To learn more about the MAP Trading Strategy & Emini Academy’s trading program, click here- http://eminiacademy.com/free/?sig=10

If you want to learn more about NinjaTrader, click this link- http://eminiacademy.com/ninja-trader/

For a free download of NinjaTrader, get a demo account through AMP Futures here- http://www.ampfutures.com/EA.php

Check out the live trading video below to see the MAP Trading Strategy and NinjaTrader in action!

Check out this video…