My good friend Tim Sykes is known as the “bad boy” of penny stock trading. His no B.S. approach to trading is a breath of fresh air in an industry riddled with scams. He’s hated by evil penny stock promoters, and loved by his subscribers.

I had the opportunity to sit down and get an inside look into his $250,000+ yearly business plan. Check out the video below:

Visit http://www.timtradespennies.com to take advantage of Tim’s decade of making a killing in penny stocks.

Over the past couple of years we’ve had some incredible day trading travelling experiences.  Everything from trading at the base of a live volcano in Costa Rica, to having a “pro trader pow-wow” in the heart of Buenos Aires, Argentina.  Our next stop is going to take us all over the east coast of Australia…

The Mission – Maintain a high level of trading performance while trading at 2:00 am Australia time

Focus, discipline, and patience.  These are all behavioral habits professional traders have ingrained into their psyche.  For a lot of us, focus means being awake and fully present to watch the market.  So, one would think that trading at night would have a negative effect on their trading results.  However, the Emini Academy has many student traders from all over Australia.  And many of them have told me that the time difference is only an issue for a short period of time.

The Plan of Action – Get comfortable with the time change, then execute regular S&P 500 emini trades

We’re flying into Sydney, Australia on November 12th at approximately 8:00 am local time.  From my past experiences with travelling to the other side of the world, it takes 2 – 3 days to become completely comfortable with the time change.  So, the first few days in Syndey we’re going to take it easy on Bondi Beach.

After our short stent in Sydney, we’re staying in beach side condos on the Gold and Sunshine Coasts.  This will give us the quiet environment we need to focus on the market.   I plan on hosting a few of our live trading classes and comparing my performance to how I usually do when I’m in the states.

This should be interesting…

To finish off the trip, we’re going to be cage diving with some great white sharks!  We decided it would be best to save this for the end of the trip just in case anything goes wrong.  ;-)

I have plans to meet up with traders in Sydney, Gold Coast, Sunshine Coast, Melbourne, and Port Lincoln.  If anyone else would like to join us, feel free to shoot me an email at chris (at) eminiacademy (dot) com.  I’d love to meet up with you!  Also, please let me know if you have any recommendations about things that could help our trading journey be a memorable one!

Stay frosty,

Chris

Today we arrived at Caesar’s Palace in Las Vegas for the 2010 Futures and Forex Expo.  As I was walking around the casino floor, I couldn’t help but think about the ironic similarities between the casual gamblers and most day traders.

The correlation between gamblers and most day traders

There was a guy sitting next to me at the Blackjack table; I could see the hope and anticipation in his eyes.  First, he gets a 7 which doesn’t get anything but a mild frown.  Second, he lands a 4.  His eyes light up like a slot machine that just hit a jackpot!  As a fellow “participant”, I can’t help but cheer him on when he doubled down.  Boom, the dealer slams down a King.  ”21 baby!”, he shouts.

It wasn’t a split second after his big hit that I realized how ridiculous his (and my) enthusiasm was about the prospect of making money at the Blackjack table.   Sure, one can play a strategy that has the best odds… but ultimately, the house has the edge.  After all, the Vegas strip wasn’t built making gamblers rich.  Some people don’t even know the rules of Blackjack, let alone have the confidence that they’re playing a winning strategy.  Yet some still have this unrealistic hope that they’re going to make a fortune sitting at that table.

Almost every day I talk to traders who are day trading FOREX or swing trading e-mini futures, who don’t know if their strategy has a possible positive expectancy.  Some traders know their trading system isn’t winning, but out of sheer desperation and not having any better options, continue to risk their capital.

Now I’m not bashing the excitement of gambling or denying the fact that some people make money gambling.  In fact, next to poker, Blackjack is my favorite “training game” to get me ready for trading.  I don’t sit down expecting to quadruple my money (even though it’s happened more times than once).  No matter if it’s trading eminis or gambing, the end result is the same: to make money.

The only way to run your business like a successful day trader

So, I think we should all take a step back and realize the only true way to become successful at this game of odds.  We have to become the house!  It’s vital that we find an “edge”, or something that shows you a profit potential.  Now I’m not talking about just over optimizing for historical conditions like the piece of junk trading robots.  I’m talking about using a trading strategy that gives you a statistical edge over other market participants, properly managing your risk and profits, and developing your skill to execute your strategy in the live market.  It’s easier said than done.

The market needs participants with the “gambler” mindset.  In the end, it’s the emotional decisions of the irrational traders that feed the small minority of profitable day traders.

A lot of people want to learn how to day trade e-minis.  I hear a lot of misconceptions about trading e-minis, so I figured I’d do a quick video talking about some of the basics of emini trading.  Keep in mind, to become a professional trader means a lot of practice and work.  A system can help you become consistently profitable, but ultimately it’s up to you to execute and stay disciplined.

Here’s a video with Part 1 of Emini Day Trading:

What do you think is a stronger emotion, fear or greed?  Let’s answer that by looking at a few examples…

Imagine a stock broker who was doing his job in during the tech boom around 2000.  His job was probably pretty easy, right?  From his perspective, everyone wanted a piece of the pie.  Typically, when the general public hears of a fast and easy way to make money, they’re usually quick to jump on the band-wagon to make a quick buck.  However, the stock broker still has to make an effort (sometimes with outbound calls) to get people to invest with his company.

Greed may be a strong emotion, but I think the fear of loss is much greater.  Here’s why…

Now think about that same retail investor, who was probably uneducated in market dynamics, when the bubble started to burst.  As prices were falling faster than a lead filled balloon, who do you think was being “proactive” then?  My guess is the stock broker didn’t have to make any outbound calls.  As a matter of fact, I’m willing to bet his phone was ringing off the hook with people trying to pull their money out of the market.

I think this S&P 500 e-mini daily chart from February 2010 up to May 2010 gives a solid example in the differences in fear and greed.  You’ll notice how it took almost 3 months for the market to gain about 180 points, yet it only took 8 days (about 9% of the time) to lose around 90% of the gains.

Let’s break this down from a perspective of two groups: professional traders and retail traders.  In my blog post on 05/05/10, when the DOW had a massive drop of around 1,000 points, I show where the retail traders got net long the market right around the same time the pro’s got net short the market.  If you look at the COT Net Position indicator over time, you’ll see a pretty steady inverse correlation between the pro traders and retail traders.  It’s almost like the money gets transferred from the retail traders to the pro’s.

As professionals, I think one of the best things we can focus on is what the other 98% are thinking… and do the opposite.  If we can recognize the actions and perceptions of the masses ahead of time, we can usually stay on the right side of the market.

There’s a lot of great information about Trading Psychology.  One person whom I have a lot of respect for is Dr. Brett Steenbarger.  His blog has been instrumental in developing a proper trading mindset over the years.

Apply Trading Psychology for consistent profits

So, after a single negative trading day last week, I’m back strong… I had an idea about what the market could do today based on some longer term charts.  Just to reiterate, I don’t care what happens intra-day on the monthly, daily or 60 minute chart.  But it gives me a good high level overview that can create a nice objective bias.

How we apply Trading Psychology in our professional trading group…

As I mentioned in our trading room this morning, you have to use trading psychology by learning to think one or two steps ahead of the market.  Basically, look at trading like a chess game.  Here’s what that means to me…

When I’m looking to get in a trade, I want to see the trade hit my target before I even get in the market.  If I can’t see the potential for the trade to work out, then I just sit on my hands.  Doing this gives me really strong conviction in my trade, and the confidence to hold for the target. 

A few students asked me how to develop a strong trading psychology and the ability to “think two steps ahead of the market”.  And the simple answer is this: practice, repetition, and burning those damn images into your mind.  You have to be able to close your eyes at any given moment and “define” a winning trade in your own mind’s eye.  I think about this stuff so much that I dream about it… dead serious!  And in some dreams I can actually feel the emotions and physical sensations of what it’s like to be in a trade.  If you gain control over trading psychology, then your day to day decisions making in the live market will become so much easier!

Learning to manage your trading psychology and mental state game is a process

There are no short-cuts…  Only dedicated study to develop your craft.

Trading is a business and performance activity that must be measured over the long-term, but managed on a trade-by-trade, micro level.  For example, your main goal should be to come out net profitable over a period of trades, days, weeks, or months.  It doesn’t really matter if you win any single trade, only if you win over time.  On the other hand, you must make sure you execute each trade to the best of your ability.

Just like in poker, you’ll win some hands and lose some.  You’re not trying to take the entire table’s cash on every single trade, and you shouldn’t try and do that with the market either.  Instead of looking for the daily grand-slam, go for consistent base hits.  And if you work on a winning strategy, good risk management, and stay disciplined, you’re chances of being profitable are infinitely greater than shooting from the hip.

Don’t be over-eager to get into a trade.  If you open your trading platform too anxious to place a trade, chances are you’ll get yourself into a less-than-optimal situation.  So just sit back and relax; your trade could be right around the corner.  I always like to start with a prime trade; something I feel really confident about.  Just to reiterate, I don’t care if that trade works or not, I just want to gain self-confidence and know that I’m executing on my plan.  And when I’m in the zone, you don’t want to be on the other side of my trades.  So, when you get a “prime setup”, play them with confidence.  And play them as if they have the potential to be a grand-slam.  Not every trade will turn out to be a huge winner, but give it a chance to show you if it’s going to turn into one.  On the other side, if the trade starts to fizzle out, then don’t get attached by hanging on.  Get comfortable with scraping trades and getting ready for the next.

Don’t think about the money when trading.  Instead, focus on your performance and execution on every trade.  Of course you need to consider the risk on a trade, but your intra-day focus should be on your technical strategy and management plan, not if you’re positive or negative at that current moment. It’s possible to be winning, but trading poorly.  Sooner than later, it will catch up with you.

Ask yourself this question: “Is self-control really that hard?”  A lot of people slave away for 40, 50, 60 or more hours a week, often doing jobs they hate.  All you have to do is sit on your hands when the deck isn’t stacked in your favor, then play strong when they are.  This is often the most difficult part of trading for a lot of traders.  A person can be disciplined for 95% of the month, then have a temporary moment of laziness that can wipe out a major portion of their profit.  So, you must play like a professional until the game is over!

After a profitable trading morning session,  I decided to take the afternoon off to enjoy some time in downtown Buenos Aires, Argentina.  And as I was sipping on some “cafe con leche”, the markets were going into a state of panic and confusion.  Within 30 minutes the DOW fell about 1,000 points, which dipped below 10,000 (around $9,869), then capitulated back up to $10,520 for a loss of $347.80 (3.2%) on the day.

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.

Well, it’s been a few months since I’ve been out of the country. Ever since our last trip to Costa Rica, I’ve been hacking away at the e-mini futures markets. Also, I’ve been immersed with our MAP Mastery class, which is a group of 30 traders who have invested 95 days to learn how to trade the MAP Trading Strategy.

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…