Posts Tagged ‘e-minis’

Emini Trading for Beginners – How to Day Trade Futures

Wednesday, June 2nd, 2010

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 profitable, but ultimately it’s up to you to execute and stay disciplined.

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

Free Day Trading Video Course

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Posted in Trading | 4 Comments »

Fear and Greed – A Traders’ Best Friend?

Thursday, May 20th, 2010

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.

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Posted in Trading, Trading Psychology | 1 Comment »

Trading Psychology – Knowing When To Push It

Tuesday, May 18th, 2010

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.

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Posted in Thoughts, Trading, Trading Psychology | 3 Comments »

Trader Error, Panic, or System Meltdown… What Happened Today?

Thursday, May 6th, 2010

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

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Posted in MAP Trading Strategy, Thoughts, Trading, Travel | 2 Comments »

Day Trading in Buenos Aires, Argentina

Tuesday, April 27th, 2010

Well, it’s been a few months since I’ve been out of the country. Ever since our last trading trip to Costa Rica, I’ve been hacking away at the e-mini futures markets.  Also, I’ve been immersed with our MAP Trading Program members, 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…

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Posted in MAP Trading Strategy, Thoughts, Trading, Travel | 2 Comments »