Futures Trading Beliefs | Support and Resistance Levels

Jump to a section in this post:
1. Market Commentary
2. Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000
3. Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Economic Reports for Thursday, November 17, 2011

1. Market Commentary

Bearish close today on stock index futures and as I mentioned yesterday, a break below 1204 on the Dec. SP 500 can trigger another leg down.

I wanted to share the feature below by a colleague of mine. WORTH READING:

Beliefs

By Janice Dorn, M.D., Ph.D.
Janice Dorn, M.D., Ph.D. is a Financial Psychiatrist and Financial Futurist. Dr. Janice Dorn might be the only Ph.D. (Brain Anatomist) and M.D. (Board-Certified Psychiatrist and Addiction Psychiatrist) in the world who actively trades, writes commentary on the financial markets and coaches fellow traders. Dr. Dorn has been trading the gold futures markets full time since 1993. She has written over 2000 articles on trader and investor psychology, and coached over 600 traders. Her website is www.thetradingdoctor.com

If you must play, decide on three things at the start: the rules of the game, the stakes, and the quitting time… Chinese Proverb
We trade to make money. Almost without exception, every person who enters the markets does so because of the promise of making his or her life better through buying and selling in the financial markets. Many come to the markets because of the lure of easy money and the availability of this or that system, method, software, trading technique, seminar, infomercial or tempting e-mail. Never in the history of mankind has it been easier for people to tap into the markets. Tens of thousands visualize themselves sitting in their pajamas, making trades from home and earning a really good living. Moreover, trading goes on all over the world and people can buy and sell at almost any time of the day or night. What’s not to like about this? How easy can this be?

At their core, trading and investing are simple. The challenge is that they are not easy. Trading is unlike any other activity that a human being experiences. The reason for this is that the markets are open, adaptive systems that are always in motion. Other than the regulations set by the exchanges, there are very few rules. Trading is a game where we make our own rules and strive to take money from other people before they take our money. This is serious business, because it is our hard-earned money that we put at risk every time we enter a position. There is almost no way, short of very complex hedging strategies, to put money into the markets without putting it into the realm of risk.

Why do so many traders fail? Why are so many called and so few chosen? There are several main reasons for this, but the fundamental one centers around belief systems. When you think about it, the market is pretty much a level playing field. Everyone has access to similar information, charting systems, and trading platforms. For a price, you can get just about anything you think you need in terms of trading. The two things you really need to be successful are…
…not for sale: your belief system and the belief system of others.

You are not really trading the markets. You are trading your beliefs about the markets against the beliefs of everyone else who is trading. This is the area where the majority fails; i.e., they do not have a good understanding of their belief systems, yet struggle to put them into action to generate profits. You are what you believe, and if you don’t know who you are or what you believe, the market is a very expensive way to find out. Why? Because you will act out your insecurities and telegraph them to others in the markets who will exploit them. This happens every day on a very large scale- those who know themselves take money from those who do not know themselves.

Let’s look at a price chart as one example of this. What is a price chart? It is emotions plotted on a grid. That’s it. A price chart is the sum total of belief and emotion. Why do you execute on that chart? Because you believe something about it. The thousands of others who are executing on that chart are also trading their beliefs. In order to have a chart, it is necessary to have both buyers and sellers. In order for price movement to occur, there have to be both buyers and sellers. This means that these people are trading their beliefs in that moment. That also means that they have beliefs which are completely in contradiction. If it were not so, there would be no price movement and no chart.

How can we understand this even more clearly? A price print means different things to different people. Those who win have learned to focus on what the price means to others, rather than to themselves. Put another way, top traders are always looking to find out where the other person is going to execute. Where is the other person who is already in the position going to get out of that position? What does that person think or believe about his position, and what is going to cause him to get out? It is, then, the beliefs of the other person that matter to you in terms of profit. When everyone who is going to get in is in, and everyone who is going to get out is out, there is no price movement. The movement occurs when the loser decides to get out, because the winner can wait. This is the edge that people have when they let profits run.

Put yourself in the position of the loser and try to fathom what that person believes about his or her position. Constantly question your own belief systems until you know why you are doing something. Always ask yourself, “What do I believe that is not true? What do others believe that is not true?” That is a good place to start.

No belief is neutral. Everyone has the power to dictate each decision you make. A decision is a conclusion based on everything that you believe… A Course In Miracles.

Thanks and Good Trading!
Janice
Janice Dorn, M.D., Ph.D.

2. Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000

3. Support & Resistance Levels for Gold, Euro, Crude Oil, and U.S. T-Bonds

4. Economic Report for Thursday, November 17, 2011

Building Permits
8:30am

Unemployment Claims
8:30am

Housing Starts
8:30am

Philly Fed Manufacturing Index
10:00am

Mortgage Delinquencies
Tentative

Natural Gas Storage
10:30am

FOMC Member Dudley Speaks
12:50pm