Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
For 2014 I would like to wish all of you discipline and patience in your trading!
One way to eliminate fear and greed while day-trading:
The methods described in this article are for educational purposes only. Past results are not necessarily indicative of future results. The author and the publisher assume no responsibility for your trading results. Trading involves a high degree of risk. No recommendation is being made to buy any stock, commodity, option or other financial instrument. Consult your financial advisor before starting any investment system.
It is a known fact that fear and greed can be one of your worst enemies.
One way I found that helped some clients to deal with the fear and greed and its related cousin, “getting out of winners too soon and staying in losers too long…” is entering multiple contracts when getting into a day-trade.
Obviously, one has to have the appropriate risk capital, margin requirements to do so but the advantage of trading more than one “unit” or splitting your trading size into two or more parts is as such:
If you enter a trade with one contract ( or if you are treating your trading size as one unit, meaning you enter a trade with 4 contracts and exit the trade with 4 contracts, that is considered treating your trading size as one unit), you can face a very quick dilemma, especially when day-trading. You get in and very quickly you are up 2 mini SP points….what do you do? Do you take profit? Bring your stop loss closer? How do you avoid getting out too early or too late?
On the flip side, you enter a trade and it goes against rather quickly…if you get out then it is a loser and what if the market goes back up says the little devil voice in our head….
In the good case scenario when market decided to be nice to us and is moving in our direction, what I like to do it is exit half of my position relatively quick. In the case of the mini SP , around 7 ticks profit. What I found out is that will allow me to manage the rest of the trade in a much more relaxed manner since I already “locked profits in” I can now look for a proper stop, close to my breakeven level. I can analyze my next target more realistically and hopefully if the market provides room for additional gains, be in there to participate.
The same can be applied to the stop loss part. I can choose to risk a smaller amount or a tight stop on the first half of my position and a bit wider stop on the other half of the position. That can help prevent the scenario when one does not get out of a trade because mentally he or she does not want to accept the loss….
Of course there is much more to trading and day-trading. Entry signals, exit techniques, why and when to get in a trade are key but I hope that this little tip will assist you while trading and will prevent some of the instances where you get out too late or too early…..
GOOD TRADING !
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not indicative to future results.
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Futures Trading Levels
|Contract Dec. 2014||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Feb. Gold||Mar.Silver||Jan. Crude Oil||Mar. Bonds||Dec. Euro|
|Resistance 3||1240.4||16.96||69.59||142 3/32||1.2457|
|Resistance 2||1227.7||16.78||68.91||141 24/32||1.2425|
|Resistance 1||1218.9||16.60||68.16||141 17/32||1.2367|
|Support 1||1197.4||16.24||66.73||140 31/32||1.2277|
|Support 2||1184.7||16.06||66.05||140 20/32||1.2245|
|Support 3||1175.9||15.88||65.30||140 13/32||1.2187|
|Contract||March Corn||March Wheat||Jan. Beans||Jan. SoyMeal||Jan. bean Oil|
|ThuDec 4||4:10am||EUR||Retail PMI||47.0|
|Tentative||EUR||Spanish 10-y Bond Auction||2.12|3.0|
|Tentative||EUR||French 10-y Bond Auction||1.18|1.4|
|7:30am||USD||Challenger Job Cuts y/y||11.9%|
|7:45am||EUR||Minimum Bid Rate||0.05%||0.05%|
|8:30am||EUR||ECB Press Conference|
|USD||FOMC Member Mester Speaks|
|10:30am||USD||Natural Gas Storage||-51B||-162B|
|12:30pm||USD||FOMC Member Brainard Speaks|
This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading.