(And How Systematic Trading Can Help You)
Welcome to Futures Day Trading, one of the TOUGHEST games in town! Many traders come into the day trading game with the Fantasy of starting an exciting new life, trading from home, (or at the beach in a lawn-chair, tropical drink in hand – complete with colorful umbrella).
Quit your day job and day trade for a living – that’s the ticket. No more bosses. No more traffic. No more living paycheck to paycheck. No more JOB!! (i.e. “Just Over Broke”)
The Illusion is that this transition is easy… after all, it’s just a matter of funding an account and implementing the coolest new trading setup right? And yet even with plenty of great emini trading setups that exist – there is still a pretty darn high casualty rate of 80-90% of day traders who eventually drop out and quit! Why? What is the reason for this and is there any way that you can avoid becoming the next causality in the day trading game?
Lets Look At Some Reasons Why Traders Drop Out.
There are two main reasons why Futures Day Traders eventually throw-in-the-towel and give up. The first is not having an appreciation for the TRUE NATURE of the market. Underestimating the trickiness and day-to-day personality changes in the futures market can completely throw a new trader off balance before they even have a chance to find their sea legs. There is this idea that the market is orderly and cyclical and has some secret underlying “mathematical symmetry” which just has to be discovered and tapped into to be able to cash in big. The concepts of Elliot Wave Theory, Fibonacci numbers, Market Profile, etc. each do their part in helping promote this falsehood. The harsh truth is that the financial markets are so complex and intertwined with so many influential factors, domestic and global, that they are simply beyond comprehension and will never be figured out by anyone. Market price movement is NOT consistent – which easily throws a monkey wrench into most trading approaches. We may see several days of low momentum chop followed by explosive trending action for a few days which can take you by surprise. You are simply not going to be able to achieve $100 per day like clockwork every trading day of the year like most beginning traders fantasize about doing.. it’s more like $100 some days, -$200 the next 2 days followed by a $500 day followed by $100 followed by a couple of Break-even days…
Unfortunately price action does not move in a straight line and just like the market doesn’t like indecision. Most traders have a hard time handling the day-to-day inconsistency of price action. The way the market moves in reality is more like two opposing teams (Buyers vs. Sellers) playing broom hockey pushing a puck around all day. There is are no secret “harmonics” controlling the market. Sure.. in the end we can score some net points, but it can get messy during the game and some of the players will get banged up and bloodied in the process. The first thing you have to do is to change your beliefs about the market. Quit trying to figure it out and instead focus on learning how to play it.
You cannot “Figure Out” the market… you can only attempt to exploit it.
The 2nd reason traders eventually drop out is that they remain stuck at the beginning level of hunting NEW Trade Setups. This over-fascination with finding the next best “Magical Trading Setup” causes many folks to get hung up at that stage and never progress any further. There are literally hundreds of Futures day trading setups that can be learned and experimented with. But we immediately run into a problem. The same trading setup used on different timeframes for example can lead to tricky and confusing situations. You could be in a downtrend on the 2 minute chart while at the same time be in an uptrend on a 10 minute chart. The same setup is giving you a buy signal on one timeframe but a sell signal on the other. Which trade do you choose? This kind of confusion can lead traders into the costly abyss of jumping from one type of trading setup to the next not realizing that the “Trade Setup” although very important is only the tip of the iceberg in the trading process. In the end, you learn that there are no “Holy Grail” setups that work all of the time. All trading setups ever invented have a failure rate. Since there is ALWAYS some degree of failure rate, when you give up on one trading setup because it doesn’t seem to work all the time – and jump to the next new trade setup that comes along you are merely swapping out one degree of failure for another, but never progressing. So what does this mean? To improve our results in trading we must move past the level of the trading setup and focus on what comes AFTER the entry. This is the only way we can increase our EDGE in trading.
Putting It All Together – Moving Past The Trade Setup
Trading is a game of odds and tolerances – which is played over the series. If the odds are good and the tolerances are optimized for the particular market we can win at the trading game by creating a Winning Edge. Let’s examine this further. Each trade is composed of a multi-step process which only starts with the trade setup. Focusing exclusively on the setup like the majority of traders do only addresses a portion of the trading process. So what more is there to enhance? For starters, keep in mind that, A TRADE SETUP IS NOT A GUARANTEED ENTRY. When we get a valid trade setup we next have to determine EXACTLY when (and if) we are going to take an entry. This is called the Trade Trigger. While we just added a new level of complexity and decision making to the trade – we also added an additional opportunity to INCREASE OUR EDGE further. Remember not all trades will work out so if we can add an extra layer to help filter out potential losing setups (by not getting into them) we can increase our odds even further. And it doesn’t end there. Once we take a fill on a trade, we have to know where to place our initial protective stop loss and when and where to trail a stop behind a trade that is moving in our favor. Also where are the high probability price targets based on the current market conditions? So we have the Trade Trigger, Stop Placement, Trailing Stops, Price Targets all of which we can focus on to enhance our edge further. Is there still more we can improve on? You bet.
Increasing Our Edge One Step At A Time
Another way we can reduce the number of full stop-outs and increase our edge is to trade using the Delta Neutral strategy, i.e. take half the position off the table at a quick “easy to hit” target and move the stop up equal distance on the remainder. This allows you to you create a no-lose (or close) position. Starting off with a precision trade setup, you are basically betting that you can hit a quick target before the market can run against you twice that distance. If your technical setups are good then you put the odds in your favor that you can achieve this easy target more often than not. There are basically 3 ways a trade will follow-through after you employ this technique. (1.) The trade will take off quickly and hit your first target with ease getting you to safety. (2.) The trade will have trouble getting off the launching pad, price will waffle around for a bit above/below your entry point before taking off and hitting your delta target. (3.) The trade is unable to reach your Delta Target and eventually runs against you to hit your full stop-loss.
So far so good. We can increase our odds and reduce full-stop outs by getting to delta neutral. But what if a trade is having trouble getting filled at your target? Do you just have to watch your trade run all the way against you and hit your full stop? Is there anything that can be done to prevent this? The answer is Yes. There is a point for many trades that are not going to follow through, where they begin to exhibit signs of failure. The Power E-mini Momentum system has been designed with logic that detects these trade failure warning signs and alerts a trader to tighten their stop to a specific price level. To play defense on a bad trade, a trader can either attempt to scratch the trade at Break-even or begin to cut the position size down quickly in an effort to reduce the loss.
The Power E-mini Automated Signals delivered through our Desktop Alert Software is a cost effective tool to help you increase your Edge in day trading. We have a system that alerts you to the the best ES Futures trading setups each and every session and you will learn a finely tuned strategy to help you play those signals. There are many Trading Systems and Training Courses touted on the internet some which charge large one-time fees of thousands of dollars up front. Unfortunately when you finally come to the realization that the strategy is not going to work out for you like you thought – they already have your money…!
At PowerEmini.com we have a different approach. You can get started for only $99 and if you are not happy with the performance of our system you can simply cancel at any time. Our membership is month-to-month and has no long term commitments. If you think about it – we designed our business model so that that it is in our best interest that the system performs exceptionally well for you – so that you stick around. Take the plunge and sign up today and give our Automated Trading Signals a try for a month… it’s super easy to get set up. For $99 you will learn advanced trading techniques which help you immediately improve your edge.
Sign Up Today – And Increase Your Trading Edge Tomorrow
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