Some Thoughts Ahead Of A Return To Action

I will be glad once the action gets going again. Hopefully tomorrow. I must say that the past few weeks have been extremely boring to me without good trading action.

I like to engage the market and do not like when things are slow.

I just wanted to air some thoughts about what I am thinking this evening about my own trading.

I need to be wrong more often.

This means exactly what is says. I am going to speculate more in the upcoming weeks and months.

I have months worth of extremely accurate preps on file here and the bets need to get laid down on my premises.

This does not mean get stopped out more often and not hit the winners. I must be willing to treat each trade as if it were the first of the day. Regardless of what happened with the previous trade(s).

Do not be protective of your entry points.

This is one of the most frequent areas that traders have questions about. When should we use a break even mechanism?

I am going to elaborate more on this is a separate post but the answer is that there is not right answer.

I will offer a quick separation in tactics here. Those who trade many contracts and manage their risk merely by size can scratch their trades much more frequently.

Those who trade small size and have stops must deal with the fact that stops will get hit even if you are correct in premise.

So your trades are not either right or wrong. They are either wrong, right and you take yourself out, right and you get low/high ticked, or right and you still have to exit properly.

This is tough. Without discretion, even if you know what you are doing, I think your chances of having a profitable trade closed out are about 20%-25%. This will not cut it.

I use stops. The way I trade, if the trade does not work with taking minimal heat, it will tend to move against me 2.5 - 3.5 points. So I have adjusted to taking a series of small losses as opposed to large risk on each trade.

You have to find your own comfort level.

One thing I am certain of is that just about every time trade moves 2-2.5 points in my favor, it will come back and test my entry point.

So I am simply going to almost never use a break even after a positive excursion. It is just not worth it. Missing a 10 point trade because I do not want to take a loss after a 3 point excursion makes no mathematical sense.

Make some blind bets if the area feels right.

I started as a technical scalper. This makes me prone to want very specific pattern setups to enter a trade.

I do have some extremely powerful pattern setups that work almost all of the time. However, you do not always see them. Sometimes I do not see an optimal setup for 2 or 3 days.

This will not cut it this year. Good trading is not about setups. It is about buying and selling extremes at good prices.

I hate saying that because it does not actually help with anything. We do not know what the good prices are in advance.

However, we can project were they will be if certain scenarios play out. I am going to hit these areas whether I have a good setup or not.

I have spent thousands of hours on screen and trained with one of the best in the business. I need to trust my judgment.

This is important. When I think something is going to happen, it is probably going to happen. I need to bet on it. It is OK to be wrong but it is not OK to be right and not act.

It is time to start winning by large margins. I have the capability and the skill. I am not going to grind.

This market will get the best of me in a major way some days but over time I will have a large edge if I am aggressive.

I will not this market slowly bleed me for periods of time nor will I allow myself to slowly beat the market.

I am better than that.

What do I think is going to happen in the first quarter?

My natural premises and feelings about the indexes, crude, and the US Dollar have proven to be highly accurate over the past few years.

I am not to the point where I can make large macro bets on these premises but I plan on building up to it.

Even though the structure of the indexes is very strong to the upside, I believe they are preparing to roll over of move down in a major way in the first quarter.

This bias will not affect my intra day operations much. I just wanted to get my feelings out there.

Let the market prove me wrong.

Good trading everybody.