Trading Evolution

Markets are never wrong - opinions often are

Organizing your trading day

A typical day for a trader consists of analyzing different trade setup or scenarios as they come up during the day. I have about 40 different scenarios or trade setups that I watch daily. So how do I keep it all in my head without letting it explode? The answer is I don’t. I have a piece of software that helps me manage my attention during trading hours and focus on what is coming. On top it displays trader clock which shows me current time, countdown and time until coming events such as economic releases, international market open and close times, FED speeches etc. Next it shows my weekly mental and monetary goals and progress bar based on my current account balance. And finally list of only relevant at that particular time trade setups. For example, I monitor some setups during US open hours so the application shows me setups for US open, my past notes and stats ahead of US open and hides them later so I can stay focused on next trades. After trade is done I make notes for next time, update results and forget about it until the next time so my head stays clear for a next trade.

PS I am not selling or giving this piece of software because it does much more than that and I am only writing this post so it might help other trades develop their own methods of organizing their trading days. If you are penny stock trader, Forex trader or just day trader please share your own methods on staying organized and prepared.

Weak start for 2016

ES futures are pointing to weak start of 2016 for US equity markets. Futures are down around 1%. Say thank you to China which just reported drop in December PMI to 48.2. Good luck to all traders in 2016!

Update: It is not just weak start of the year. So far it is the second worst start of the year in more than 80 years.

Dow's worst starts to a year over the past century:
-8.1% in 1932
-2.3% in 1922
-1.8% in 1983
-1.7% in 1930, 1980 and 2008
Currently -2.5%

Jamie McGeever

Why it is enough to know when EUR is going to move

I see that many new traders are focused on finding right entries based on price for example they are looking for support & resistance, breakouts, moving averages, momentum etc. There are countless number of past price based indicators. Here I would like to talk about why for small trader it is enough to know when the market is going to move. And you do not need sophisticated options strategy to take advantage of it. Let's look at hypothetical example. We noticed that on Wednesdays at 11:30 am EUR/USD pair starts to move. One Wednesday it moves lower, another it moves higher and next time higher again. We don't have any idea about move direction but we see consistent start of a move at that time. It might be some bank starts to execute clients order or big trades start building position ahead of some economic release. It doesn't really matter to us.

My point here this time based pattern is enough to build profitable system. There are exactly four outcomes at 11:30: you go long EUR & it drops, you go long EUR and it rallies, go short & it drops, go short & it rallies. Two out of four are profitable. Lets say it usually moves about 30 pips and we have a stop-loss 12 pips. At 11:30 we ask our girlfriend, or spin the dice, or do whatever to pick a direction and enter the trade with stop. 2 out of 4 times we will be stopped out and will take loss but the other two times we will make profit of 30 pips. Our average P/L per trade should be 9 pips (50% loss of 12 and 50% gain of 30).

Remember move is random and our position is random. The only constant here is time of entry.

Day_##MoveOur PositionP/L
Day 130Long EUR30
Day 2-30Long EUR-12
Day 3-30Short EUR30
Day 4-30Long EUR-12
Day 5-30Short EUR30
Day 630Long EUR30
Day 7-30Long EUR-12
Day 830Short EUR-12
Day 9-30Short EUR30
Day 1030Short EUR-12
Total P/L after 10 trades is 90 pips.

Trader loses $58 million in two weeks trading short-dated market index options

In January 2015, the Master Fund collapsed after Li moved virtually the entire portfolio into long, short-dated, market index options, nearly all of which were pegged to the same expiration date of January 17, 2015.  When the market moved against those positions on January 16, 2015, the Master Fund was left with approximately $501,253 in cash, having started January 2015 with approximately $58 million in assets.

SEC Press Release

Source: SEC Document