What Works for You?

The tremors of the earthquake in Japan combined with disappointing news on housing starts and consumer price increases in food to push the SPX and COMP below YTD gains.  The DJIA remains positive for the year, but suffered a loss for the day.

The focus for today's blog is WHAT WORKS FOR YOU? 

News is important, and it is recommended that you add a reliable source to your favorite list, because news releases vary in their perceived importance to the market.   Once you have a feel for what news may or may not do, your next focus is upon what works, and what does not work.  I assure you, knowing what does not work is exceedingly important.  Knowing what trades not to take will keep you in the game to use those that do work.

To develop your trading style, you will want to practice a variety of setups. 

• Keep tabs on their effectiveness,  your ability to spot them, and your ability to properly enter and exit the trade. 
• Next, narrow down the list to those most effective.  This will direct your focus to those trades you are best at, and should prevent "stupid" setting in where you become the Lone Ranger.  The market will love you, but not your account.
• Focus on consistency in all markets.  You should have a minimum of one full year, and preferable two full years of developing your trades, and using those trade in all markets.  Generally, you will find smaller range days in the summer, historical "crisis" in October, a robust 4Q, and, as you have seen this week, a never dull option expiration week.
• Don't bother to think about money, except in the sense of managing your account risk.  You are not trying to get every tick in a run.  You are not trying to beat the top or the bottom of the market.  If you can trade 1 contract (C) for 1 point and develop consistency, you should naturally migrate to 2c or 3c when your confidence and professionalism has developed.  Your trade setups and experience will develop into 2 to 4 points trades, with the objective to get some of those 6-10 point runs.
• Patience, practice, and consistency.  They are intertwined and must be developed every day, and hopefully you will show a progressive growth in C's and points.

WED 3-16-11

When we post trades in the room or here in the blog,  it reminds me of a line in the Wizard of Oz.  "Pay no attention to the man behind the green curtain."  Don't focus on points, or number of trades from any source.

  FOCUS ON THE TRADE

The day began positive.  Looking like the bulls may try to reverse their lethargic presents.

The first two trades were longs as the bulls approach, then broke a key resistance level. 



And then, one of our favorite setups, the CMA hit. It was a combo with a XRB present, and we had CC.

A must take setup!

If you missed the b17 entry,  you could still use a multi-chart approach to find additional entry points in b18.


That CMA sealed the day.  Bears were in control.