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What Keeps You From Trading Success?


Time for some FUN!

Let’s take a poll. Not only will the exercise be fun, but you’ll get instant access to the results of what others are saying.

Of course all polling is completely anonymous. No names will show, only numbers.

The poll only has ONE QUESTION. It’s multiple choice and should take you about 12 seconds to complete.

But there are 2 separate polls:

  • A poll for swing traders (those who trade with the intention of holding positions overnight).
  • A poll for day traders (those who trade with the intention of not holding positions overnight).

Here are the benefits of this poll:

  1. We’ll see if there are different problems preventing people from succeeding whether they are day traders or swing traders … or if the primary obstacles are identical.
  2. You’ll see if your problems are the same as everyone else’s, or if your problems are unique to you.
  3. I will use the results of the survey to provide you with free educational material in my blog entries and YouTube videos on the topics that people are struggling with the most.

If you are both a swing trader and a day trader, I invite you to complete both polls.

Here are the links to the polls:

  • Swing Traders: http://www.squidoo.com/swingtrader
  • Day Traders: http://www.squidoo.com/TopDogDayTrading

Go there now and have some fun.

There’s also more free trading information at both of these pages, so you’ll have to scroll down the page a bit to find the poll.

There’s also a Guestbook where you can suggest more questions for the poll. Right now there’s only one question there, but I’d like your input to add more questions.

Feel free to go back at any time and get updates on the polls as they update in real time.

Remember, by completing these polls, you’ll be getting free trading materials from me on the topics you indicate you need the most help with.

Help me, help you … and together let’s make some serious coin!

Here are the links to the polls:

  • Swing Traders: http://www.squidoo.com/swingtrader
  • Day Traders: http://www.squidoo.com/TopDogDayTrading


My Podcast Alley feed! {pca-e425e8472ad1b7f2a34ed1dd8ef7c30f}

Question: What is the Best Interval for Day Trading? Part 2


This may very well be the most common question I receive. I wrote a blog entry about this same topic on July 13, 2007 in which I used the question to share why I prefer tick intervals to minute intervals for day trading. But now it’s definitely time to address the question head-on. So here’s how I decide on the chart interval I’m going to use for any given market. I’ll use the example of tick charts, but it applies to minute charts as well.

You will be looking for the best chart interval for your “setup chart” (the time frame where you identify the setups you trade). Once you find that, you simply multiply that time frame by whatever number you choose for your confirmation chart (the next higher time frame). I always use a confirmation chart that is 3 times the interval of my setup chart.

You start with your money management rule of what you have decided will be your maximum risk per trade. Usually this is a percentage of your total trading account. The number you choose will depend on your own risk tolerance, but is typically between 1/2% and 2%.

Simply start with any tick (or minute) increment and then looking at a historical chart, you examine where your entries and stops would be on that chart. Would a total loser be less than your maximum risk per trade?

Look at 20 or 30 entries:

If a lot of them are more than the maximum risk, then you need to go to a shorter time frame.

If they’re all less than the max risk, but a lot less, then you need to go to a higher time frame.

Get as close to your max risk without going over it at least 90% of the time. This gives you the best combination of keeping your losses small, and keeping the “noise” of a short time-frame to a minimum.

Just keep adjusting the time frame until you find the interval that best fits those guidelines.

This is the BEST way to find the right interval for you. But there are a couple of other things to consider:

1. If your trading account is very small and your maximum risk is a small percentage of that, then you may have to use an interval that is so fast that it’s very noisy. Obviously that’s not a good situation and the only way out of it is to have a larger trading account. Many traders are simply underfunded and this can be a large part of the reason for their failure.

2. The faster the time frame, the less time you have for identifying and entering a trade. This can result in missing entries. How fast is too fast? The answer to that varies from person to person. It depends on how fast your mind and fingers are! You’ll only know that by trading and finding out for yourself. But if you find yourself having a hard time getting into trades that you see, you may want to go to a higher time frame.

3. The psychological need for trading frequency. If you go to a chart interval that is too long, then your trade frequency may get beyond your attention span. Longer-term intervals are good for proving more accurate signals, but they provide fewer trades in a given period of time. This can lead to missing trades, not because the market is moving too fast, but because there is so little for you to do, that you get distracted and don’t see the setups when they come.

4. You may also want to use an interval that is very popular. This especially applies to minute charts. 5 minute charts and 60 minute charts are very common time frames and it can be helpful to use them simply to see what everyone else is looking at.

Some traders use what I call “magic numbers” for chart intervals – usually Fibonacci numbers – thinking they have some significance. In my opinion, that is a completely meaningless way to choose a time frame.

The above suggestions will provide a chart interval that is based on finding the time frame that is the best intersection of sound money management principles and your own trading psychology needs.

That’s a “meaningful” way to find the best time frame for your charts.

Who “Ticked Off” the Market?


In case you haven’t noticed, the markets have made a slight turn for the worse.

Some would call it a NOSE DIVE!

Volatility was very slight as the market was moving up, but now that the market has turned down, volatility has increased dramatically.

Note the increase in the range of the bars in a short period of time as the market started moving down on the S&P 500 chart below.

What could account for this?

A case could be made for volatility cycles, but they are so irregular that it’s tough to find any meaning or predictability in them.

There’s another, more fundamental, issue that may be causing this increase in volatility, especially since it has been isolated to the downside.

On July 3, the SEC’s elimination of the uptick rule was put into effect.

The uptick rules was established in 1934 and stated that a stock could only be shorted (sold before bought) if its current price was higher than its previous price.

The purpose of the rule was to prevent traders from artificially driving stocks down and then buying them back at lower prices.

3 years ago the SEC began a pilot program in which it suspended the uptick rule for some high volume stocks. The experiment was designed to determine if eliminating the uptick rule would have an overly negative impact on stock pricing.

The results of the pilot program were seen as favorable and so the uptick rule was officially eliminated on July 3rd of this year.

Exchange Traded Funds such as the SPY and QQQQ have never been subject to the uptick rule.

Proponents say that the uptick rule imposed an artificial hindrance on pricing, and that it is best to allow the free market to determine stock prices.

Did the elimination of the uptick rule contribute to the dramatic increase of volatility to the downside in the last month?

A look at the $VIX index shows that this is by far the greatest volatility we’ve experienced in several years.

Perhaps we’ll never know for sure if the elimination of the uptick rule is the cause, but it’s something to keep in mind as we continue to watch what could be a new ability for the markets to move down faster and with less hindrance.

S&P 500

Mile High Trading


This Saturday I’ll be conducting a 4 hour mini-seminar for the Denver Trading Group at the Radisson Hotel Denver Southeast in beautiful Colorado.

I’ll be including a special in-depth presentation on trading psychology and how to overcome your personal psychological obstacles.

If you live in the area, join us for an in-depth view of my trading methodology.

If you know anyone that lives in the area, pass along the word!

The Denver Trading Group (DTG) is one of the most active and exciting trading groups in the country.

Live presentations are given by well-informed guest speakers and are scheduled on at least one Saturday each month, starting at 9:00 a.m.

If you don’t live in the area: The Denver Trading Group will be scheduling guest speaker presentations and SIG meetings each week in the DTG hotComm room.

You can get more information about the Denver Trading Group at their web site: http://www.denvertradinggroup.com