Back to blogging

I've had a hard go of it over the last 2 years. I changed my trading style from stock screening and longer term swing trading, to day trading futures. I went from working with my wife in a high paying job, to trading for an income for the entire family. My trading account went from a tidy and comfortable amount of money to about the amount that I started trading 7 years ago. My ego deflated. My trading sucked.

I've recently started pulling things together. I went back to work, and my wife recently joined me. I no longer need to trade for the mortgage payment each month (which I found to be incredibly stressful). I can take my time and take only the best trades.

I'm still making foolish mistakes. I think they're residual emotional problems from the pressure I felt to make money. I'm making fewer of them, but they're still there.

It's funny. I read dozens of trading books that harped on psychological issues in trading. I thought they were all silly. I never made emotional mistakes when I was trading for fun.

But when I needed the money, holy cow, I made every mistake I had read about (and some that I can add to my own book some day). I began to hate blogging because every day seemed like more of a failure than the last. I wasn't motivated to let folks know how stupid I was being. No one wants to read about a trader who loses money. I certainly didn't want to write about one.

I think I'm more ready for that now. I think I might be able to keep some traders from making the same mistakes that I have. I hope that my struggles with my emotions in the trading world will maybe help a few of you out there make better decisions than I did.

I'm Back!

I've been away for a while. OK, I actually haven't been "away". I still live in Omaha, Nebraska. I still have access to the internet. I still trade.

But I've been on a bit of a journey over the last year. I hope to detail that journey here over the next couple of months with the intent of encouraging others out there who may be experiencing some of the same things that I experienced when I decided to begin trading full time.

Last month, Charles Kirk encouraged me to share what I've learned with my readers. I fully intended to begin blogging again on January 1st, but time got away from me and my laziness overcame me. I find it hard to comprehend the time and effort that guys like Charles must put in to their websites on a daily basis. I'm pathetic.

So, for the new year, I plan to regularly contribute to the blog. Hopefully I'll be able to encourage you with some of the things I've done (and am doing) right and prevent you from making some of the same boneheaded mistakes that I've made as well.

Evolution of Man

WOW

That was the craziest market session that I've ever experienced. I traded earlier in the session and was about to short, but decided to wait for some more confirmation. The market then fell off a cliff. I calculated that if I had taken that short (and executed everything perfectly), I could have made a year's worth of income in a couple of minutes.

I'm actually kind of glad I wasn't part of the insanity. It looks like folks on both sides took a pretty good pounding. My order matrix looked like it had accelerated 100 times. Crazy times.

Can we keep going higher forever?

My long gap fade this morning failed miserably. After I stopped out, I noticed some areas of resistance around the highs yesterday. Interesting. Maybe this rally is done. Who knows, but Adam Hewison has an interesting video about where we sit right now in the market. Here's what he Adam says:

"We owe trillions of dollars, but Crude oil is at $86 a barrel, the DOW, S&P, and NASDAQ are making new highs almost everyday and unemployment is officially at 9.7%.

Everything is great! Happy days are here again... Right?

So is the DOW, S&P, and NASDAQ all going to keep going higher forever? Or are the teachings of a dead mathematician going to reverse this juggernaut of a market?"

You can see his video here.

The Market's Line in the Sand

Adam Hewison has posted an interesting video on where he thinks the market is headed based on his study of the technical charts. He writes:

"To many technicians, it is very clear where the equity markets will reverse, and for those folks who don't follow the technicals, this is a key reversal area in the S&P 500, the NASDAQ, and the Dow."

"Currently the major trend remains positive for all the indices and we would only become negative on the these markets should the key levels I show you today, are broken."

You can see Adam's video here.

Using a Fibonacci grid from Friday to predict price action today

I wanted to point out the power that Fibonacci grids exert on the market by drawing a grid from Friday's lows and highs.

Fibonacci grids are not magic and they don't have some sort of hidden "power" over prices because of some mysterious use of number sequences. They work because patterns in the market continually repeat themselves over and over again. And they work because there are a lot of people (like me) who trade using Fibonacci grids.

I wanted to point out using a 5 minute chart of SPY how the action last week can effect price action this week. You'll notice that today's prices bounced around in Friday's range and often bounced off exact grid retracements (blue arrows). With knowledge that these areas will provide support and resistance to price movement, you arm yourself with a very powerful "predictive" capability that many traders out there aren't aware (or capable) of.