Friday, December 22, 2006

Hustlin' and Bustlin'


So what's the controversey over? Everyone seems to have been reading my blog about my futures trading, and seems to be quite un-informed. First of all, I've been studying the Russell, and the S & P 500 intra-day e-mini contracts for about 6 months now. I paper traded them everyday along with day trading stocks. I've watched videos, I've gotten in on webinars, listened to conference calls, read articles, forums, blogs, books, speakers, etc. If you're considering trading the Futures markets you need to do your research, you need to learn how the Futures trade, and you need to limit your risk by taking, HIGH PROBABILITY SETUPS!

Okay, I'm sure the main question you'd like answered is, "What's a high probabilty trade set-up with the Futures Indexes?"

Here is a typical trade I ALWAYS take. It's a high probabilty trade in which the direction is extremely strong, either up or down, rally, or sell off, either go long or short. I NEVER, EVER trade futures just to be trading. That is the best way to lose money, waste time, and make someone else's pockets bigger. Futures is cut throat, hard core, I'll kill your momma for the next tick extreme.

Here's the Process:

1.) Step one. Wake up at 6am EST and find out what news has been released, see if the Futures are indeed trading strong in one direction.

2.) Step two. Go to www.briefing.com and go to "Free Content", then click "ECONOMIC CALENDER". Find out what news is coming out today! Major major news would be FOMC meetings, Corporate Profits, CPI, Inflation Data, etc.

3.) Step three. Do not enter any trades until the specified news you're awaiting has been released. Compare the numbers "Actual" vs "Consensus" and mentally figure out if it beat, missed or matched the "actual". I've stressed on this blog already the importance of my main style is based on NEWS Trading. I don't always trade spreads, or tick extreme's, or pivot points, or retracements, or Fib's. I like to trade NEWS. One shot kill on a 99% chance the market will turn in a strong direction.

4.) Step Four. Look at your charts, see if any Key Support/Resistance Levels have been surpassed or breached.

Let's take a look how today played out.

1.) 6am, http://www.briefing.com I found my news, The Philadelphia Fed is going to speak today at 12pm.

2.) I awaited the news. It was released. Here's what happened:



December Philadelphia manufacturing index at -4.3 (-9.4 pts), this means that -> The weakness in orders from the auto and housing sectors now add to stalled business investment from a break neck pace just a few months ago. Risk is that the weaker business confidence which is driving investment may weaken further if the manufacturing sector falls in to decline.

Immediately at 12:01 markets turned, Wall Street was discouraged by this data, and markets sold off.
Russell 2000


S&P 500 Index, right at 12:01pm



These are very sizeable moves and could have been very profitable had a trader realized that news was coming out today.

I don't see why other sites are bashing my number, my methods and my name. If you can't trade the Futures, then stick to stocks. Whatever is profitable for you and works is wonderful. We all have niches in the market, and once you've found it and make money then stick to it. My purpose is trying to provide insight to other traders in the world that there are ways to use leverage in a positive manner, which you can reap rewards from.

If you'd like to hear a great broadcast from another Russell Futures Trader, Lee_Leibfarth, Click Here. He is based more on technical trading, and even uses a fully automated bot for trades, this is something I'm currently looking into.
Out,
Cal

11 comments:

Anonymous said...

what do you use for news to get the actual number once it comes out to see if it is + or -.

F. said...

I made that exact same trade. All the other indicies were down and ER2 was struggling near its opening range high in addition to a multitude of other edges lining up for an easy 8 pts.

Marlyn Trades said...

Hey Cal - good to see you are doing well - I like your approach and believe it is the best way to trade futures - just don't game the news - wait until the trend is established and go with it. When I traded Forex I learned that the news driven trend once established stayed in play long enough for me to scalp a profit and then get out of the way.

Keep a tight stop and ignore the detractors - trust me on this one - you can tell folks how to trade - you can give them money to trade with - you can show them in black and white absolutely empirical terms what works and what doesn't - and they still won't believe. They prefer to believe in mythology rather than attempt to understand reality.

I'm going to stay with stocks - I'm an old guy and I like the slow pace these days.

Be sure to read John Carter's book - Mastering the Trade for a lot of good setups in the futures market.

Good luck.

Marlyn Trades said...

Damn - forgot - and if you go bust - so what - who hasn't done that at least once if not more.

Zoomie said...

Cal,
You perhaps are missing the point of some postings. It is a rookie mistake to count your winnings before trading a system. That means you are looking on the winning side vs. the losing side. Trading is a losing game. These are not my words, but words from arguably one of the best traders in the world. I would try not to lose any money, and if that happens for a few months, you may become profitable. If you can do what you say, right off the bat, than good for you. You would be a major exception. If you have great discipline, then it is possible. You are just showing lack of understanding about trading when you assume the winning side. I did it, everyone has, and every rookie to come will.

Anonymous said...

can you record yourself trading the ER2?

Get a demo of Camtasia and show us some trades. I enjoyed watching the Hindsighttrading video

Yaser Anwar, CSC (Trader- Equities & FX | Quoted 6 Times In WSJ, Twice in NYT & FT) said...

Cal-

That's a good approach. I don't trade futures much, still in the learning phase, but for my FX I trade the news. Since these markets are open 24/7 one cannot watch the markets the whole day- that's nuts.

In my FX experience and like you've got the mission statement to trade just news in futures, I think it is appropriate to do so, as it keeps one focused on price action around that event- in our case the news.

Good luck buddy- I'm quite sure you will do very well, the first step in achieving is believing.

Anonymous said...

I have been trading 4 years fulltime profitable - and until u hit the wall - and its coming because you are a newbie - then you will know if u can make it. The warnings others are ginving you has nothing to do with wanting u to fail - its the warning that its coming. I almost feel sorry for you.

Jim K said...

Cal, good luck to you.

I have traded futures for 15 years and have become wealthy doing it because I learned to quantify and determine the level of loss i am willing to except for each trade and not a cent more. over the last 15 years I hvae also never been margin called... not because I didn't make mistakes, but because my risk limitations would force me to cut losses before the margin clerk would have to make the call. But it goes beyond that. I do not generally trade futures related stock indexes unless there is an overriding and unusual trend or event taking place in the markets.

First, please be very careful in the week ahead playing around with index futures in a thinly traded market because volatility can spoil your day. Never sell a dull market short. But beyond near term distortions, I generally avoid futures on indexes because I prefer to study supply and demand dynamics of physical commodities and their relationship to chart patterns and then deploy wealth generating trades in the futures market. That's just my preference and my forte.

Perhaps, yours is in the realm of predicting short term supply and demand for Russell and S&P, but even after all of these years, I don't have the skill, clairvoyance, or ability. But I've got to tell you, mastering an understanding of BTUs, barrels and even bushels has given me a great life (yeah all the material things you could ever want, but more importantly love of family).

That's not to say that I won't be engaging in speculative activity in various index related futures. I sure will because i do see a trend coming. When the time is right in the coming months, when I see SPA down 5 to 10 points one morning, I will deploy into FULL SIZED FUTURES on various indexes.

Playing any single type of futures every day is not for me... it's repetitive and boring. Who the hell wants to sit behind a screen all day like that? There's got to be variety and also rest and refreshment for when the time is really right to trade the bigger trends. Running after 1 point scalps will burn you out and leave you ill prepared for the big opportunities.

Some folks have given you bad and good advice about how easy and hard it is to make money in futures. I actually think it IS easy to make money if you can be PATIENT and wait for the right opportunities and know when the right opportunities are at hand. But that is impossible for most since they don’t study and have a clue. If you are planning to make money 1 point at a time, you are ultimately doing it the hard way, the risky way and not planning for when the right opportunity will be at hand for you. Why do it in 15 trades when you can do it 3 or 4? Think about it. I'm not saying it is impossible 1 point at a time, but when you calculate the risk of loss that's involved with each trade, it is better to wait for the stronger trend when there is a greater chance the market will be with you and you're using a back-hoe to accomplish your goal, as opposed to just a shovel.

And notice, I just used the word “chance”. You need to think in terms of odds in this futures game. You mentioned that you’ve studied up on how to trade futures, but how good are you at poker?
David Sklansky's book, The Theory of Poker, is a must read. The logic detailed in that book is directly correlative to success in futures trading. Enhanced returns depend on a combination of fundamental, seasonal, cyclical and technical factors. You’ve only been showing technical factors. Cal, good luck.. Merry Christmas. Be careful…. Have fun and get Sklansky;s book to broaden your perspective!!!

Anonymous said...

Cal, good luck to you.

I have traded futures for 15 years and have become wealthy doing it because I learned to quantify and determine the level of loss i am willing to except for each trade and not a cent more. over the last 15 years I hvae also never been margin called... not because I didn't make mistakes, but because my risk limitations would force me to cut losses before the margin clerk would have to make the call. But it goes beyond that. I do not generally trade futures related stock indexes unless there is an overriding and unusual trend or event taking place in the markets.

First, please be very careful in the week ahead playing around with index futures in a thinly traded market because volatility can spoil your day. Never sell a dull market short. But beyond near term distortions, I generally avoid futures on indexes because I prefer to study supply and demand dynamics of physical commodities and their relationship to chart patterns and then deploy wealth generating trades in the futures market. That's just my preference and my forte.

Perhaps, yours is in the realm of predicting short term supply and demand for Russell and S&P, but even after all of these years, I don't have the skill, clairvoyance, or ability. But I've got to tell you, mastering an understanding of BTUs, barrels and even bushels has given me a great life (yeah all the material things you could ever want, but more importantly love of family).

That's not to say that I won't be engaging in speculative activity in various index related futures. I sure will because i do see a trend coming. When the time is right in the coming months, when I see SPA down 5 to 10 points one morning, I will deploy into FULL SIZED FUTURES on various indexes.

Playing any single type of futures every day is not for me... it's repetitive and boring. Who the hell wants to sit behind a screen all day like that? There's got to be variety and also rest and refreshment for when the time is really right to trade the bigger trends. Running after 1 point scalps will burn you out and leave you ill prepared for the big opportunities.

Some folks have given you bad and good advice about how easy and hard it is to make money in futures. I actually think it IS easy to make money if you can be PATIENT and wait for the right opportunities and know when the right opportunities are at hand. But that is impossible for most since they don’t study and have a clue. If you are planning to make money 1 point at a time, you are ultimately doing it the hard way, the risky way and not planning for when the right opportunity will be at hand for you. Why do it in 15 trades when you can do it 3 or 4? Think about it. I'm not saying it is impossible 1 point at a time, but when you calculate the risk of loss that's involved with each trade, it is better to wait for the stronger trend when there is a greater chance the market will be with you and you're using a back-hoe to accomplish your goal, as opposed to just a shovel.

And notice, I just used the word “chance”. You need to think in terms of odds in this futures game. You mentioned that you’ve studied up on how to trade futures, but how good are you at poker?
David Sklansky's book, The Theory of Poker, is a must read. The logic detailed in that book is directly correlative to success in futures trading. Enhanced returns depend on a combination of fundamental, seasonal, cyclical and technical factors. You’ve only been showing technical factors. Cal, good luck.. Merry Christmas. Be careful…. Have fun and get Sklansky;s book to broaden your perspective!!!

Cal said...

wow this last post may have been the most educated, informative, & inlightening comment I've seen since the inception of this blog. Please state your name, email, thank you.