Filed under: online trading methods | Tags: commodities, commodities trading, Floyd Upperman
Floyd Upperman is an experienced trader who uses the Commitments of Traders reports the CFTC puts out to find trading opportunities in commodities and futures.
In this interview, I talk with Floyd about how he developed his trading skills, a recent sugar trade that made him thousands and why he’s most comfortable position trading. Although he will swing trade or even day trade when the time is right, Floyd finds he is able to read the market the most clearly when he is able to take advantage of trends lasting a few weeks.
Floyd admits that he still goes through periods where he is not as profitable as others, but also realizes that those times do pass and overall he is able to make up losses over the longer term with trades that do go in his favor. He has worked for years to refine his indicators and talks about what it took for him to reach his current level of proficiency in trading.
Read the commodity trading interview in full here.
Filed under: online trading methods | Tags: forex price action, forex trading strategies, learn to trade the market, Nial Fuller
Tim Bourquin recently sat down with Nial Fuller to discuss his trading methods and how he finds good opportunities in the forex markets.
Nial Fuller’s price action strategies are becoming more popular with currency traders who are looking for maximum reward and low risk. More than technical analysis, the Nial Fuller trading system is a path to trading success in the forex markets by paying attention to price action in currency pairs. This allows the trader to make educated trading decisions based on what the market behavior is telling him or her.
Filed under: Uncategorized
Brendan Egan is a full-time swing trader. Here we talk with Brendan about the three main stocks he trades and the three main patterns he watches for opportunities.
Listen in as I talk to him about the ways he trades the markets.
Filed under: online trading methods | Tags: "John Netto", One shot one kill trading
Tim Bourquin: So talk about how you figure out which markets would be not correlating to themselves or correlating in opposite directions to know which ones to buy and sell.
John Netto: Sure. First of all, if they’re going to spread trade, there’s a couple of — you could spread through a highly correlated markets or, you know, obviously, with everything else, the more risk, the more award. You could step back and trade less correlated market. So a highly correlated spread would be, you know, The Dow Jones EURO STOXX 50 versus The DAX, okay. They both encompass European equity. They both are nominated in Euros so there’s no currency risk there. I can, you know, the two have a historical correlation that’s pretty strong north of 95%. And as a result of that, if those two spreads deviate, they may present some opportunities there and so as well to that okay. So correlation is the first key component. Second, like I talked to you about is currency. You know, having a spread in currency alleviates some of the currency risks that can come if you spread other products.
Third thing is well — is like an ebb and flow. So with spread trading there are mean reversion strategies. Meaning that if there’s a high correlation, that correlation diverges, you play a strategy that they will, you know, come back in line again so that’s more, you know, a value proposition. And also trend following strategies as well. You take a look at the crude curve, all right. You know, the energy markets, some of the agricultural markets and when you see crude trend in higher, I mean this isn’t always the case clearly but when crude was rallying like it was in late 2007 or early 2008, we had what’s called the backwardation dynamic. Meaning that, you know, the price of front month crude contract was actually priced higher than the back month crude contracts. This, you know, was a very tell-tale sign of the dynamic that was in play when crude got as high as $145 a barrel. Whereas, when crude topped out and started to head south, we went all the way back down the, you know, south of $30 a barrel. We had a huge dynamic or a steepening curve. Meaning it’s like front month crude was priced at whatever — $28 a barrel. In one month that was priced at $36 a barrel. Whereas in backwardation, front month was priced to, let’s say, $140 a barrel and back month was priced like $137. So those — that supply and demand dynamic in how those markets are priced all plays a role.
Here’s the information to listen to the John Netto interview and transcript in full.
Tim Bourquin: All right. So we talked to Michael Goode awhile back about penny stocking. I know he was one of those guys that really railed on you at first about your strategies. But then once he tried them realized they worked and you converted him and you guys have actually put out a DVD together. Are more people kind of being open to shorting and trading penny stocks these days? Have you made progress there you think?
Tim Sykes: Yeah. You know it’s tough. I mean when you try and convince someone that the better trade is to short a stock, that’s at a dollar or two dollars a share, you know they look at you like you’re crazy. When I started blogging two years ago, Investopedia, short selling penny stocks was illegal. So I had to change a lot of people’s mind. And now a lot of brokers say, “No. You can’t short stocks under $5. You can’t short stocks under $3.” But you know the numbers speak for themselves. I’ve done well. Michael Goode was my biggest hater. He’s now made $130,000 in two years. And what it comes down to is that, you know even if stock, you’ve got $1, $2, or $3 and it’s up from like let’s say 5 or 10 cents a share, it’s really worth every 10 cents a share. So you can really predict it going back down there since 99.9% of penny stocks fail. And you know no one on the internet wants to believe it because there are a lot of promoters, there are a lot of suckers and it’s all about perception with this thing. So when I try to come in with you know exposing SEC filings and saying, “Well someone just paid $300,000 for this promotional mailer, why did they pay that for the mailer instead of giving it to the company?” It’s tough to bring in reason, but over time gradually people are coming around.
The full Tim Sykes interview can be found here.
He had a good plan for his next trade: He used a smaller initial stop loss and the Risk Reward was greater than 2:1. The trade started out as a nice winner and looked like it was going to run straight to his profit target–it was already five S&P points in his favor! But when it began to turn back lower, he let his emotions get the better of him: He had that feeling that the market was going to continue to head lower and hit his stop loss. He didn’t want to take a losing trade! This was the pressure of ‘making money’ talking to him and he threw his plan out of the window. Rather than risk having this trade become a loser, he panicked and took the two S&P Points still left in the trade [If you are curious, he would not have been stopped out and price would have reached his original profit target if he had stuck with his plan]. Once the trade was closed, he realized he had two winning trades for his first two trades. He was riding an emotional high: This ‘off floor’ trading wasn’t hard!
The next day, he saw his third trade opportunity right after the S&P open, when the market gapped open lower. Most floor traders ‘know’ the market loves to fill open gaps, so that gave him his trade idea. He already had two winning trades and was feeling good about his trading, so he decided he would go back to using ‘looser’ stops for this trade. The market had just opened and the economic numbers that had come out before the opening [and caused the market to gap open lower] had left this market volatile, with fairly wide range bars. He didn’t want to get stopped out and then have the market turn around and fill the gap!
This trade had nothing going for it: The initial stop was too large, the risk reward was poor, he was taking an entry right after the open that was fighting against the trend. And he made matters worse: When price got near his initial stop loss level, he looked at the screen and the size of the ‘buy’ orders shown by his platform. Then he watched price hesitate and turn just a bit higher. He was certain the buyers at this level would keep price from going lower, but price was so close to his stop, he cancelled his existing stop and moved it five S&P points lower. Remember, he just had two winning trades in a row and was running on an emotional high. He was certain price would never break through this level and hit his new stop loss order.
But price did break through the lows and quickly stopped him out for a rather large loss. On this single trade, a trade he was certain was a sure winner, he had lost all he had made on the prior two trades and quite a bit more. If you ‘eye up’ the first three trades, you should be able to see the usefulness of ‘same size’ maximum stop losses per contract, as well as what damage you can do to your account if you move your initial stop loss order to a worse level.
I haven’t yet mentioned leverage. Though many brokers will let you trade three or four E Mini S&P contracts per $10,000 Dollars, by doing so, you are exposing your account to extremely large percentage swings on each and every trade. Overtrading [trading too frequently] and using too much leverage will drain an account faster than anything else–and people that lose all the money in their accounts are generally guilty of both of these.
Click here to read the remainder of the article.
Filed under: online trading methods
First, every once in a while you read a story about a trader that really hits home. This is one of those stories:
Everything You Needed To Know About Trading You Learned In Kindergarten:
http://www.TraderInterviews.com/KindergartenTrading.php
Tim Morge, one of my favorite interviews in the library, is a great story-teller. He’s got a way of teaching us valuable lessons about trading by telling a story about his own experiences.
This article is a bit long (you may want to print it out and get to a comfortable chair), but it’s a quick read and I promise you it’s worth the 15 minutes.
It’s also a great follow-up to the trading rules email I sent you yesterday. This story is about implementing those rules in the real-world.
Visit this page to read it now:
http://www.TraderInterviews.com/KindergartenTrading.php
All the best,
Tim Bourquin, Co-Founder
TraderInterviews.com
(direct email): tim@traderinterviews.com
(direct phone): 1-949-348-2590 ext. 15
Filed under: online trading methods | Tags: market structure, trading strategies
I’m constantly impressed by how many different ways traders have found to make money trading.
Five years ago, if you would have asked me how most good traders approach the markets, I would have said that most trade in a very similar way.
Not today. Although many share similar discipline traits, their methods are as varied as the traders’ personalities themselves.
The market structure and trading cycles interview posted today is a great example of that. Charles Pennison has been trading short-term cycles in the market for steady profits since 2002. In this interview, he talks about how he combines overall market structure, monthly cycles and 2-5 day cycles to paint a picture of the markets that gives him clear signals for good trades.
We discuss the support and resistance areas he watches, the timeframes he monitors, and ways he finds great trades in “price clusters and equilibrium zones.”
His surprisingly simple methods have given him consistent earnings for years and he shares his strategies openly and honestly in this interview.
Listen in on my conversation with a great S&P eMini trader here: http://www.traderinterviews.com/out/TradingMarketCycles.
We also discuss the a specific type of Bollinger Band that he says works remarkably well in the S&P Futures markets and why a specific number of standard deviations give him advance notice of the direction of the market.
Finally, we discuss the one tool he says has been a terrific one or two-day leading indicator of the S&P contracts – and it’s something most everyone has access to but rarely uses. Even he didn’t realize its power until recently.
P.S. Around the 13-minute mark, Charles starts talking about the specific level he watches to find support and in the S&P. It wasn’t something that I had heard about before but made perfect sense. This interview alone will be worth it this month!
