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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (1315)	6/19/1998 8:22:00 PM
From: Leland Charon	Read Replies (2) \| Respond to of 44573

Patrick, Did you trade anything today? I was out for most of the afternoon. My "system" is still on a sell signal for the spoos from 1122. It looks as though a lot of my S&P trades will be more or less position trades. If I can manage to take a nice chunk of a trend when its there thats all I am looking for. Leland

To: Patrick Slevin who wrote (1315)	6/28/1998 10:34:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 44573

Good observation about analysts, Patrick, which I agree with. Here I want to avail myself of the trading skills of you and others here for the benefit of everyone here including the beginners. I have a book that I am reading on the day trading of Futures authored by a person who traded S&P Futures contracts on the floor. I want to print excerpts from it here about the trading activity itself to see what value the day traders here find with what the book has to say. The coverage of how to prepare for and manage trades in the market takes place in the middle of the book. The first part of the book about preparing the reader's frame of mind to this subject material and specifics on some introductory details of how the market can behave and be traded. I may include some of this information in my posts at a later time. I hope to hear from you experienced day traders out there about what you think this book has to offer the day trader. All comments and constructive criticism of the book welcome and encouraged. The author breaks up the day trade into the morning and afternoon trade. He believes these are the two times during the day there is profit to be made that can show a trend. These two time periods are interrupted by a "lunchtime" or noon period of time that usually is not trending where this more difficult time of the day to trade is not worth trading. "I like to compartmentalize my trading into two distinct parts -- morning and afternoon. Because these two compliment one another, the morning trade frequently creates the first leg which, given the symmetry of price and time, culminates in the second leg in the afternoon. So you might have half the rally in the morning and the other half in the afternoon. Or the morning's rally is offset by a comparable afternoon decline. When carefully analyzed, however, the morning and afternoon sessions can be remarkably different in character". "The place to begin any inquiry of how to trade any given day is the open." "From a strategic point of view, it is a time of intense activity. How you play the open, or at the very least, what conclusions you draw from the initial open activity will determine the success of your trading day. The open is a time of extreme liquidity with an abundance of buyers and sellers all jostling for the competitive edge. It is a time when prices get taken "out of line", offering some of the best trading opportunities of the day. Significantly, it is frequently a time when the high or low is registered. "While the open can indeed improve enlightening to those who know what to look for, you must do your homework in advance if you are going to turn the morning spurt in prices to your advantage. It helps to be armed with a shopping list of support and resistance levels, prior highs and lows, not to mention a sound knowledge of your market. This is all second nature to seasoned traders. They live and breathe these numbers. They know the interim high and low of the last moved that topped out last Monday afternoon, say. If they are floor traders, they know where Merill Lynch came in selling 500 cars yesterday - and how it was taken in by the market. They know whether the Fed Chairman is scheduled to speak this afternoon - and the Street's opinion of the likely news. And, of course, like most good traders, they know yesterday's highs and lows, including the intraday numbers and how the market behaved just prior to the close. All this information must be processed and understood prior to the open. This makes the actual decision-making a virtual afterthought once the opening bell rings. "Timing, we all know, is critical to the futures market, but the speed with which you act becomes doubly important at the open. Because of the inherent volatility and uncertainty that is characteristic of the open, the speed with which you act is so vital, on occasion you may want to enter the market on a "market on open" order. I know you can make the case that, under certain circumstances, it is best to let the market calm down before placing the order. But there is times when waiting makes no sense. In markets that exhibit strong trends, buying or selling the open is often the best strategy. I have mentioned the summer of 1987 when a trending market returned excellent profits on the simple strategy of buying the open, buying the first break, and buying double the quantity on any downward penetration of the first break. With few exceptions, this simple strategy generates consistent profits in a trending market. Significantly, the second and third entry levels were not always hit. That meant a failure to buy on the open would of meant none or lower profits on the day, as the market frequently soared out of sight." Will be continued in my next post here. Any comments or constructive criticism of what has been covered here so far? Bob Graham