For those who thrive on the juice of fast action

Trader’s Evolution, Part I

One day last week I spent the morning in a day
trader’s HotComm room and the afternoon inside a money manager’s website. Equal
time invested with each reminded me how similar yet profoundly different our
profession is for all.

Retail Side

Time spent inside the day-trader’s forum was interesting. It was fast-paced,
action packed and exciting. Trade calls for swings and scalps were shouted out
in scattered fashion for the S&P 500, Russell 2000, EURUSD, GBPUSD and crude
oil… not to mention a few individual stocks. Audio bells & whistles were going
off all the time: "ca-ching", "ding-ding", "applause", "yeah baby" and various
other self-accolades were quite generously used.

Trade signals, entries and exits happened so
fast, I really couldn’t see how any visitors trying to follow along (all verbal
input, no typed text) could execute any of the trades let alone all of them.
I’ll assume all trade orders issued were taken. If so, they are much more
organized than me. There is no way under the sun I could scalp trade five
symbols with necessary focus AND execute the orders with real money while
simultaneously posting timely into online. Anyone who hasn’t tried running a
live trade room or at the very least splitting attention from charts = broker
applet to posting thoughts online can only imagine how mentally divisive such
efforts are.

Now, I do have ability and methodology to aptly
scalp trade if I wish, and would almost certainly make more money per emini
contract traded
than any other tactic at my disposal. But is that the best
trading approach for me?

Management Side

Time spent inside the money manager’s forum was interesting. There I learned
about CTA performance comparisons for one, three, five and ten year records. I
read about risk management, risk control and outlier disaster management. Things
that come into play when one is either managing money and/or trading large
contract size on a routine basis.

Topics that would bore retail traders to
paralysis were covered in detail there. No bells, whistles or back-slaps over
booking $100 per contract profits. No adrenaline rush. No wonderment and thrill
that a trade attempt actually resulted in money making money. Just pure,
unemotional math… actuarial statistics.

Same Game?

The trade room and website listed above both covered stock index futures
trading and FX trading alike. Same exact symbols traded; polar opposite in every
manner from there.

I recall with fondness how exciting and
thrilling my own trading used to be. The very idea that I could buy an option
contract or trade futures contract long/short and watch money flow into (or out
of) an account was exhilarating. Know what I mean?

There is something powerful about playing
cards, slot machines, bingo, lottery tickets, sporting events or financial
markets with money at risk with potential for reward. Mankind has been
leveraging money to make money with for literally thousands of years. The
newness of emini contracts, online brokers and complex software systems are
merely fluff on top of the core fact of what we as modern day traders do. It
does not differ one whit on an emotional level from ancient traders of spices
and silk, wild west traders of horses, whiskey and guns or a dozen other periods
in history I can think of without effort.

Since time immortal, there have been groups of
men who would wager in the pits and others behind them who would play a similar
game, but apply some hedging tactics. No different in core concept that what you
and I did this week in the market, what we’ll do again next week and the weeks

Personal Choice

Some retail traders absolutely thrive on fast action and lots of activity
inside each trading day. Others prefer a more relaxed, deliberate pace. At this
stage of my evolution as a trader, I prefer the latter. spent my time watching
every candle paint on a chart with eyes glued to the computer screen. That is
enjoyable to many and quite profitable to some. In my opinion I could make the
most money per contract over time while trading a more intensive, focused
approach than I currently do.

But at what cost?

Chris Curran recently noted that trading takes
a physical and emotional toll over time. He related how refreshing it is to take
the midday period off and enjoy some personal time, lunch with his wife, etc. I
will say that time spent with those we love is the most priceless commodity for
any of us, and there is no such thing as too much of that.

I myself enjoy frequent "breaks" during a
trading day. My office is in-home, and I have a laptop on wireless i-net access
that follows me around the house. At any given time between 11:30am and 1:00pm
EST I might be doing a number of things. Recently I made several dozen quarts of
canned tomatoes, sauce and salsa from our garden. Two days ago I whipped up a
couple dozen pints of Chianti wine jelly, low sugar pectin recipe that is to die
for. Next week will be a chardonnay vintage of jelly to follow. Our wine
connoisseur friends just rave over that stuff, it’s a snap to prepare and goes
great with crackers & venison summer sausage.

Just yesterday I took a leisurely one-hour bike
ride around the country roads here in what might be that last 85F summer
afternoon for this calendar year. Today I cleaned half my gun collection (I’ve
got a few) to prepare them for the upcoming seasons. With all that wine jelly
now made, we need some wild game to go with it!

While I performed all of those multi-tasks (and
then some) this week, here is the cumulative summary of what we posted verbatim
for trade entries, stop-loss orders and exits inside our educational HotComm

1/2 position = one emini

Full position = two emini contracts

Monday 9/12

per full
position ES

+$400 per full position ER (went to
+$1,000 per position after exiting)

ER per
1/2 position

-$100 ES per
1/2 position

-$50 ES per 1/2 position


Net for Monday: -$50 per full position ER
and ES traded

Tuesday 9/13


per full position ES

+$800 per full position ER

-$50 ER per 1/2

ES per
1/2 position

-$100 ES per 1/2 position


Net for Tuesday: +$950 per full position
ER and ES traded

Wednesday 9/14


per full position ES

+$520 per full position ER

ER per
1/2 position

+$200 ES per 1/2 position


Net for Wednesday: $620 per full
position ER and ES traded

Thursday 9/15

per full position ES 1236 (stopped out
1236.50, immediately dropped to 1230.50)

+$400 per full position ER


Net for Thursday: +$350 per two-lot
position ER and ES traded

Friday 9/16

per full position ES 1237.75

ER per
1/2 position ES

ES per
1/2 position ER


Net for Friday: +$400 per two-lot
position ER and ES traded

Net Weekly Cumulative: +$2,270 per

+$11,350 per $100K balance (+11.35% weekly, +590.20% annual)


+11.5 points
per Russell 2000 emini contract  

+22.5 points per S&P 500 emini contract

Total # Trades: 19

Wins: 8

Loss: 9

Par: 2

% wins: 8 of 17 = 47%

Included amidst the math above are all usual
trading "mistakes" such as missed entries, exiting profitable trades too soon,
stop-loss orders getting clipped to the tick before price action runs deep in
favor, realities of our profession. No one is perfect, therefore no method or
system is ever managed perfectly. Obsessing over attaining perfection in trading
usually results in destruction instead.

Trading is an important part of my life, and it
is certainly the financial vehicle that makes my life comfortable by material
measure. But… trading is not my primary hobby or past-time. I do not pour over
charts for endless hours and revel in the process. At this stage of my career
and the trading methods I use for eminis and FX alike, such time spent in
research isn’t necessary. Give me fifteen minutes before any opening bell and
I’m 100% equipped to trade. Anything else beyond there is merely frivolous play
with charts for me… doesn’t add to my production or bottom line.

Personal Needs

Some traders are in the market for entertainment, adrenaline, self-competition,
etc. That’s all fine, nothing wrong with such personal fulfillment beyond
monetary gains. Traders who thrive on "the juice" of fast action and lots of
internal feedback would be squirming out of their seats making salsa or completing
a set of military presses in the weight room while markets wriggle around. I
happen to like it. that works for me.

The past week’s trade activity exampled above
is meant to demonstrate two things:

1. We all can make money in emini markets besides fast-action scalping.

2. We all can make money in any financial market while preserving a quality of

We traders MUST focus on sufficient sleep,
solid nutrition and exercise. Long hours spent bent in our chairs take a toll of
physical health in every possible way. It is vital to our long-term success in
trading and more importantly life itself to focus on needs outside of trading
and live market action. If you find yourself neglecting all those more important
facets of life, please understand I’ve been there before. Stop, turn around and
point your life in the right direction, back on track and all those other
clichés` that apply accordingly.

Make sure your life is properly balanced in
every aspect. The better balanced you manage your life, the better performance
your trading will enjoy. I promise that to be true as well. Take plenty of time
this weekend to enjoy your loved ones, hobbies and past times. Such are the
things we live for that profitable trading is designed to facilitate.

Procrastinate later… live your life now!

Next Weekend: Trader’s Evolution, Part II

Trade To Win

Austin P

(free pivot point calculator, much more inside)

Austin Passamonte is a full-time professional
trader who specializes in E-mini stock index futures, equity options and
commodity markets.

Mr. Passamonte’s trading approach uses proprietary chart patterns found on an
intraday basis. Austin trades privately in the Finger Lakes region of New York.