Which Of These 3 Types Of Traders Are You?

index futures opened Tuesday’s session in a coma ahead of a slow news day.
opening hour was a 180-degree turn from Monday as light-volume selling and a
heavy premium were strong enough to hit a flurry of sell stops.  The déjà vu
continued as the futures ground higher through the afternoon but ran out of
steam in the last hour, before some short-covering helped pare the losses going
into the close.  Breadth headed south early and couldn’t quite poke its head
into positive territory, indicating that the moves up were the result of buying
in select sectors.

September SP 500 futures finished Tuesday’s session with a loss of —2.50 points,
while the Dow futures were a little weaker with a loss of —39 points.  Looking
at the daily charts, the ES posted a hammer after bouncing off of its daily
lower channel line and weekly uptrend line, but still remains pinned by its
50-day MA.  The YM also bounced off of its lower channel line and is hanging
tough above its 200-day MA on a closing basis.  Both contracts are again doing a
decent job of using time to work off the recent excess, but will need to show
some movement up on decent volume soon (like this week). For you daily 3-Line
Break followers, the ES remains short with a Break Price of 1229.75, while the
YM remains short with a Break Price of 10629.

Are You Evolving In Your Trading?

How do we acquire trading knowledge?  There is
an objective reality which humans perceive through the filters of their values,
beliefs, and rules. This perception can and usually distorts our sense of
reality. The extent to which we reduce or eliminate the distortion is the extent
to which we will be successful as traders. The time that it takes us to get
through these distortions can be seen as a trader’s “evolution.” 
In my view,
the natural progression is:

1. The Rule-Based Trader: The trader in this stage of development has 1 rule,
“Never break your rules.” Obviously, this is the strictest of the stages.                                                                                                                                             

2. The Subjective Trader: The trader in this stage has 2 rules.  The first
is “Never break your rules.” The second is “Know when to break the first.”                                                                                                                                                 

3. The Intuitive Trader: The trader in this stage has no rules, but is guided by
this: “Whatever my intuition tells me is the right action on this trade is the
correct action in the circumstances.”  The trader in this stage truly has
the “feel” and “rhythm” of the market with defined risk, and many times has a
hard time explaining the reasons for his actions.                                                                                                                                                                                   

All types of traders can make money as long as they conform to the
rules/elements of that stage.  For example, a trader at the Rule-Based
Stage is more than likely to lose money in the long run if he breaks his rules.


Daily Pivot Points for 8-24-05

Symbol Pivot       R1 R2 R3 S1 S2 S3
INDU 10531.26 10565.78 10611.99 10646.51 10485.05 10450.53 10404.32
SPX 1218.36 1222.27 1226.96 1230.87 1213.67 1209.76 1205.07
ES U5 1220.67 1225.83 1230.17 1235.33 1216.33 1211.17 1206.83
SP U5 1220.50 1225.50 1229.80 1234.80 1216.20 1211.20 1206.90
YM U5 10552.67 10598.33 10646.67 10692.33 10504.33 10458.67 10410.33
BKX 99.29 99.66 100.26 100.63 98.69 98.32 97.72
SOX 468.06 470.76 474.01 476.71 464.81 462.11 458.86


Weekly Pivot Points for Week of 8-22-05

Symbol Pivot       R1 R2 R3 S1 S2 S3
INDU 10572.56 10641.75 10724.27 10793.46 10490.04 10420.85 10338.33
SPX 1223.96 1231.99 1244.27 1252.30 1211.68 1203.65 1191.37
ES M5 1226.50 1236.25 1248.75 1258.50 1214.00 1204.25 1191.75
SP M5 1226.57 1235.73 1247.67 1256.83 1214.63 1205.47 1193.53
YM M5 10587.33 10668.67 10749.33 10830.67 10506.67 10425.33 10344.67
BKX 99.40 100.25 100.86 101.71 98.79 97.94 97.33
SOX 463.14 468.99 475.71 481.56 456.42 450.57 443.85


Please feel free to email me with any questions
you might have, and have a great trading week!

Chris Curran


Chris Curran started his trading career at the
age of 22 with a national brokerage firm. He combines fundamentals and
technicals to get the big picture on the market. Chris has been trading for 15
years, starting full time in 1997, and has never had a losing year as a
full-time trader.