Trading With Market Profile

trading Apr 01, 2018

This week's article comes from friend and frequent Meetup contributor Michael Toma.

Michael Toma, CRM, is the author of The Risk of Trading: Mastering the Most Important Element of Financial Speculation, in which he details his data-driven risk-based approach to long-term success in trading. Mr. Toma received the Certified Risk Manager (CRM) designation for risk management excellence from the National Alliance in 2007. In addition to his corporate risk consulting business, he actively trades the US-based futures and options markets.


 

Negotiating at a car dealership can be a trying process. Lease or finance, I have a dollar number in mind with some flexibility if they include my heated seats. The dealer estimates up front what price they think will move inventory and knows what their average sale price needs to be in order to meet his goals. Based on prior sales, they will also know if they can be strict with bargaining or if they need to be more flexible given a new delivery...

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How To Avoid Getting Chopped Up 🔪

trading Jan 22, 2018
 

In last week’s lesson, we spoke about the importance of capping your losses as an intraday trader.

In this week’s lesson, we will be addressing one of the trickier trading environments which cause many a trader to lose money or give back their market gains and that is the rangebound or rotational market.

Most traders love trending markets. These are the easiest markets to trade in the sense that there is usually sufficient range for most participants to catch some profits.

On the other hand a lot of traders especially newer traders have a hard time dealing with rangebound or sideways markets.

If your style is to trade momentum - that is you're trying to buy/sell breakouts, ride winners, or buy or sell pullbacks to see new highs or lows then this is a losing style in a rotational market.

The market makes sharp reversals that will chop you up whether you go long or short and the ranges aren’t sufficient to cover your losses.

And here’s the problem - most...

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Capping your losses

trading Jan 14, 2018

At this month’s Meetup, we will be discussing several key principles to successfully trading the intraday timeframe.
One of the most important principles which is applicable to all traders regardless of timeframe is the necessity to cap your losses.

One aspect of trading that attracts a great many traders is the freedom that trading can afford.
As an independent trader, you have no boss - There’s no one there to tell you what to do, how to do it, or when to do it.

This virtue turns out to be one of one of the greatest obstacles for many individual traders to master to achieve any kind of lasting success.

How many of times have you had a string of winning days just to lose all that hard earned money because of 1-2 trading sessions where you lost control and gave all that money back if not more?

Not only is the scenario damaging to your PnL but it is terribly damaging for you psychologically and destroys your trading confidence.

At the end of the day, this is where...

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Year End Trading Reflections and New Year Plans

trading Dec 17, 2017

Trading is a business and what is crucial to running a thriving and sustainable business is the practice of focusing not only the trading results but also to reflect on the broader operations of the business.

During the quiet period leading up to the New Year, there is no better time than now to take some time off and do a post-mortem of the year as well as spend this invaluable time to plan for the coming year.

In this post, I will share some reflections that I got into the habit of doing each year.

This process was inspired by some of the immeasurable writings over at Dr. Brett Steenbarger's Traderfeed blog.

The yearly review should consist of a review of all facets of trading.
The review needs to include a daily P/L summary and performance metrics, such as average win size, average loss size, win rate per trade and per day, breakdown of P/L by strategies and trade types, etc.
Your review needs to also flag the greatest winning and losing trades of the month, quarter and year.

...

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3 Important Considerations Before Trading Cryptocurrencies

cryptocurrency trading Nov 13, 2017

It's been a wild week in the world of cryptos with the failed SegWit2x effort taking Bitcoin up to 7950 and then down to 5900 at the time of this writing.

All of this volatility and media exposure has attracted a lot of new traders and investors in search of easy money.

If you're new to the Cryptocurrency space here are 3 important considerations before dipping your toes into the volatile waters.

 

1. Understand the fundamentals

Everyone has heard of Bitcoin, however, there are a plethora of independent and competing cryptocurrencies that are worth keeping an eye on.

The key is to know the instrument(s) you are trading. Just as in Forex and equities trading, understating the macro picture and more importantly, the sentiment of other traders is paramount in setting the proper trading context.

One site that you should bookmark is CoinMarketCap.

This site is a must reference to track the ongoing fluctuations in market cap and capital inflows.

I personally pay attention to the top...

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The Journey Towards Trading Mastery

trading trading journey Oct 23, 2017

In our previous articles, we've recounted how success in trading must come from objectively understanding several market truths and being willing to face obstacles and failures head-on.  

One of the biggest takeaways is that becoming a successful trader isn’t a destination but rather a process. 

It’s a process of moving from unconscious incompetence to ultimately unconscious competence.

In your pursuit towards trading mastery let the following 9 steps guide your actions and intentions.  

These steps are adapted from the book - Handbook of Coaching - A Developmental Approach.

 

1. Know yourself.  

 

"It's not the mountain we conquer but ourselves."  - Sir Edmund Hillary

Leaders and thinkers through the ages have imparted this sound maxim that we must always start at home with self-knowledge before we seek to know and understand the external the world. 

"For most retail traders, trading is a solitary effort and...

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The Trading Journey

trading trading journey Oct 10, 2017
 

 

In this lesson, we’re going to be talking about the trading journey, the realities of the markets, and what realistic success milestones look like for most traders.

The following fundamental market realities and truths are ones that all traders need to accept so that they can appropriately set the proper expectations and goals.

If your goals don't match up to reality you are doomed to disappointment and failure.

  • You are competing against the best of the best from day 1
  • Trading is a skill and not learned via rote memorization
  • The market rewards randomness
  • Most of us are not wired to accept the realities of the market
  • For most traders, progress is an evolution, not a revolution
  • Trading is something you do, being a trader is someone you become.
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A Trader's Daily Routine and Checklist ✅

trading trading routines Sep 17, 2017

 

As we have explored throughout this month's articles on the theme of "Trading Routines", trading routines and rituals are constructs we can use to cue attention, mobilize motivation, increase confidence, improve focus and situational awareness, and prime performance.

Given how powerful routines can be let's take a second to consider how best to construct them.

Routines are essentially a set of habits. Whereas habits are a conditioned set of behaviors that have developed over the repeated reaction to a particular cue.

It's important to note that habits in themselves are neither inherently positive or negative.
For instance, it's just as easy to develop good habits as it is to develop bad habits.

So what's the key to developing good trading habits?

INTENTION

Excellence is an art won by training and habituation: we do not act rightly because we have virtue or excellence, but rather have these because we have acted rightly; these virtues are formed in man by doing his...

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Smells Like Routine Spirit ⏰

trading trading routines Sep 04, 2017

As we announced in last week's newsletter, this month's trading theme is "Trading Routines".

This week's lesson comes from our "in-house" risk expert - certified risk manager and frequent contributor, Michael Toma, who shares some perspectives on the power of routines and the benefits of triggers in cueing desired behaviours and actions.

 


The Power Of Routines?

Given all the things you can’t control when trading, I guess it’s only fitting to cram in all the things you can control - our actions, tools, strategies, and of course, our crazy routines.  

I’ve heard some wild ones throughout my career but in the end, it’s the trader themselves who is comfortable with their rituals supported by endless belief in its value.

Can these routines we praise actually trickle down to make us more successful?

When the topic is discussed at our upcoming meetup on September 19, I’m confident there will be at least one routine that each attendee follows...

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The 2-5-1 Trailing Stop Strategy 🛑

trading Aug 07, 2017

This month's theme is "Trading Setups", and one of the most important aspects of any trading setup is how one manages a trade once a position has been entered into.

We've all heard the old adage that we need to "cut our losers short, and let our winners run", and in a previous Weekly Perspectives, we've written about the importance of how this plays into risk management.

However just as challenging for some traders is what to do when faced with a winning trade. How does one balance the desire to keep hard earned profits versus taking the sure winner then sitting on the sideline and missing out on the big move?

Unfortunately, there is no right or wrong with regard to this aspect of trade management but simply tradeoffs.

There are many ways to construct profitable trading systems that can involve either taking quick profits or letting winners ride.

The emotional temptation, however, is to flutter back in forth between both approaches and in the end being consistently wrong with every...

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