Pictures from the video shoot for the three-part CME series on learning to trade

What an amazing experience!

Using Jeff Quinto's "V" to supercharge your trading

Have you ever been trading well and decided to increase the number of contracts you were trading? And, just as you increased the number of contracts you were trading, you started losing money on every trade?

To add insult to injury, your losing trades were done with more contracts than your winning trades.

All too often when we increase our trading size, we unconsciously alter our trading from the creative, effective trading at smaller size to ham-handed, tentative trading at larger size.

To be most effective, increasing your trading size needs to be preplanned and natural.

Your trading size should be increased when the market is rewarding you and decreased when the market is not rewarding you.

To assure that increasing your trading size is natural, you should have a strategy for adding and decreasing contracts clearly outlined in your trading plan. I advise even new traders to have a strategy for adding contracts in their first trading plan.

As an example, you could decide to trade your base position, ten contracts, until you are up 30 ticks per contract in a day - at which point, you would trade the next size increment, fifteen contracts. You would trade the increased size, fifteen contracts, until either the productive part of the day ended or your P&L dropped below the 30 tick per contract threshold - at which point you would revert back to trading your base size, ten contracts.

Reverting back to your base size once you fall below the threshold for increasing your size is very important.

Too many traders increase the number of contracts they trade when they are being rewarded and do not reduce their contract size when their P&L drops below the preset level.

Don't let your ego prevent you from reducing your size. Staying with increased size when the market is not rewarding you is tantamount to falling on your sword.

Now, for what traders in my Electronic Trader Mentoring Program call Jeff Quinto's "V".

Think of the shape of the "V".

Start your trading each day with your base size represented at the middle of the "V". If you lose money, you reduce your size, as if you are going toward the narrow bottom of the "V". However, as your profits build during the day, you should increase your size as if you are moving toward the upper, wider part of the "V". If you think of my "V", it will help you conceptualize adding and subtracting contracts as the market either rewards you or penalizes you throughout the trading day.

Using the "V" to exploit winning days and reduce losses on losing days is one of the concepts I teach traders in my Electronic Trader Mentoring Program. You can find out more about the program by going to www.JeffQuinto.com.

Wishing you success with your trading, Jeff

Copyright © 2009 by Jeff Quinto, all rights reserved

Making decisions with imperfect information

A man with a watch knows what time it is. A man with two watches is never sure." Segal's Law

Successful trading comes from being able to make decisions with imperfect information.

However, like the man with two watches, we often try to look for multiple indicators to confirm our decision before we make a trade.

After all, we want as much going for us as possible.

But, waiting for everything to be aligned in order to make a trade will not lead to success.

By the time anything becomes completely obvious, it has already happened.

As an example, let's say we put 100 people in a field on a hot summer day with the sun beating down on them and not a cloud in the sky.

Then, let's ask all 100 people, if it is going to rain - with not a cloud in the sky, almost no one would predict rain.

Let's say a few clouds enter the sky and we ask the same group if it is going to rain.

This time a few more people are likely to predict rain.

Now, let's say that the sky fills with dark clouds.

When we ask the same 100 people if it is going to rain, most will say it is going to rain.

The only way to get the entire group to agree that it is going to rain is if it is actually raining and they are all getting wet.

This is how decision making in trading works.

If you wait for perfect confirmation of what you are predicting, it will have already happened.

Looking for more information, like the man with two watches often only serves to confuse your decision making. This is the reason that I coach traders to concentrate their focus in one timeframe on one chart.

I have traders in the Electronic Trader Mentoring Program who successfully glance at other timeframes for context. But, constantly diverting your attention from one timeframe to another will only result in your being confused.

Meaningful success in trading comes from learning how to make rational decisions before the outcome becomes obvious to everyone else.

No matter how advanced you become in your trading, you are still going to have to make your trading decisions using imperfect information.

If you would like to learn how to dramatically improve your decision making power, check out my Electronic Trader Mentoring Program.

You can find out what other traders, like you, think of having me as their trading coach by clicking on the testimonials tab at www.ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

The deck is stacked!

I have heard dozens of traders lament that the market is fixed. They believe the deck is stacked against them.

I have a very different view of the market.

I believe the market is designed to pay you money.

I agree the market is fixed - that the deck is stacked. I believe that the market is stacked in your favor.

In reality, the market is neutral, but, for those traders who do three things, the deck is stacked in their favor.

• They consistently execute setups that have an edge;
• They cut their losses when they are wrong; and
• They exploit their gains when they are being rewarded.

If you start with an edge in your setups and you cut your losses and let your profits run, then the following is true:

• The market is designed to pay you money;
• A good trade works immediately and profoundly; and
• Any trade that does not work immediately and profoundly is suspect.

First - in my view of the market, the market is not against you. The market is designed to pay you money, if you just know how to extract the money it is waiting to give you.

Second - a good trade works immediately and profoundly. A good trade should explode in your favor the moment you execute it.

Third - any trade that does not work immediately and profoundly is suspect.

When a trade immediately explodes in the trader’s direction, surprisingly, most traders cannot get out of it fast enough.

They cannot believe their good fortune.

You should view this favorable explosion as the norm and let the market go in his direction until that market either stalls or retraces by a preset amount.

After all, if the market is designed to pay you money, then each trade has the potential to be a home run.

Of course, we know that most trades do not immediately explode in your direction. When faced with a trade that does not move or, worse, drifts against the trader, most traders make excuses for the trade and think of reasons to hold onto it hoping it is still going to work.

You should do just the opposite.

A trade that does not go in your direction should be given the minimum amount of room to work and, if it does not, it should be exited.

After all, each trade is just a small probability.

It is important to keep in mind that when you are in a trade that is not working, you are not able to see the next trade which has a better chance to reward you.

In conclusion, the deck can be stacked in your favor if you just understand that:

• The market is designed to pay you money;
• A good trade works immediately and profoundly; and
• Any trade that does not work immediately and profoundly is suspect.

I can help you make sure the deck is stacked in your favor in my Electronic Trader Mentoring Program.

To see what other traders like you think of having me as their mentor, check out the testimonials tab at www.ElectronicFuturesTrader.com.

To find out more, e-mail me at Jeff@ElectronicFuturesTrader.com and tell me a little about yourself and your trading.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto, all rights reserved