The futures markets they are always a-changin'

Come gather round traders,
wherever you are.
We know that these markets,
are harder by far.

Accept that this change,
is just part of the deal.
Follow your plan,
with unwavering zeal.

You should look to grow,
in these difficult times.
Resolve to be the trader,
who advances during declines.

For the futures markets, they are always a-changin’

The markets, so far this year, have been hard to trade.

Traders ask me if they should change their strategy to accommodate the new reality of 2009.

Are the good trading markets of the past gone forever?

From my vantage point over 37 years of trading, I can tell you that the markets they are always a-changin’.

Today’s difficult markets are, in part, the result of a fundamental change in market participants that I have seen several times over my career. This fundamental change is the result of formerly-important market participants leaving the markets, never to return.

My experience shows that new major players will eventually come to fill the void, but until these new major players emerge, the markets will be volatile, illiquid and hard to trade. Importantly, my experience shows that these difficult times are excellent for learning to trade and for improving, honing and deepening you trading skills.

During the tech bubble of the late-nineties, people left their jobs in droves to make easy money as stock day traders. Tech funds flourished as the stock in dot-com companies with improbable business models rose to impossible levels.

When the bubble burst, many of these players left the market leading to several years of dull markets. Between October 2003 and June 2007, the VIX, the CBOE’s index of volatility, spent the entire time below 20.

Today, the VIX is 40. At the height of last fall’s volatility, the VIX reached 80. When the VIX first went below 20 in 2003, traders told me it was impossible to trade S&Ps. In time, most of these same traders adjusted their trading to the new lower volatility and did well.

In the early-eighties, many grain exporters merged or went out of business. Throughout the seventies these same exporters were among the biggest players in the grain markets.

Initially, the grain markets were illiquid and hard to trade without these important participants.

Like today, traders wondered if the markets that we had known were over, never to return. In time, the merged grain exporters became even bigger players. These larger grain exporters and a new category of major player, funds, became the biggest traders in the grain markets. The markets did not return to exactly the same markets as before, but they did become highly-liquid and very tradable once again.

The same thing will happen today.

The hedge funds and investment banks that left the market in 2008 will be replaced by another group of major players.

Who they will be, I cannot say. But, they will bring liquidity and they will bring opportunity.

Until the markets return to the liquid, flowing markets of the past, I would trade conservatively. I would not throw out my proven trading strategy in an attempt to adapt.

Instead, I would make certain that I was:

• confident in my setups,
• resolute in my risk management, and
• sure in my ability to execute my plan.

My goal would be to grow as a trader and to go forward in my trading account, albeit, at a slower pace than in better trading times.

I can help you use these times to prepare for the good trading markets ahead in my Electronic Trader Mentoring Program. You can find out more at: www.ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

My name is Bond - Jeff Bond

Can you picture yourself as James Bond in a tuxedo sitting at the Baccarat table at the casino in Monte Carlo with a beautiful girl by your side?

I can.

The first time I was ever in a casino, I wanted to be just like James Bond. Of course, I was in Reno, Nevada (the biggest little city in the world), not Monte Carlo.

I did have a beautiful girl by my side (my wife) and I had invested five minutes, or so, reading an explanation of Baccarat in the little pamphlet I found on the table beside the bed in our hotel room.

So, I was ready.

My wife and I agreed to limit our investment in my pretending to be James Bond to a few hundred dollars, which we split between us. We arrived at the Baccarat table well-dressed, confident and ready to break the bank at Monte Carlo - I mean, Reno.

As it turns out, I should have invested more time reading the pamphlet explaining Baccarat because, when I sat at the table, I did not have any idea what I was doing.

However, through no fault of my own, some of my bets seemed to work. My wife was similarly winning some of the time.

After what seemed like a long time and many winning and losing bets, I was nonetheless out of chips.

My wife gave me a few of her chips and we played for a while longer until we were both out of chips.

I suggested we adjourn to the bar so that I could get a Martini (shaken, not stirred). At the bar, my wife opened her purse and I saw that it was filled with chips.

Unbeknownst to me, she had taken a few chips out of each winning pot and stowed them in her purse.

I was elated.

I was indeed James Bond, not some chump from the suburbs.

We cashed our chips and went to a late show where we saw Alan King.

Being smart about money in trading is just like that.

You need to take your profits off the table and play with a set amount of money. When your account is ahead by some predetermined amount, take the money out. Trading with a larger amount of money than you planned can cause you to trade with less discipline. Do not leave more money in your account than you need to reasonably trade.

When your account is ahead by $1,000, $5,000 or whatever you decide, give your broker a call and ask for the overage to be sent to you. Only increase the money in your account in a planned well thought-out basis and only when you are ready to increase the size you are trading.

Regularly taking money out of your account may not turn into James Bond, but, in my experience, it does help in getting the girl.

If you would like to take the gambling out of your trading, check out my Electronic Trader Mentoring Program at www.ElectronicFuturesTrader.com.

Wishing you success in 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

The Year of the Rat gives way to the Year of the Bull

Today starts the Chinese New Year.

Last year was the Year of the Rat.

This year is the Year of the Bull.

The nearby chart tells the well-known story of 2008, the Year of the Rat.


Traders in my generation used to tell all the younger traders about the stock market crash of October, 1987.

We referred to it reverently simply as “The Crash”.

The Crash was breathtaking, and the horror of it seemed even more spectacular over time as the story was told, and retold. However, as bad as it was, the Crash of 1987 lasted about a week.

In contrast, 2008, the aptly-named Year of the Rat, unfolded over much of the year. Its most spectacular volatility extended over several months.

I do not know what we will be calling 2008 in thirty years, but, for now, the Chinese may have it right as the Year of the Rat.

Could the Chinese again be right in calling 2009 - the Year of the Bull?

Could the stock market have already fully-discounted our negative economic reality?

In describing his investment philosophy, Warren Buffet said that, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Certainly, the entire world is fearful, but is it time to be greedy?

As to my studied opinion developed over thirty-seven years trading futures, I haven’t a clue.

What I do know is that disciplined traders will be rewarded and undisciplined traders will be punished.

I know that traders who follow their plans will do well.

Traders who limit their losses when they are wrong and press their advantage when they are right, will be handsomely rewarded.

I, also, know that focusing on the past will not help.

According to Warren Buffet, “if past history was all there was to the game, the richest people would be librarians”.


Make 2009 your personal Year of the Bull, join my Electronic Trader Mentoring Program. A few spots remain available to start in mid-February.

Once again to quote, Warren Buffet, “risk comes from not knowing what you're doing.”

I can help you know what to do whether 2009 turns out to be another Year of the Rat or, as the Chinese predict, the Year of the Bull.

Wishing you success in your trading, Jeff

Copyright ©2009 by Jeff Quinto
All rights reserved

Grading your trading

Over the years, I have developed an evaluation system for futures traders. I use this rating system to help traders, I coach, in the Electronic Trader Mentoring Program to upgrade their trading.

I present "grading your trading" here as a basis for defining where you are in your trading and to help you establish your trading goals for 2009.

Once you have determined your skill level, from A to F, you can work to upgrade your trading, one grade at a time. Rating your trading based on your skill level and working to advance to the next grade is a better way to establish trading goals than only making monetary goals. Rigid monetary goals may be too easily achieved in a good year and not achieved at all in a difficult year. By focusing on enhancing your trading skills and your consistency, your trading profits will naturally improve.

My grading system starts with the failing grade of "F" and advances to modest improvement as a "D" trader. I estimate that 75% of all traders are in these two categories.

Only 25% of all traders who attempt futures trading advance to become "C" traders. These traders have a chance of meaningful success, although they are not there, yet.

10% of traders advance to become "B" traders and only 2% of traders, in my grading system, advance to become "A" traders.

What grade are you?

Grade F traders lack a plan, lack discipline and do not know where to go to find either. "F" traders encompass a majority of all futures traders. They buy a surefire system that doesn't work. Then, they join a chat room that doesn't help. They copy other traders and look for the great setup that will make them rich. They claim to have discipline only to lose it when things do not go their way. They are searching for answers, but they do not even know the right questions to ask.

Grade D traders have a plan that they do not consistently follow, setups that they do not always take and rules that they often violate. "D" traders are traders who realize that they need a plan, that they need rules and that they need discipline. But they do not consistently follow their plan, stick to their rules or live within the discipline they set. I estimate 25% of all traders are in this category. Trading for these traders is not only unrewarding financially, but it is unbelievably frustrating.

Grade C traders have a plan, are usually disciplined, and are able to pay their trading expenses from trading profits. "C" traders have surpassed 75% of all traders. They are able to hold their own in their trading account, but they have not yet developed their trading to the point where they are able to make meaningful, consistent profits. This is the gateway to trading success. Once you can beat the market and pay your trading expenses, you can work on your consistency and, over time, you can build your trading size, so that you can move forward to the higher grades.

Grade B traders have a well-developed plan, are well-disciplined and are able to make consistent profits. "B" traders are an exclusive group. They have a well-developed plan that they execute without fear and without hesitation. They understand risk and always keep their downside discipline. The major skill they lack that keeps them from moving from being a "B" trader to an "A" trader is the ability to fully exploit opportunities.

Grade A traders represent only 2% of all traders. These traders are set apart based on their ability to fully capitalize on opportunities while holding to their plan and keeping strict discipline. "A" traders are those few traders who not only have a solid foundation of trading - robust setups, clear trading plan, downside risk management, but they have the key ingredient to meaningful success in futures trading.

They regularly exploit opportunities. These greatest traders in the world are defined by how they "press" their advantage. The secret to this highest level of futures trading is exploiting opportunities by the trade, by the day and by the year.

Do not despair if your honest assessment grades you lower than you predicted.

Just know that you need to work toward becoming a better trader. You do not need to worry about what you will need to do to become an "A" trader. Instead, just concentrate only on moving to the next grade. Once you reach that grade, and only then, work toward the next grade.

In this way, you will be working toward improving your trading in a measured, logical way knowing that to become a "B" trader you must first master the skills of a "C" trader.

I can help you advance in your trading during 2009.

Traders in the Electronic Trader Mentoring Program will tell you that you need a trading coach. I am that trading coach. Simon Townshend, a successful British hedge fund manager with whom I work described the progression in trading and the advantage of using a mentor/trading coach when he said:

"Less than 20% of traders are profitable. Probably only 5% are really profitable and probably only 2% are consistently really profitable. To join the 2% club is not easy, but it is possible. However it takes all three of those elements mentioned earlier - the right strategy, the right discipline and the right top class mentor. Certainly you can reach the 20% mark without the latter provided you work hard enough. But however good your strategy and your discipline, the 2% club will almost certainly elude you if you are working alone. That is why Tiger Woods does not work alone and why the top traders all have mentors and buddies working alongside them too. Fortunately for me I searched and found a mentor that is perfect for me. Fortunately for you, you know his name and he could well be that perfect buddy to propel you too into that exclusive 2% club."

Contact me if you would like to make upgrading your trading your #1 New Year's resolution for 2009.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Acres of Diamonds

Acres of Diamonds was the title of a speech given over 5,000 times by Russell Crowell between 1900 and 1925.

The speech was very popular and Crowell was paid to give the speech all over the United States. He used the proceeds from giving the speech to provide tuition for over 1,400 students to attend what became Temple University in Philadelphia.

In the beginning of the speech, Crowell tells the story of a farmer who sold his farm and left his home in a futile effort to find diamonds in a far away land.

The new owner of the farm found that the property was covered with black rocks that when broken open revealed diamonds inside.

The farmer left his home in search of diamonds when, in fact, he had acres or diamonds all over his farm.

Conwell, then, tells the story of a rancher in California in 1847 who sold his farm near Sacramento in order to move further south where he had heard prospectors were finding gold. The rancher sold his farm to Colonel John Sutter who built a sawmill on the stream running through the ranch. A year after the sawmill was built, gold was discovered in the stream. The discovery of gold at Sutter’s Mill started the California Gold Rush. Since then, over $38 million in gold has been taken from Sutter’s Mill.

Nothing is known of the rancher who sold out to Colonel Sutter in search of gold further south.

The point of Conwell’s two stories was that good fortune is often waiting for you wherever you are. You do not need to search far and wide for success. It can be found right here and right now, if you just know where to look.

I was taken by the Acres of Diamonds story the first time I heard it, many years ago.

Today, I think that the story provides a great parallel to finding success in futures trading.

Success in futures trading, in a way, is very simple.

Most unsuccessful traders try to make it more complicated than it needs to be in the hope that they will discover some secret. In fact, the secret to successful trading is not even a secret.

Success in futures trading is not about finding the most complex way to trade, it is not about enrolling in the best live chat-room, or buying some great trading system.

Consistent long term success in futures trading comes from

• finding a methodology that works for you,
• documenting that methodology in a clear, detailed written trading plan, and
• then, exploiting that methodology while following your plan to the letter.

A workmanlike plan unfailingly followed will always beat a great plan executed inconsistently.

You see, you probably do have acres of diamonds all around you, if you just know where to look.

If you would like my help in finding your acres of diamonds, please feel free to contact me at Jeff@ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Maximizing 2009 - data mining for futures traders

Several years ago, I attended a luncheon meeting at the Economics Club of Chicago in which Bill Gates spoke.

I had never heard Gates speak in person and I was ready to hear all about the newest software and latest technology. Much to my surprise, and disappointment, all Gates talked about was what he called "data mining".

Gates thought data mining was important.

He said that by analyzing data collected throughout your business, you could find revealing insights leading to improvement.

To tell the truth, I did not get it.

For me, the meeting was a bust. I came to hear something useful and exciting and all I got was a discussion of data mining. My reaction to Bill Gates was similar to the time some years ago when a wealthy, older family friend in Iowa told me he wanted to talk privately with me after dinner.

He said he wanted to tell me something important.

After dinner, he and I went downstairs away from the rest of the family to play Gin Rummy (this is Iowa, not New York City) and, for me, to hear what he had to say. He cleared his throat, looked at me seriously, and told me that he thought the stock market was poised for a rally.

Poised for a rally?

Was he kidding? No one wanted to buy stocks, least of all me. Stocks hadn't done anything for years.

The stock market was actually lower, at that time, than it was ten years before when I first became a stockbroker. I was disappointed. I thought that he was going to tell me something important.

Did I mention that our long-ago Gin Rummy game took place in early-August 1982, just days before the Dow bottomed at 777 and began an eighteen year bull run to over 11,000?

Just like hearing about data mining from Bill Gates, I did not get it.

However, today I saw a dramatic example of how mining the data from your trading can lead you to important discoveries.

This may not be exactly what Bill Gates had in mind, but it demonstrates the importance of keeping detailed, accurate records of your trading and periodically analyzing your records.

One of the traders in the Electronic Trader Mentoring Program took my advice and analyzed his trading in 2008 during the dreaded two weeks off from trading in late-December.

As you might expect, he tallied his trades by month. He listed them by setup and he figured his winning percentages and losing percentages.

Lastly, he separated trades that matched his plan from trades that were impulsive and did not fit into his plan. The impulsive trades were obviously the result of a temporary lack of discipline and nearly all of them were losers.

In this case, the lesson from looking at his past trades could not have been clearer. Had he not done these emotional, out-of-plan trades, he would have more than doubled his result for the year. Instead of making a 15% return on equity in his trading account, he would have made almost 40% return in 2008. Maybe, this was what Bill Gates was trying to tell us.

My suggestion is that you make a New Year's resolution to analyze the data from your trading in 2008. There could be some easily-implemented change that you can make to advance your trading in 2009 without taking more risk - in this trader's case actually by taking less risk.

If you would like my help in finding and documenting a methodology that works for you and then exploiting that methodology in my Electronic Trader Mentoring Program, please contact me at Jeff@ElectronicFuturesTrader.com.

As your trading coach, you can let my hindsight be your foresight.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Jeff Quinto’s Guest Lecture to the LBR Group on learning to trade, sizing, dry spells and the grind

Linda [16:09:32]> HI Gang! We have a guest lecturer today, Jeff Quinto. He works with the traders in the Photon Trading Room, part of FuturePath Trading. He will give an introduction, talk about a few things, and then take questions. He knows a lot about the grind of trading, including long flat periods, and frustrating days.

If any of you wish to ask Jeff questions after the talk or get in touch with him, his email address is: JQ@fptrading.net

JeffQ [16:11:28]> Hi everyone!

Good to be here again! I had a great session last year.

I would like to do is talk a bit about getting started, dry spells, the grind and, then, take questions - that was most fun for me last year, hearing your questions!

Let me tell you about the best trader I was ever involved in training. If I told you what he made in a recent year you would be impressed, but that is less important than the struggle he went through to get to that point which says a lot about the dedication it took, but also, that it is possible to do this.

The first thing I want to say is that as great a trader as he is today, it took 9 months before he even broke even But, after 9 months, he started making money. He slowly and steadily increased his profitability.

Learning to trade and being successful takes a long time. One of the reasons that people fail in trading is because they give up part way through the learning curve. You DO have to make progressive improvements in your trading, but it still takes awhile. It can be years, too, not just 9 months. Any occupation where you can make this kind of money takes years to learn. It is too lucrative a business for people to make it that quickly. The reality is it can take even up to three years to find a consistent groove.

Throughout this period, though, you should be making progress. You need to be keeping track of your progress. Record keeping is vital to keeping track of your progress. You need to be able to judge how and what you did.

As this top trader became more proficient, we devised methods for him to increase his SIZE as the market rewarded him and decrease his size in bad times. When one increases size they often tense up. You need to be able to do this automatically; as you make money increase size; and as you have flat periods or draw downs, decrease size.

On days that are WORKING for you, you NEED to PRESS!

This is the KEY! Press on Good days - if you are having a good day press and press.

If you are having a bad day or are out of synch, stand aside - lose small amount only, then say you are not in the groove and walk away from it.

Which leads to the GRIND - what do you do, when you come in each day and you lose and you are disappointed and you are down.

WHAT TO DO?

The first thing I note is that we all have control over only one thing in life – ourselves.

So when I get down to the grind, I try to do things that are positive for me - exercising, eating right, sleeping - doing all the things that we should be doing, but somehow we do not do them. That is one way that I fight the grind by being as positive as I can - I can only control myself and do positive things for myself. I can not control the market.

freddy [16:10:34]> Jeff - talk to me about frustrating days! thx!

JeffQ [16:24:45]> Frustrating Days: The first thing you have to do is have a trading plan and then look for good trades. My brother-in-law always used to say, “If you come to work each day and make good trades, the results will take care of themselves.”

You have to be CLEAR on what you intend to do. You have to be honest with yourself which is something that people do not always do. When you are frustrated, you make trades that do not fit your plan and you are making trades you should not take. You end up SABOTAGING your plan.

Are you frustrated because the market is not accommodating your plan, or are you frustrated at your own actions and performance?

The trader I was talking about earlier, would simply walk away on the frustrating days. He would be mad that he lost on the day, but it would not change his attitude. Some days you are in tune and some times you are NOT. It is just part of the probability of things.

rajhima [16:25:09]> Jeff: Any hints or tips on increasing size?

JeffQ [16:29:31]> My idea regarding size is that you prearrange how you are going to handle size based on your performance. You must have a plan that:

if you are up, say, 20 ticks - you trade 2 lots;
if you are up 40 ticks you trade 4 lots.

You must make sizing automatic. It must be easy to implement. It must be decided in advance. If your account is up N %, you increase size by x amount. It must be predetermined and vice versa. If you are down by N amount, you reduce size - all according to a prearranged algorithm that suits your risk profile and amount of capital you have. It must be easy for you to implement this for it to work properly.

vince1 [16:26:13]> Jeff - so talk to us about patience as it pertains to the good days and bad days.

JeffQ [16:31:47]> Let's talk about patience - I think the good trades ought to work immediately, so I do not give flat trades any patience. If it does not work when I think it should, it is suspect. As long as a trade is working in your favor, you have to stay with the trade. Patience to stay with a good trade comes with experience. If you get out of a trade because it looks like it faltered, but, it is only a pause, you have to be prepared to get back in.

Let me tell you the mindset of a very short term trader, in three progressive parts:
1) The market is designed to pay you money;
2) A good trade works immediately; and
3) anything that does not work immediately is suspect.

In this way, what I am doing is looking at the market and saying, the market is designed to pay me money if I can figure out how to operate within it. Because I am convinced it should pay me money, every trade I put on should explode in my direction. And,
if it does NOT do that, then I am quick to get out of it.

Now, we all know that every trade we do does not explode in our direction. The fact is, most trades are more complicated than that. But, you see how it affects your ATTITUDE. That is the attitude you should have. Of course, it is dependent on time frame - working on a daily time frame with immediacy versus working on 1 minute time frame are naturally two different things.

Everyone takes a different number of trades and has his own style - an active trader may trade 20 times a day.

iggie [16:37:21]> do you have any audio tools for purchase r/t to your mentoring concepts?

JeffQ [16:39:23]> Our Mentoring Program is designed around one-on-one daily interaction because people learn in their own way. Your trading needs to be a reflection of your own personality. I would not be disappointed if someone was learning more quickly than I was or making more money then I was making. You need to develop a plan that makes consistent returns for YOU.

In terms of a plan, in the Mentoring Program, I use a written template for a plan, but anyone can make their own template. Try to put down on the plan:

what setups you are going to take;

the hours that you are going to trade;
put in the most detail that you can; and
DEFINE what you are going to do during the day.

In the case of my students, we share these trading plans between the trader and me. First, it holds the trader accountable for doing what he planned to do. In your case, whether you tell someone else about it or keep it to yourself, you have to make yourself accountable as to how you execute your plan.

Your plan can EVOLVE over time, but you should not change every ten minutes. I would be very slow to add new setups or change the way I do things. A well thought out plan should be something that you are convinced can work.

Things that are related to risk should NOT change quickly - what are you going to do if you have three losers in a row, or lose x amount - that is something that should NOT change because that is what makes you an effective trader.

One of the things that I see time and again with people - one of the things that I see is that this great plan gets thrown out the window on frustrating days and it becomes
free form trading, a veritable trading free-for-all. This is where people really do a great disservice to themselves.

They have a great plan. Tey just do not have the discipline to stick with it. Here it helps to have someone else to talk to. Have someone that you are held accountable to – to ask you did you follow your plan? It helps to have someone to share this with at the end of the day.

acies [16:39:51]> How do you feel about stop and reverse trades as a successful trading style?

JeffQ [16:45:21]> This is not my style. I believe in trading WITH the energy. Over my years of experience, the real money is made trading with the energy. What you describe is just a different style from mine.

There are all types of things that people do that lead to successful styles, though I do not try to push people into a specific style of trading. It is important for you to come up with your own trading style.

In our Mentoring Program, I help traders focus on risk and how to increase size and decrease size and, then, I hold traders accountable to it. So, the style is less of an issue to me, if it is actually working for YOU!

iggie [16:44:55]> Do you have specific tricks/strategies you use to build discipline in the traders you mentor? If so, can you give some examples?

JeffQ [16:48:57]> In terms of discipline, I meet with my traders over the Internet every day and we go over their trades. Both the trader and I know clearly what they were intending to do and we look and see if they actually did it. Sometimes, I see a trade that just does not fit and I tell them it did not fit or that it was “bone-headed” and that helps tp hold them accountable.

Because we have a plan and we are executing trades within that plan, I do not want to hear about a trade that is not in the plan. Over time, we can add new trades to the plan. Then we can execute those trades. Cut and dry.

A lot of this comes down to accountability. That is a problem with people because they are out there in their homes and offices by themselves with nobody looking over their shoulder to check on them.

In addition to holding traders accountable, as I have been in the business a long time, I can tell you if there is something that has greater odds of working or not. In the long run, you must build your own way of trading though.

pearlstone [16:51:06]> Jeff: could you give an example of trader having a profitable day and how to press winnings?

JeffQ [16:52:35]> OK, let’s say that you start the day as a 5 lot trader. You are now up 10 ticks on 5 lots (10 ticks times 5 contracts). Now, you increase your size so that you are a 10 lot trader, making the same trades, doing the same things, except that you are a 10 lot trader.

I like to talk about TICKs, not Dollars. It puts money in the abstract that way. We are just making ticks here - same thing with increasing size, none of it should be a big deal. A trader that presses something knows he has the trend for the day pegged, so if you have the right game plan or road map for the day (which is impossible to do every day), but when you DO have the market pegged, keep trading it, keep increasing size as you are rewarded.

If your equity backtracks by a certain amount, call it a day. The MOST debilitating thing you can do if you increase size is to keep the full size on and then lose. So, in my scenario, you are only giving yourself so much more to do. You have to be willing to stop if you start backtracking – it is VERY important not to turn a winning day into a losing day. Trade aggressively in the direction of your game plan WHEN the game plan works.

There are many days and times of day that are not productive. The morning tends to be the time of most opportunity. Lunch can die down, don’t press trades at lunch if there is nothing going on..

Here is something I advise, if you have a BAD losing day take the next day off and do something you enjoy. Do not do it as punishment. Do it to take a rest and recharge your batteries.

What most people do is they come back again and again and repeat the same mistakes. There is nothing wrong with taking a breather from trading, be it an afternoon or a few days.

Also, it is important to have hobbies that give you pleasure and are very different than trading. I like to hike and do things outside. That is how I get joy in a way that is different than the markets.

When I work with traders, they put their trades on a CHART. They either print off a chart or put it on your computer showing where you bought and sold during the day, as well as how many ticks you made or lost and how long you held the trade. This is a great tool because when you put your trades on a chart, you can see absolutely what you did and not what you THOUGHT you did.

You can see when holding a trade made sense or when you should have gotten out sooner. All these things become evident when you look at a chart with your trades put on it. Another thing we do as part of all trading plans is to keep statistics - any stat that will be helpful as to how you are doing.

Here are some of the obvious ones:
average hold time for winners
average hold time for losers
maximum hold time for winners and losers
the amount of heat that you took
and then the distribution of ticks per trades like a bell shaped curve

From these things, you can get an idea of what you are doing . I really like the HOLD TIME for winners and losers. People FOOL themselves with what they are doing with actual trades. They THINK they hold their winners longer then their losers. Often, the opposite is the case. Look at this over time. It becomes more subtle with a more experienced trader. It is really important information

Linda [17:06:08]> Sounds like you could also use number of bars as well, so as to adjust for trades off hourly chart versus trades off 5 minute chart.

JeffQ [17:06:18]> We look at minutes most often.

Here is another SURE SIGN of someone not making it:

They hold losing trades overnight

In my world, you would never hold a losing trade overnight. Why would you hold any losing trade overnight - it shows up on your statements in the morning

If you made a rule that said I WILL Carry NO trades with a debit overnight, I bet your trading would improve by a huge percentage.

iggie [17:09:10]> What can I use to track time?....a cooking timer or what?

JeffQ [17:10:16]> A cooking timer might just be the ticket! I have people who use EGG timers and turn them over with each trade. Of course, your trading style can not change to anything longer or shorter than the time it takes to boil an egg if you do that.

Another idea would be to use a stop watch. We had a guy in the trading room who had two stop watches around his neck at all times. He looked like he was timing race cars, but it worked for him.

The place that you trade is important, you need to control your environment at home. It needs to be quiet. You should not be disturbed. The point is, control the things you CAN control - yourself, your environment, and recognize you can NOT control the market.

You need to be serious and focused the whole time you are trading - FIGHT DISTRACTIONS.

Here is story for you – SPECIALIZE – successful traders often excel in one market, but do not trade well in other markets. The best bet is often to concentrate where you make your profits trading, often it is in just one market.

Linda [17:17:40]> Nothing wrong with that - sounds like you should know your game and what works best for you, and have patience if you are still going through the learning curve and finding out!

vince1 [17:17:32]> What is the best way to focus on multiple markets - sometimes I miss trades because I am babysitting a position - how do you figure out the most effective amount of markets to trade for each individual.

JeffQ [17:18:32]> You are going to miss moves. That is OK. You can only focus on so much. Sometimes you are focusing on the right market and sometimes the wrong one, but you do not know in advance.

Linda [17:19:30]> Sort of like, you get the direction or main play right or you do not -same with picking markets. Sometimes you pick the right ones, other times, they might stall.

JeffQ [17:20:22]> The new Photon Trader Pro trading software will have tools that may be helpful, such as trailing stops of your design, so you do not have to baby sit a position. Again the best trades work right away, in my world, I would not be babysitting a trade - just have stop in, manage the trade, but do not watch every tick on longer term trades - it works or it does not.

Linda [17:21:38]> Thank-you everyone for your questions! We will clean up the transcripts and have them posted for your review tomorrow. Any last Questions for Jeff?

rajhima [17:21:34]> There are lots of days when I make good money in Currencies and give everything back in Indexes and vice versa...Any hints at how to manage these? In other words, I feel like being in a zone in Currencies and carry that into Indexes and get whipped.

JeffQ [17:22:58]> It might be helpful to have a risk plan for each market since they are totally independent - each market should have its own limit and risk parameters. Each market should also have its own separate sizing strategy, so you do not give back money. Think about starting over again when you start to trade the Indexes.

My email address is: JQ@FPtrading.net
my number is: 312-987-8124

If anyone is in Chicago or comes to this area, I invite you to stop by my office to talk about trading, see the trading room, and also, if you wish any of you are welcome to contact me about coming to trade for just a week or two out of the trading room if you want a different experience. Our traders can use TT trading software, Photon trading software, and CQG trading software.

We are all waiting for the new release of the Photon Trader Pro trading software that has trailing stop functions on the chart that are simple to use! Stay tuned!

Linda [17:28:59]> Thank-you, Jeff, for taking the time to share some stories, advice, and words of wisdom. I like the emphasis on accountability to your plan that you have in your program.

JeffQ [17:30:02]> Thank-you for having me as a guest on your site, Linda. Thank-you for your questions, everyone and I look forward to meeting more of you one of these days! Again, please feel free to contact me if you have any follow up questions that come to mind!
Good Night!

Linda [17:31:06]> Thank-you Jeff
Excellent lecture
Good night!