November 17, 2011
We were joined by three great guests on Trader Talk and they were kind enough to stick around and answer a few questions following the official interview! We have put together a brief transcript of the interview below as well as a copy of the recording.
Bette Crowe – RightAngleTrading.com
Todd Mitchell – TradingConcepsInc.com
Chuck Crow – DTITrader.com
How long did it take you to find a trading method that worked successfully for you?
Bette – It took me a long time. I started in the brokerage business in 1984, before the age of the computer. It took me about 16 years. In 2000, I left the brokerage industry and started focusing on my own.
Todd – I started trading in college, 1986-87. I learned from my father, and when I graduated in 1990, I had the method down; I used a lot of trial and error. My method is based on price action, and the natural ebb and flow of the market.
Chuck – The E-mini S&P is really all about price action. For me, the numbers just kind of clicked. I think developing a consistent, successful method, is a constant development. As long as I continue trading, I’m still searching for that consistency.
What routine do you follow each day to achieve the best results in your trading?
Chuck – You always want to develop the market recap. I go in looking at a 30 minute chart, which gives a pretty good picture of the market. What numbers is the market paying attention to in any given day? That’s the method that I use, the routine that I go through. I take me out of the equation and look at what the market is doing. Look at the day by day action of the market, which will give you a pretty good picture of what the market is doing.
Todd – I have a written out check list that I go through. I journal my thoughts and beliefs about everything that is happening that day. I do look at the bigger picture off of the 30, 60, or daily charts. I also record myself through Camtasia, taking the trades that I take so my students can recap the trade and learn through it. I’m trying to get them inside my head so they will know why I entered and how I manage a trade. That makes me even more disciplined. It’s all about discipline and controlling your emotions. That has made me a better trader. Going through a constant routine does wonders to your bottom line and your trading success.
Bette – It starts in the evening, the night before trading. And I get up well before the market opens, so I’m alert and awake and ready for the day. For the first 2 ½ hours, I’m trading futures. I follow several of the ETFs. After the trading day, I really do an analysis and a postmortem on what I did. It’s very easy to cheat yourself.
If you had to pick one trade idea or thing you are looking for in the market (long or short term), what would it be?
Bette – We have had lower volumes and it really is a day traders market. If I had to buy something now, I would look at SDS.
Todd – I’m a day trader, I do swing trade, but it’s very tight. I look for certain price patterns. I definitely use the triple funds. I’m pretty short term. My risk to reward ratio is at list 2:1, reward to risk. It’s a matter of if I’m taking out or not.
Chuck – As a day trader, you typically go where the market takes you. One of the things I like to look for is, is it possible for the market to challenge the beginning of the month. As we start closing into next week, and coming towards the end of November. It wouldn’t surprise me that the market would come back to the beginning of the month number. I think timing on a long term basis, and challenging those opening numbers. And challenging the opening number of the year. The market can make a very big statement as we get closer to that number.
Todd – Have you adjusted your trading method in the e-min S&P’s with the current volatility?
Even though I’m continuing to learn, my core of how I trade today is the same as it was in 1991. Markets don’t change, but the volatility cycles. Everything that I do is based on the volatility. I use the same principles and set-ups.
Bette – Why do you feel ETF’s are such powerful trading vehicles?
I think they’re a fantastic invention. Most people don’t realize that they are now 35% of the total market volume. You can go long or short, or the inverse of that if you’re bearish. They can’t be halted the way a stock can be halted. In a stock, you are stuck and you can be halted for months. The news doesn’t affect them as much as a stock. On the leveraged ETFs you really have to be careful about how long you hold them. They’re leveraged by buying options and futures. Hold them for less than a month. ETFs have options, so you can buy a call option on an ETF, rather than putting all the cash out there for it.
Chuck – Why do you find it important to know the yearly and monthly open of stocks and futures?
We like to believe that the markets are all about economics, but you see that the markets are really about challenges that occur. 1256 is an incredibly big number in the S&P Futures. If you’re above it, it’s an incredibly good year. There’s not a lot of focus on index futures or the DOW or NASDAQ. When we’re looking at these index futures, you see things you might not have seen just by looking at the index of the stock. We’ve got to have those milestones, the yearly opens, and the monthly open. It really does become a run to the finish. How is it going to project for the next month, the next year, etc? If you don’t know those opens, then you’re trading behind the 8 ball.
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