michaelday: âI will now try to outline one possible S&P emini trading strategy and if you could give me an opinion about it.â Sure. I just want to mention that all of my comments are filtered through my own preconceptions regarding the market and, therefore, I may see difficulties where you have none. In other words, your style may work well for you even though it doesnât resonate with me. I donât know where youâre at in terms of trading, michael, so please donât be offended if I throw in things for other newer traders that may appear to be self evident to you. âHowever my main problem is that I'm not sure if this entry strategy has positive expectation in the long run.â First, Iâd like to address the issue of entrys vs. exits. I think working on entry is very important but, initially, Iâd rather work on how I intend to manage a position once it is opened. Once Iâd devised a practical and effective method of trade management, one that not only strikes a balance between holding on for potential gains and preserving âin tradeâ profits but also can be altered to function maximally in different environments (i.e. opting for targets or tighter trailing stops in consolidating markets as opposed to greater freedom in a trending market), I would then begin to focus on improving my entry. Understanding how to manage a trade, rather than making an entry, is more likely to have a significant impact on a traderâs long-term success. Now, regarding trade management, I think it is extremely important to develop rules that allow one to determine the bias of the market throughout the day. These rules not only help traders to open positions in the direction that appears to be the most likely to produce profits, but also more importantly, gives one an idea of the environment that he/she is operating in so that a trader can begin to find ways to adjust trade management parameters accordingly. Creating these rules can keep you on the easiest side of the market. Can I write some run-on sentences, or what? âI am trying to base my trading style on "probability trading" similar to what Mark Douglas described in his book "Trading in the Zone".â I havenât read the book so if you want to explain the concept maybe I can offer some more specific comments. âI draw the lines on 1minute candlestick chart. (Yesterday's high, yesterday close, yesterday's low, PP (H+L+C)/3, and most obvious support and resistance lines from last 3 hours of yesterday's trading). All together 6 lines.â I like your use of important S/R, but as I donât use Pivot Points in my trading, I cannot comment on their effectiveness as triggers. I can say that I do not see S/R âareasâ or Pivot âlinesâ as triggers, though. I see them as filters that can help to guide my choice of a trigger. The first thing that comes to mind is that I would want to use the current open as an S/R area, as well. With the exception of the morning, I would tend to favor the long side above the open and the short side below contingent upon my filters. Throughout the day, I would continue to keep track of the S/R areas that develop as the day progresses as well as those areas that have been weakened by penetration. Speaking of triggers, I believe it is important to separate your indicators into distinct groups. Triggers and filters. Triggers will tell you when to enter and filters will help you to gauge how valid the triggers appear to be. Filters can also alert you to the need to alter your trade management to limit your exposure or risk. âIf there is movement through any of the six lines described above on increased volume I get in.â This doesnât tell me too much about how you choose to enter. What constitutes movement âthroughâ a line? Do you enter on close? If so, on a 1-minute or 5-minute close? Where are you placing your stop? Must the stop be violated on close? What constitutes increasing volume? Higher than the previous bar or a series of escalating bars? Iâm not trying to be a dick. It just comes naturally. Kidding. The point Iâm trying to make, probably poorly, is that it is hard to focus on just the trigger when anyone, including the trader himself, attempts to evaluate a system. The effectiveness of your entry, in P/L terms, is completely dependant upon your trade management. Simply altering the placement of your stop can dramatically affect your P/L. Therefore, a trader needs to always evaluate the entry plan within the context of his trade management parameters. As far as volume is concerned, hereâs the difficulty I see with the standard 1-minute indicator. Is it continuation? Is it capitulation? Who knows? In general, my take on 1-minute volume per bar indicators is fairly clichÃ©. Volume should be consistent with direction. If volume is roughly increasing when the market advances and dissipates when the market declines then Iâm thinking long side. The reverse for the short side. âAlso if there is bounce of any of those lines (here I am not sure if the volume should be incerasing or decreasing) I get in.â What constitutes a bounce? When the line is broken or broken but no close? At what point or proximity after touching or breaking the line can you label it a bounce? At whatâ¦etc. Unless you are adept at spotting capitulation, however you achieve this, then Iâd go with the volume observations above as a guide. Obviously, extremely high volume can signal a reversal. Volumeâs relationship to the range and the âbodyâ of the candle or bar, T&S, or the squawk box can offer clues, as well. âI also open 5 minute candlestick chart to have clerarer bigger picture...â I think your use of the 5-minute to gain perspective is very wise. âI have real time sound coming from S&P futures pit.â Depending on how you choose to trade and the time frame (TF) in which you operate, a squawk box may help or hurt. Personally, I found it useful in the morning but quite distracting when I would shoot for longer extensions. Iâd advise any trader to try it, though, and see if it worked for them. âI also have MIRC s&p chatrom open and CNBC. Those two I use to be aware of any unexpected news.â Iâm not familiar with the MIRC S&P chat room and I donât watch CNBC, but I think having access to a good news source can be very useful, especially in todayâs environment. âI don't use any other TA indicators such as EMA, Bollinger, MACD etc., at the moment, if you could recommend some I would appreciate it.â I donât use any of the indicators youâve mentioned, either. I rarely use any âpopularâ indicators. If I do refer to such an indicator it is not in the fashion that they are normally used. Iâm not suggesting that they canât be employed successfully, just that I donât use them. I do, however, use custom indicators that I find very effective. âI prefer to play short at this time because bad news is more likely to happen than good news and therefore is better to be caught while being short.â Personally, I donât worry about that. Iâm more worried about getting the direction right day after day, week after week, month after month, year after year. Iâm not dismissing your fears, but Iâve been caught on the wrong side of an announcement before and Iâve recovered. On the other hand, Iâve known traders whoâve slowly bled to death because they didnât focus on the fundamental issues of survival. One of those fundamentals is getting the directional bias right so that they werenât continually finding themselves fighting the market. âIf the trade is going in my direction I use trailing stops and once one point is made that trade should never become losing trade. At least break even.â I see nothing wrong with the your idea of not letting a profit go to a loss after a certain point. I use something similar in my trading, but 1 point seems a bit tight considering my TF. Iâm not you and Iâm not trading your account or your style so I canât be sure that the number of points youâve mentioned is appropriate or not. Please keep in mind that everything Iâve said is only my opinion, so take it for what itâs worth to you. I tried to convey my ideas as completely as possible, but undoubtedly I may not have hit the mark. Personally, I find it very hard to discuss all the subtleties and nuances of trading in writing. Iâm sure that Iâve failed to mention some important qualifiers. I hope I havenât misled anyone.