Should I Day Trade Or Swing Trade Futures?
July 18, 2014 at 3:58 PM (QQQ)(DIA)(SPY)(SIRI)(ZNGA)
Daytrade or Swingtrade For Maximum Return?
It's About The Money Stupid!
It's not the first time I've asked this question, or been asked this question. I've asked myself, I've asked you, I've even asked a "Higher Authority" on occasion. Turns out... it keeps turning up.
What is Day Trading?
I wrote a series of articles (Important Day Trading Rules), 3 to be exact, which answer this question in great detail. Not only do we cover what it is, but we cover how to do it.
What Is Swing Trading?
I've covered that in detail as well, both on the Blog and on the Web Site. If you Google "CFRN Swing Trading" you can spot them all in a jiffy. Some are short some are not. This one probably best answers the question of "What is Swing Trading?" and "How can I Swing Trade for Fun and Profit?" It's got a really catchy title: Swing-Trading.
Now that you're well informed on how the two differ, let's revisit your original question -
I'm going to share with you an email that went out to our general community last night. Not the Partners, but our community at large. This email and the one that preceded it, walk you through every Zone to Zone move we encountered (just in the S&P 500) since the Globex open last Sunday night. Some of these trades happen during RTH (regular trading hours) and others happen when you're fast asleep, based on where you live. In today's Global Marketplace (Globex), there's almost always someone trading something, somewhere. Markets open at 6PM EDT Sunday night, and outside of the "shift change" each day, trades happen. Here is the email in its entirety...
The Zone to Zone to Zone Email Futures Diary
| Our last email contained a chart for the S&P500 Emini Futures. We highlighted the Zone to Zone moves which at that time were roughly 59 points since the Globex open last Sunday evening. Tonight I will leave out the chart (save a tree) but give you a brief rundown of what has transpired. |
A move from the 1967/1968 Zone to the 1975/1976 Zone. A reversal and a move back down to the 67/68 Zone. The move continued and reached down to the Zone below at 1959/1960. Reversed at the Zone and back up to 67/68. Back down to 59/60 and a continuation to the Zone 47/48. Price reversed and moved us back up to the Zone where we now sit @ 1953/1954 @ 3am EDT. Totaled up in a nice little package we have 50 points to tack onto the 59 from last night's email. We also discussed that the chance of any trader being sharp enough or skilled enough to capture all those points even |
| though the boundaries are clearly marked out, is simply a dream. Better yet a fantasy. In the interest of reality vs. fantasy, we chopped the 59 points to just 1/3 and called it 19. If we do the same again, 1/3 of 50 = 16+. Fair enough. 19 + 16 = 35 and we still have one more trading day left in the week. I say, with a day yet to go... lets take the numbers which we've already reduced to 1/3 and whack them again, this time by 50%. Hmmm.... that's a paltry 17.5 points for 4 days work. Is that a fair wage? The CME has determined that each of your points is worth $50 so 17.5 X $50 = $875.00 per contract. Wait a minute, we had more than that last evening and we added 50 points since yesterday. Correct? You see... I have a theory, most traders who do not succeed in this business of trading have made a grievous error in attempting to build their business on a foundation of unrealistic expectations. That is a fatal error, the blue screen of Emini Death. The actual numbers 59 + 50 = 119 points. However, in an attempt to infuse some harsh reality into the situation, we've not inflated, not exaggerated, but subtracted, divided, reduced. I suspect that most mail order courses promising to teach you how to write a "Killer Sales Letter", would have a good laugh at what I've done. Price is currently at a Weekly Trading Zone as I type. By close of business today (Friday), I fully expect that price will either have risen to the Zone above, or slipped to the one below (take your pick). Either way, it's 5 points headed north or 5 points headed south. Putting math aside, let me ask you a question. Would you be content to earn $1k per contract on a weekly basis? Of course for the 10 or 20 contract trader that number changes by a factor of 10 or 20, but for now... focus on the one. The margin required to trade 1 contract intraday is $500. Hold it over the close and it jumps to $4758. Even at the higher price you are controlling almost $100k of equity in the best of breed S&P 500. Day rates ($500) apply at night as well, you just can't hold a position open as we shift from one session to the next. If you're trading 1 contract and have a $10k account it's not an issue. If you are working with less start up capital, you now know how to avoid it. Would $200 per day, per contract, satisfy the alligators nipping at your heels? Of course with our 24/20 Blueprint the goal is to build your position size in a steady and controlled manner. However, no matter how clever the scheme, unless you can become consistently profitable in the simulator, you'll never trade live, not with us. At least not with our blessing. We have a plan. We have a definable edge. It makes sense. If you would like to see it in action and ask a few questions, join us today from 9:30-11:30am EDT. https://www1.gotomeeting.com/register/956061280 password = opportunity You will see rapid fire action across a variety of markets. I'll be there in the background. Let me know you want to know more about what you see and how it ties into what I've written about in this email. We'll arrange a private GoToMeeting or I'll invite you to a Webinar next week. See you at the Bell! Blessings DeWayne ps. Trading is risky and you really can lose all of your money (and then some). We utilize aggressive risk management on every trade, but past performance is no guarantee of future performance. Not here, not anywhere. Just because you may have stumbled in the past, don't lose hope. Take a free look at something that might just be your missing link. To find out, click the link above at the appointed time, enter the password... and let's see what happens. |
| Now let me share with you the email that was sent out roughly 24 hours prior to the one you just read - |
Our Weekly Trading Zones have changed trading forever for many of our CFRN Partners. The Zones are emailed to Partners every Monday morning before the market opens. Once they are published they become "carved in stone".
In other words, we do not change, massage, or manipulate the Zones based on how the market unfolds as the week progresses. This proprietary methodology is ideal for the Trader who wants to take a slightly "bigger bite" out of the market. It also serves the short term Trader who is simply looking to earn his Daily Bread ($100 per contract / per day) and finds the Zones useful as a back drop to keep their trade on the right side of the tracks.
Price is always seeking a Zone. As it comes to rest inside of a Zone, as it consolidates, the questions is quite simple - "Will price now move to the Zone overhead, or the Zone below?" It will always attempt to to do one or the other.
S&P 500 Emini Futures - Hourly Globex Chart
Monday morning price began to consolidate just below the WTZ @ 1967/1968. For 3 hours price treaded water and then broke to the upside triggering an Alert that was sent out to our followers early Sunday evening to consider being long above 1968. The Alert was public and can be seen on our Google Plus Emini Community page.
You can see the hourly candle which triggered our "trade of the day", did not consolidate inside the Zone. When that happens, we expect price to revisit the area, often before touching the next Zone above or below. The Swing high was 1974 creating the potential for a 6 point trade. A trained eye will spot weakness and potentially exit on the close of the bearish candle in hopes of revisiting the Zone below.
The consolidation we did not get on the first pass through the Zone was achieved on the pullback Monday evening. Now, we are ready for the move that will take us all the way to the Zone overhead. So far we have 6 points up and 6 points down. It's a 3 hour cruise up and we tack on another 7 points.
The Wall Street open brings a reversal "at the Zone 1975/1976" and we not only pick up 7 points on the way down, we also slice through the Zone @ 1967/1968. Which tells us what? That's right... "we'll be back". Sure enough, price turns on a dime at the 1959/1960 Weekly Zone and heads back for some nice long "consolidation and rest" at the 1967/1968 Zone. Let's not forget to add the 7 points down and the 7 back up.
We now rest for 10 hours at the Zone inside of 2 point range. London opens and off we go back to the 1975/1976 Zone and STOP. In the process we add another 7 points. The second candle at the Zone is a Bearish Engulfing Candle and a tip-off that the next move may be to the downside. Indeed it is, yet it fails to make it all the way to the Zone. Did I mention Zones are an AREA? We become so accustomed to seeing price turn right at the Zone, we have to constantly remind ourselves to embrace the possibility that we might come up short, at least on the first attempt.
The Swing Low is 1969.25. The chance of catching the exact low is slim to none, but the ability to walk away with 4-5 points on this move is very real. We have a faster time frame running at all times in the background on the Slingshot. The Slingshot would have alerted us that even though the Zone had not been reached to the downside, the Buyers (Bulls) were now back in control. Our proprietary indicator set allows us to know who is in control and at exactly what time and price possession of the ball takes place.
This mid-field turn around creates a 4 point opportunity to the up-side, we run into the Zone again, rest for 3 hours and as I type tonight we are now on our way to the Zone below and have moved 4 points plus in the process. Let's stop for a moment and add up the numbers. Going back to the first move we highlighted, here we go...
6
6
7
7
7
7
7
4
4
4
_____
59 points
No one's perfect and we all have to sleep. Right? So maybe you only caught half, maybe even 1/3. That's still over 19 points and we still have 2 days left in the week. Is this an unusual week? Not at all. This is a typical, ordinary week. We also publish Zones for the Nasdaq, Dow and Russell.
Custom Zones available upon request.
If this seems too good to be true, let me reassure you. Trading's not easy, but it can be simple! Having the numbers is only one part of the equation. Learning how price behaves around a Zone and learning the very important skill of reading a chart, are all equally important. You can't trade from a one-legged stool.
Let me invite you to pop in Thursday and Friday and see exactly what the other Zones look like for this week. I will be happy to answer your questions and you can watch us trade live for 2 full hours. Send an email to support@cfrn.net and request the link and password for the Live Trading Room. If we get busy it might be slightly after the open before you receive your email with the link and password. Relax, we will get to you as quickly as we can. If you are already on a free trial and / or have recently finished a free trial, no need to apply.
Blessings
DeWayne
ps/ on the math where for only 1/3 of the movement, that's still 19 X $50 or $950 per contract and we do still have 2 full trading days left. For the 1 contract Trader, $950 is in my mind, a handsome paycheck for 3 days work. For the 10 contract Trader, that's a paycheck with a comma (and we still have 2 days to go).
Past performance does not guarantee future results. Trading is risky and you could lose all of your money and then some. However, if you just come to watch... you're safe.
You Have The Facts -
Now You Decide! Day Trade or Swing Trade or Both?
I would love to discuss this in greater detail, but there's soome guy on the phone with a funny accent, said his name was Guinness ( I thought that was a beer), hard to understand (maybe he's had a few), but he mumbled something about the longest blog post in history so let me take the call, find out where it is, and I'll share it with you all tomorrow.
Questions?
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