Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

Happy New Year!

If you want to keep up-to-date with my trading method and advice, please follow this forum post:

I've written over 50 entries so far, and am trying to update it daily (Holiday's excluded).  I choose subjects to cover based on my own trading and based on what is happening on the trading forum, in the Skype trading rooms, and with my own trading students.


More on my trading method, and general advice

I've just started a thread on the forum that I've been meaning to start for a long time.  This will be a long thread that evolves over time. 

It is not a typical journal, as I won't be documenting trades themselves (entries and exits).  Instead, I will be sharing with you what truly matters, what lies deep within and really controls (or perhaps a better word is allows) your profitability and success as a trader.

The thread focuses on psychology.  Before you close the browser, let me share something with you.  The psychology forum on BMT is the least popular forum in terms of activity.  But guess what, 95% of traders lose.  So, if you are smart, you will do the opposite of what the majority is doing.  Think about it.

I'm a realist.  I'm not advocating seeing a shrink to deal with problems, although it probably doesn't hurt (after all, the real benefit is just in allowing yourself to talk things out in the open, and work your way through them).  I'm not a believer in hypnosis or etc.  I have trouble grasping things like The Sedona Method.

However, one thing I know to be absolutely certain - psychology is what causes most people to fail at trading, and is something I have struggled with for a long while, too.  You should be spending the majority of your day focusing on how to better improve your mental state, your game plan, etc, as opposed to playing with new indicators.

Guys, I'm serious!  This is the way!

So come check out the thread and give it a chance, I think over time if you are not closed minded you will see how this truly is the path to becoming a successful trader.


Fibonacci based Envelope Expansion

I know I haven't blogged in a while, I've been busy with the forum. I've created a couple of new indicators recently for VIP members and wanted to just briefly post a screenshot of one here.

The screen shot pretty much covers it --- the indicator is designed to show price extremes. I prefer it over Bollinger any day. This isn't a cherry picked chart, it is today's chart and covers the last three days of last week. I also uploaded a dozen or so more screen shots of different instruments and time frames to the forum thread.

All the details are in the VIP thread on the forum.


Harmonic Trading

If you've ever wanted to learn more about a trading strategy called Harmonic Trading, which uses techniques like the AB=CD pattern, the Gartley pattern, and the Butterfly pattern, and much more --- you should subscribe and participate in the new thread by George on the forum.

Here is the link to the thread:

The method assumes that trading patterns, like patterns in life, will repeat themselves.  Here are a few examples of some patterns, courtesy of

The AB=CD pattern is a price structure where each price leg is equivalent. The Fibonacci numbers in the pattern must occur at specific points. In an ideal AB=CD, the C point must retrace to either a 0.618 or 0.786. This retracement sets up the BC projection that should converge at the completion of the AB=CD and be either a 1.27 or 1.618. It is important to note that a .618 retracement at the C point will result in a 1.618 BC projection. A .786 retracement at the C point will result in a 1.27 projection. The most important consideration to remember is that the BC projection should converge closely with the completion of the AB=CD.

The structure of the Butterfly pattern was discovered by Bryce Gilmore. In my experience, I believe an Ideal Butterfly Pattern, which requires specific Fibonacci ratio to define the structure - including a mandatory 0.786 retracement of the XA leg as the B point - offers more precise Potential Reversal Zones (PRZ) and more significant trading opportunities.  Also, the Butterfly pattern must include an AB=CD pattern to be a valid signal. Frequently, the AB=CD pattern will possess an extended CD leg that is 1.27 or 1.618 of the AB leg. Although this is an important requirement for a valid trade signal, the most critical number in the pattern is the 1.27 XA leg.  The XA calculation is usually complemented by an extreme (2.00, 2.24, 2.618) BC projection. These numbers create a specific Potential Reversal Zone (PRZ) that can yield powerful reversals, especially when the pattern is in all-time (new highs/new lows) price levels.

The Gartley pattern was outlined by H.M. Gartley in his book Profits in the Stock Market, published in 1935. Although the pattern is named "The Gartley," the book did not discuss specific Fibonacci retracements! It was not until "The Harmonic Trader" was released that the specific retracements of the B point at a .618 and the D point at a .786 were assigned to the pattern. There are others who have assigned Fibonacci retracements to this framework. However, they use a variety of Fibonacci numbers at the B and D points. Despite these variations, the Fibonacci retracements that yield the most reliable reversals are the .618 at the B point and the .786 at the D point. Furthermore, the pattern should possess a distinct AB=CD pattern that converges in the same area as the 0.786 XA retracement and the BC projection (either 1.27 or 1.618). The most critical aspect of the Gartley is the B point retracement, which must be at a 0.618 of the XA leg. 

The thread is just getting started.  Come join us!


Al Brooks fan? Want to learn how to trade without indicators?

Looking back, it is easy for me to now say that indicators are more of a hindrance than a blessing.  For new traders indicators are the devil.  They are like an addictive drug, you can never get enough.  Worse, they are teaching you all the wrong things about trading.  They are teaching you to rely on a squiggly line on a chart instead of learning to read true price action and understand what is driving the move.

If you are experienced and profitable trader, then indicators are useful tools.  But if you "grow up" on indicators, the lessons you thought you learned are almost all entirely wrong and need to be completely un-learned so you can make room for price action.  Indicator-less trading with nothing more than trend lines and support and resistance lines that you've manually plotted on your chart.

Whether you agree or disagree is not important.  There is much to be learned by viewing and understanding both sides of the argument, and few would dispute that Al Brooks is the definitive source for bar-by-bar pure price action analysis.

There is a great discussion going on the forum about Al Brooks and many other highly recommended authros and books that focus on trading without indicators.  Come check it out, and join in the discussion -- but only if you want to improve your trading.



How to correctly use volume in your trading

First, if you are looking for a nice volume indicator that identifies key turning points in the market, check out the work from cory on the forum.  He has created the "VolumeStop" indicator, and in about one months time his v2 and v3 of the indicator have received about 500 downloads.  It's popular because it works well :)

Download link:

Second, whether you're looking for hand holding and are just getting started with Volume, or you want a deep insight and analysis of applying volume to your trading, you should check out the thread by cunparis.  Cunparis is trading with a minimal set of indicators, and let me tell you -- that is the best way to trade.  You can learn a lot from this thread, so go check it out and get involved today.

Here are a couple of screen shots from his thread:

Here is the link to the thread.  Get involved today and learn something incredibly useful:


Need 5+ years of historical ES tick data?

If you are in the market for over five years of historical tick data for the ES (S&P 500 e-mini), then head over to our VIP section on the forum.  You can download it there for free (if you are a VIP member).

On a side note, if you're wanting to split the cost of some historical tick data for CL (Crude Oil futures), drop me a line on the VIP forum.  We're looking for people to split the cost.  I only have about six months worth and am looking for a few years.


Creating a successful automated trading strategy

I have my opinions on how to create a successful automated trading strategy. My experiences form my opinions.

But I'd like to once again invite you to share your opinions and experiences. I say once again, because back on my blog a few months ago there was a lively discussing on this topic, but now that the forum is in-place this is a much better way to share our ideas and theories on the subject.

So here is my list of initial questions. Please share your thoughts. Some of these questions are generalized. Some are specific. I think all are important.


  1. How many strategies have you created?
  2. Of those, how many would you classify as profitable?
  3. Of the ones you classified as profitable, how do you define profitability? How long of a period did you trade it cash before deciding it was profitable?
  4. How many strategies have you created in which you initially thought they were very profitable, but later discovered they were not (ie: curve fitted).
  5. Do you prefer to trade discretionary, mechanical, or automated?
  6. How many trades do you require in a backtest in order to feel the results are not curve fitted? (ie: 500 trades)
  7. How much historical data do you require in order to feel the results are not curve fitted? (ie: 3 months, or 3 years, etc)
  8. Percentage wise, how much of a draw down is acceptable when compared to total net profit? (ie: if net profit is 1,000 and draw down is 100 that would be 10%)
  9. What other criteria do your strategies need to meet in order for you to feel they are not curve fitted?
  10. Do your strategies rely on traditional indicators such as Moving Averages, Stochastics, CCI, Bollinger Bands, etc?
  11. Do your strategies rely on price action such as higher highs, lower lows, double tops/bottoms, pivots, day highs/lows, opening range breakouts, etc?
  12. Do your strategies have pre-defined stops in targets (ie: 8 ticks)? Or do they use a variable dynamic such as ATR or Standard Deviation? Or do you have no pre-defined limit and you exit a trade solely based on something from item #10 or #11 telling you to do so?

For my answers to the above, you'll need to read the forum post.  I'd also like to hear from you, so please reply on the forum!

The discussion begins here:


Trading CL (crude oil futures) plus my usual opinions

Here is a video blog about trading CL (crude oil futures). I also share my usual opinions on multiple time frames, indicator simplicity, money management, etc.

I started a thread on the forum here about it:

Download HD full-screen MP4 video


Custom Programming for hire, NinjaTrader programming by Big Mike

I am now making my NinjaTrader programming services available.  I can write indicators and strategies, from simple to complex.  Please, serious inquires only - I am catering to those who have a great trading idea but no way to translate it into NinjaScript code. 

My services are not free because I pride myself in doing comprehensive work and anytime I spend coding is time spent away from trading.  Rates begin at $100/USD and a medium-sized project requiring a half dozen hours of work will be around $300/USD.

To make an inquiry or to see more detail, visit here:


Are you utilizing the benefits of Renko charts for NinjaTrader?

As you know, I am a huge advocate of multi-time frame trading.  I think no trader should look at just one single chart to make a determination of when or where to trade.  Traders that attempt this method usually have such an overloaded chart you can't even see what is going on, and half the indicators don't even agree.

I like to look at three different charts.  I like to use different styles of charts, so I can see price in different ways.  For example, Range, Volume, and Renko.  Each chart has a unique purpose, and each time frame a unique picture of the market.  Following that, each type of chart (range vs. volume, volume vs. renko, etc) provides a unique perspective of price.

If you haven't tried Renko charts yet, you should take a look at them.  Here is a brief description of renko:

A type of chart, developed by the Japanese, that is only concerned with price movement; time and volume are not included. It is thought to be named for the Japanese word for bricks, "renga". A renko chart is constructed by placing a brick in the next column once the price surpasses the top or bottom of the previous brick by a predefined amount. White bricks are used when the direction of the trend is up, while black bricks are used when the trend is down. This type of chart is very effective for traders to identify key support/resistance levels. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors.

For example, a trader will sell an underlying asset when a black brick is placed at the end of series of climbing white bricks. Since this type of chart was designed as a way to follow the general price trend of an asset, there can often be false signals where the color of the bricks changes too early, producing a whip-saw effect.

Here is a side-by-side comparison of Range vs. Renko on the same period of market activity:

Above: Range Chart

Above: Renko Chart

On the BMT forums there are several good discussion about the use of Renko bars.  The discussions point out both the advantages and disadvantages of renko. 

Here is one such discussion that covers the basics in an all-around fashion:

Here is another that specifically spells out the downfalls of renko:

And finally, one more on comparing range to renko:

I hope you'll broaden your charts and find that you benefit from these discussions! :)


TheWizard's Holy Grail Indicator package

TheWizard on BMT forums has a very popular thread going.  He's talking about his trade setups and indicator settings, and a lot of traders are paying attention.

In the thread, he discusses his targets, stops, chart sizes, and provides the indicators he is using in his system.  He also gives examples of the entries and is answering questions from fellow traders.

One of many screen shots from the thread

Some users have already posted back their own adapted version of the system.  Remember, adapting someone elses work to suit your own style and method are very important, it is what gives you the necessary confidence to succeed.  Here is an example of RJay's adapted version:

Come join the discussion and download the indicators!  Here is the link to the thread by TheWizard:


Van Tharp's Max Expectancy and System Quality Number (SQN)

caprica on the BMT forums has started some discussions on Van Tharp's Max Expectancy and Van Tharp's System Quality Number (SQN).  I was only vaguely familiar with these principles, so I've learned alot in the last few days.

The principals behind the two formulas is interesting, but I am a meat and potatoes kinda guy so I skimmed that do get a basic understanding and then moved straight to the download so I can add this to NinjaTrader.  caprica posted two downloads which are NinjaTrader Optimizer Types, so basically now instead of optimizing on Net Profit you can optimize on Max Expectancy or SQN.

I ran some of my system strategies through the new optimizer types, and was quite shocked.  When you combine these new optimizer types with piersh's genetic optimizer, you really can elevate your strategy backtesting to all new heights.

Here is the thread on Max Expectancy:

Here is the thread on System Quality Number:

The link to the downloads for NinjaTrader is included in the thread.  I also highly recommend checking out the other Psychology and Money Management threads on the BMT forum, there are some more discussions about Van Tharp's Position Sizing and several new discussions on risk management.  I'm learning a lot each day from fellow traders who have come far enough along in their trading journey to pay the proper attention to money management and psychology.

Quoting caprica, here is a quick definition of Max Expectancy:
So what is expectancy?

Expectancy is your profit percentage per win multiplied by your win rate minus your loss percentage per loss multiplied by your loss rate.

Expectancy tells you what you can expect to make (win or lose) for every dollar risked. Casinos make money because the expectancy of every one of their games is in their favor. Play long enough and you are expected to lose and they are expected to win because the “odds” are in their favor.

Example, you could have 99 losing trades, each costing you a dollar. Thus, you would be down $99. However, if you had one winning trade of $500, then you would have a net payoff of $401 ($500 less $99)—despite the fact that only one of your trades was a winner and 99% of your trades were losers.

And again quoting caprica, here is a quote on System Quality Number:

The only way to seriously qualify and optimize any system is through its System Quality Number (SQN). I advice you to refer to Van Tharp for reference on the subject.

Assuming a set of N trades (N>30 for being statistically significant), SQN is defined as follow:

SQN= Squareroot(N) * Average (of the N Profit&Loss) / Std dev (of the N Profit&Loss).

The large the N, the more trading opportunities you have.
The large the average P&L, the better you are obviously.
The smaller the Std dev (P&L), the more regular are your results and the smaller are the drawdowns.

Note here that if you optimize for the largest SQN, you maximize in fact the product N*average P&L and you minimize the Std dev (P&L) and the drawdowns at the same time.

This is exactly what all good traders should be looking for their system.



Genetic Optimizer for NinjaTrader

Piersh has been kind enough to release his fantastic genetic optimizer for ninjatrader on the BMT forums.

I won't even pretend to know how genetic optimizers work, but it has to do with weeding out the numbers that are poor performing and keeping the numbers that perform the best.  These numbers are then allowed to procreate so each generation is built upon a solid DNA string.  Honestly, it's that kinda stuff.

You can read up on genetic optimizers on google.  But if you do any kind of strategy work, then having a GO in your toolkit is a must.  NT7 is going to include one, sure, but a) when/if will NT 7 ever come out?  and b) will their GO be better than Piersh's?

It's simple to install and use.  To give you an estimate of how much time it can save, I can normally optimize a job with tens of billions of combination (read:  Ninja would _never_ finish, as in years) in about 10 minutes.  It doesn't brute test every combination, instead relying on selective breeding of combination that perform well.

Here is the discussion thread, and the download for the optimizer, along with installation instructions.  Be sure to check it out, and don't forget to send your thanks to Piersh!


Using trade statistics to improve your money management system

Gary on the BMT Forums created this thread today:

The thread is all about money management, and how he is applying a simple analysis to his trading plan in order to develop a fact based money management system.  This is an absolutely invaluable approach.  It combines simplicity with intelligence and is backed by compelling data that is custom build on his trading plan.

With his analysis, he can determine if his stop is in the right place, and how to best capture the highest percentage of potential MFE (maximum favorable excursion) on any given trade setup.  Ninja only records the MFE that occurred while you were in a trade, but with Gary's method you can record the maximum MFE the setup delivered and then use that information to create a customized ATM strategy to capture those profits.

I highly encourage you to participate in this discussion and adopt this system. Gary is trading CL (crude oil futures) but this can be adapted to any market.


The holy grail is right here

I just uploaded a video where I plead and beg fellow traders like yourself to work on your money management and not on your chart and indicators.  The video talks about money management, psychology, indicators, and journals.

Hope you guys watch it and find it of use.


Download HD full-screen MP4 video

In the video I play a few seconds of an older song with these words which I felt can be applied to the Market in general.  Here are the words, as you are reading them and/or watching the video, apply these words to the Market:

Take me as I am.
This may mean you'll have to be a stronger man.
Rest assured that when I start to make you nervous and I'm going to extremes,
Tomorrow I will change and today won't mean a thing.

Check out the video.  Indicators are not the answer.  Psychology and Money Management are.


Trading Psychology and How The Mind Works (IV)

Here is the last installment of this four part series from George, the moderator of the Psychology and Money Management forum on BMT.  If you are enjoying these then I invite you to come join the forum discussion and elevate your trading to the next level.

You can find the Psychology and Money Management forum, which George moderates, here:

The forum also has many comments from fellow traders, so check them out below.

Part 1 on BMT
Part 2 on BMT
Part 3 on BMT
Part 4 on BMT

And now, without further delay, here is the final installment:

Trading Psychology and How The Mind Works (IV)

Al right guys it’s time to sum it all up and go for the solutions to all this. Before I go on, please keep something in mind.   There’s only one, and only one way to get disappointed in this life. And that’s when ones expectations aren’t met.

Remember that talk about the Holy Grail and where it is?

You got it, it is right there, on the inside. Stop looking for it outside. The only thing is that, we have to uncover it first.

Have you ever wondered why, affirmations, confirmations, positive self talk, positive visualization, you name it, never works? The market is full of all these techniques. Learn how to be positive, learn how to have discipline, learn how to be successful etc.etc.

It’s not working because of the program in our subconscious mind. If the program is negative, it doesn’t matter how hard you try to change it with your conscious mind. It won’t be persistent. Remember what you had in your conscious mind, the “will power”? 

And remember that it was temporary? Now you understand why it doesn’t work. In order to change a habit one has to be persistent for a period of at least 14 days. The only problem is that it’s very difficult to follow a new habit, during such a long period because you’re using your will power in that case. Plus that you’re going against yourself constantly. You’re forcing yourself to go against your program that’s running between 95-99% of your daily life with a conscious will power that’s temporary. Isn’t life ironic?

But nevertheless, when you do understand this, you’ve gained a huge awareness. For the first time you’ll be able to look at yourself from the outside. You’ve gained self distance. You start to understand why and how things work. That gives you a tremendous advantage. And that is in case you want to change of course! If you’re content with your new findings, and you want to continue as a slave of your own program
and habits, then go on and live life as you did before. But if you want to make a change, then you have to get to the core.
In the last article I gave an example that explained how fear of success works. Normally it works like this.
An event that causes an emotion takes place, for i.e. whatever causes you to have that fear, or whatever causes you to engage the protective role of your subconscious mind. Simultaneously two more things occur. The energy in that event is stored in your body and an association is created in your brain. All this takes place in order to reward one thing, survival.
Since that event took place, and during every second of your life from back then till your present moment. You’ve had that process (and all other processes, since their commencement) running constantly in the background.

In order to get rid of fear of success (or whatever change you need to make) you have to neutralize that stored energy. How in the whole world, will that be possible?

Time travel? Sorry guys, trying to be funny. Not working, right?

There are actually three ways that are working, and that I know of because I’ve been all over the place searching. You know, the usual stuff, standing in front of the mirror, talking to myself “you are the world’s greatest trader; you can do this, bla, bla, bla…) Watching movies, like “The Secret”, and feeling that it’s speaking to me directly (by the way, great movie, I liked it, the only problem is that it’s only giving you half of the equation). Affirmations, visualization you name it. It’s not my point to criticize those techniques, it’s just that it makes me mad, because they’re hiding the other part of the reality. It’s not possible to overlap a bad program. You have to get rid of the program first. 
So here are the three techniques that work. All three helps you to get rid of the bad program in order to be able to put there whatever you wish, in order to give you emotional freedom. I’ll explain shortly how they work and why they work.

1.EFT (Emotional Freedom Technique, EFT Home - World Center for EFT (Emotional Freedom Techniques))

Emotional Freedom Techniques (EFT) is an emotional, needle free version of acupuncture that is based on new discoveries regarding the connection between your body's subtle energies, your emotions, and your health. EFT has been reported successful in thousands of cases covering a huge range of emotional, health and performance issues.

It’s actually pretty easy to learn and to perform. It’s about putting your focus on an issue that’s bothering you and while you do that tap on different spots on your face, upper body, arms and fingers. If you want details, you’ll find them on their page, specifically how and why it works. It’s a great technique, if you can nail the issue. In other words, if you’re very aware of the event, that caused you problem, or if you are persistent, you’ll get great results. If the issue is more bothersome and hidden (my own experience tells me that, it’s better to seek a practitioner or to use the next method). But remember that’s my opinion, if you find the technique to be working for you and it fits you, it can do wonderful things for you.

2.Hypnosis (I’ve studied hypnosis for this guy –a home study course-, and he’s a living legend, -Gerald Kein
Omni Hypnosis Training - Onsite or Distance Learning Clinical Hypnotism Training

Usually, people are very judgmental about hypnosis, and their association’s runs directly to those stage hypnosis shows, or to mind control. Forget all of that. 
It’s one of the most powerful ways to change your program. I’m not going to spend time defending it, and give you valid facts about it. Instead, I’m going to tell you how it works, and tell you that it only work if you allow it to work. You can never, ever become hypnotized against your own will. It actually works very simple. First we have the induction. That’s a process that takes away your critical factor. In other words, it deactivates your conscious mind, and you’ll get access directly to your subconscious mind. When you are there, (it’s actually like sending heat seeking missiles) you go back to the event that caused the problem for the first time, and you neutralize it. By neutralizing the event, the energy dissolves and you are free. 
So basically, hypnosis consists of two main parts, the induction and the hypnotic therapy session. During the induction, the subject is asked to relax. It’s being constantly talked to by the hypnotist and led into a state of focused relaxation. The induction serves in order to send away the conscious mind (the analytical and the rational mind), in order to get access to the subconscious mind, where everything is stored and still active. When you get there, then you’re able to relive the event. By doing that you’re able to process it and to release it.

By reading my own words, I’m getting the impression of this might be a difficult process to grasp and to understand. If you by any chance are trying to understand this method, it means that you have second thoughts about it and you’ll be taking it to a very analytical and rational level. It simply won’t work then!

My recommendations are; if you’ve come to an edge in your life, and you’ve become aware of that impulse running in the background and sabotaging you on a constant basis, AND you’re willing to get to the edge and jump no matter what. Then hypnosis will work for you!

Hypnosis can clear things in a couple of sessions (2-4, each being about 1,5h) that has bothered people for an entire life. It takes 4 sessions to free someone from alcoholism, (you get the picture? it takes away the reason for it being practised, AA teaches people the discipline to keep themselves away from it instead. Unfortunately people are sceptical about it and spend rather 20 years in classical psychotherapy instead of freeing themselves in a couple of sessions.

Remember, hypnosis is very, very powerful if you allow yourself to take that step. If you by any chance decide to try it out, please use that link, in order to link yourself to someone recommended by Gerald Kein. Maybe you can call them and ask them for someone certified by them in your area.
There are a lot of bad hypnotherapists out there, so be sure to end up with a good one.

3.The Sedona Method (This is my favorite one, and I’m in the middle of learning it right now
Sedona Method (official site) The Secret self-help program; self-improvement technique

It’s a wonderful tool. It’s about letting go of things. It’s about releasing issues. It’s about becoming free. Basically, it’s a very, very simple technique that teaches you how to connect yourself to your feelings and how to free yourself from them. Remember the subconscious mind is the feeling mind. So you’re right on the spot again here, because it’s about reprogramming and uncovering. The beauty of the Sedona Method is that, is very portable. You can put it in your mind, by learning it, and you can use it whenever you need. You don’t have to tap on spots, you don’t need a hypnotherapist, and you can just bring it up in any situation needed. Plus that you can benefit a lot from it in trading as well, by releasing all those negative emotions that you end up with from bad trades.

Basically all of them are very powerful tools. EFT, can very easily neutralize all those bad trades, you have behind you, by tapping on those spots. Hypnosis can free you from all the junk, which prevents you from having the right perception and perspective while you’re trading. And the Sedona Method can help you
get rid of the stress that’s out there while you’re trading.

Some people collect stamps, some like to jog, and so on. Me myself, have been obsessed by these two words, “why” and “how”. Since I got tired of losing and blowing up my portfolios, and since that old friend of mine inflated his ego on my behalf. By the way, let us all send him a big Thank You! If it wasn’t for him and him initiating me into this business, I guess we wouldn’t have met. 
So Thank You Ovidiu –his name-!

By asking those two questions, why things work the way they work, and how do things work; I’ve come to gain all this knowledge that I’m sharing with you! As you see, it has not so much to do with trading. In fact trading has not that much to do with anything. Trading is just trading, nothing else. It has all to do with you, and the way you look at trading. In order to be able to look at trading, you have to get rid of all the filters that are holding you back from looking at trading the way you should be looking at it.
I’ve gained all this by asking why and how. What I’ve come to understand to this point is that ironically enough I have to learn how to let go of all this and get past all the rational and analytical stuff because that’s where we’ll be finding our own Holy Grail.

I’ve been through them all. I mean the methods and I’ve been wondering on those paths that took me here. What I’ve written and shared with you has been my reflections coloured by my own journeys. Remember that every journey is unique, and has to be performed by the persons involved in them. Take my words, and this knowledge shared as guidance, and go out there and make your own journey and find out what works for you!

Good luck and have a lot of fun, life’s supposed to be fun to live!



Video recap of my entries, charts, rules, and money management

This video reviews the ZN 09-09 contract for Thr July 9th and goes bar by bar starting a my large chart then looking at small charts for timing the entry.

I also discuss some of my trading rules and money management.

Download HD full-screen MP4 video


Trading Psychology and How The Mind Works, Part III

Hey guys... continuing from where we last left off, here is part three of four from George. If you are enjoying these then I invite you to come join the forum discussion and elevate your trading to the next level.

You can find the Psychology and Money Management forum, which George moderates, here:

Have you guys ever heard of, fear of success?
Isn't that one of the biggest enigmas and ironies that's out there?
It's like trading right! I mean how crazy is that?

I do want to make money, I love money, I love trading! But I'm still loosing money.
What we're experiencing here is a conflict between the conscious mind and the subconscious mind.

Remember, who the real you is! You're actually the sum of all your programming. Funny thing right? We got a lot of programmers in here! So, being the sum of all your programs, and by the fact that your subconscious mind has the role of protecting you. There you got it! It doesn't allow you to make money. Because somewhere in the programs you've got a bad experience that has a negative charge, and it keeps holding you back from getting hurt "again".

For instance let's say that you've been brought up by your parents (and they by their own parents), with a small simple value, such as "In order to earn money, you have to work hard". It has probably been put there, somewhere between the age of 0-7. After that it has been amplified every time you've been in and out of social contexts containing those values. Unfortunately, our parents becomes parents without getting any instruction manual on how to raise kids, plus that we have the social construction as well in the picture.

What does all this lead to?
Your parents are starting to train you in order to fit into the social construction. By doing that, they forget about unconditional love, and they start to introduce two things, punishment and reward.

They punish us when we're not following their instruction and reward us when we do as we're told. The kind of reward we get is, acceptance. When we get that acceptance, we then fulfill one of our basic needs. Remember?; the need for security.

That creates here an association, with an equation that says "In order to earn money, you have to work hard" equals "SAFETY". We grow up, and start to work, and eventually we find out that, working hard equals earning money. And the safety need is fulfilled.

No problems here right?
Everybody's happy !

Til you get into situations that can make you money easy, without having to work hard. That's when you blow it!

Take trading for instance. You've gone all the way. You've gone through all the phases (learning, experience, indicators etc). You're a complete trader. But you're still loosing money! By now, trading is easy for you. Doing it is easy, acting upon it is easy.

Suddenly we've got a new equation into play. "Earning money is easy" equals "NOT TRUE". Why? We do not want the money!

Life is not about money. Life is about safety. We live in societies, that has told us that we can reach safety through money. Money is just a tool, nothing else.

We want safety, and if that isn't met by the information we got in our subconscious minds we do whatever there's in our power to go for that. And if the real you is, the sum of all your programs, there's simply no place for that there!

Scary thing right! It scared the hell out of me, the first time I realized that's the way things are working. I refused to buy the concept. And it took me a while before, I finally had the courage to face it, and to understand that, it doesn't matter how I take it or perceive it, by my conscious mind. The subconscious plays the lead here. And no matter how much I refused to accept that, it wasn't that way. That I do love money, and that money is easy to earn, and that I love being all that trading is giving me. It just laughed back at me by decreasing my account.

Do you now understand how fear of success works and why it works that way? This was of course a very basic example. Every case is unique with it's own ingredients, but manly is built on the columns explained above.

In the next article, I'll write about what to do about it. Hang in there guys, there's hope!

To be continued...

Indicators are not the answer

The majority of people in the forum will not agree with what I am about to say. Does this make them wrong? My answer is both a yes, and a no.

Yes, I think they are wrong if they disagree. Am I entitled to my opinion? Sure, and I also respect people that disagree with me. But, I also believe what I am saying to be absolutely true, and I think if you disagree with me, and you think indicators are the answer, then you are wrong.

But -- also a "no", because if you had come to me years ago and beat me over the head nonstop and tried your best with nothing but the best intentions to shove this information down my throat, it would not have worked. I would not have listened. I may have even agreed with you, I may have tried to copy you, but in the end I would not have listened. Maybe my lack of listening was not my intent, but it is what would have happened.

Human beings need to learn for themselves. Copying only gets us so far, we must do it for ourselves to truly understand it and appreciate it. It is the experience that counts more than anything else. And by that is my final answer, which is that people are not right or wrong in a black or white kind of way. There is a lot of gray.

Let me put this another way. How many of you have "learned your lessons" when it comes to debt, like credit card debt. Ok, how many of you tried your best to instill this into your children, your friends, and family members -- to please, please not repeat your mistakes but learn from them. Ok, how many learned vs. how many went right on and made all the same mistakes you did. Now, I hope you see my point.

  • Indicators are not the answer.
  • Indicators are not the solution.
  • Indicators are not the holy grail.
  • Indicators are not the reason you lose money.
  • Indicators are not the reason you make money.
  • Indicators are not why you got stopped out.
  • Indicators are not why you hit your target.
  • Indicators are not what told you to enter a trade.
  • Indicators are not what told you to exit a trade.
  • Indicators are not the answer.
Don't believe me? Disagree with me? No problem. Trading is not being right or wrong. Trading is about developing your own method, your own "system". And more than anything else, trading is about knowing yourself.

So if indicators are not all of these things, then what is?

  • You are the answer.
  • You are the solution.
  • You are the holy grail.
  • You are the reason you lose money.
  • You are the reason you make money.
  • You are why you got stopped out.
  • You are why you hit your target.
  • You are what told you to enter a trade.
  • You are what told you to exit a trade.
  • You are the answer.
Does this make sense to you? Does it kind of make sense? Does it make no sense at all? Do you believe it, do you question it? Are you having an "ah-ha!" moment, are you cursing my name?

The point I am trying to reveal to you is that you are controlling what is happening, not an indicator.

Are indicators valuable? Do I use indicators? Do professional floor traders who make millions of dollars a day use indicators? Yes. But the indicators are being used only as a small supplement to you -- your mind -- and that is what is so difficult to learn. Indicators can be useful, but only when used in the right context and by the right person with the right experience.

If you are questioning whether or not you are the right person with the right experience to be able to use indicators to help your trading, and not hurt it -- then the answer is no, you aren't. You will know it when you are. It will be one of the greatest moments of your entire trading career when you realize this, everything will change, everything will be so clear.


Trading Psychology and How The Mind Works, Part II

Continuing from where we last left off, here is part two from George. If you are enjoying these then I invite you to come join the forum discussion and elevate your trading to the next level.

You can find the Psychology and Money Management forum, which George moderates, here:

Trading Psychology and How The Mind Works (II)

All right guys, here comes part two!
The subconscious mind. The primitive mind. That's where the Holy Grail is
Well, how does is work then?

As mentioned before, it perceives about 40 million bits of information per second. That's huge. And it's never dormant. In fact it has been awake and recording since the time you were a fetus.

It's divided into three sub sections:

1. The Memory Mind. It has recorded all your memories, all events, actions, everything that ever happened in your life since the time you were a fetus. Think of it as a video camera with five senses. All of your memories, since ever are there and they are there constantly in every moment of your life.

2. The Emotional Mind. It's the part that contains all of your emotions. Whenever we act, react on an emotional basis, the subconscious mind is involved. Have you ever thought of that situation when you reacted so silly, and you asked yourself later, why in the whole world did I react like that, or why did I say that? It's because of the emotive information that's stored in your subconscious mind. Remember, what was in the conscious mind. Those two sub minds are not involved then -the rational, and the analytical mind-.

3. The Protective Mind. It has the role of protecting you against what it perceives as dangerous. Let me give you the classical example of why people starts smoking in order to explain the protective part.
One of our primary needs is the need of security. When we become about, 13-14 years of age, we start to flirt very much with what's outside of our home. Our parents are not that cool anymore. The gang, the group is more important, so we start to flirt with the group. Now, in order to get in the group we have to be accepted. If the group is smoking, and we don't, we've got a problem. We start to feel insecure, because we've put our security outside of ourselves, it's in the group.

So we start smoking, and the group accepts us. Even if it tastes bad, and we're very well informed about the dangers, we get our needs of security fulfilled. The protective part has done it's job and has led into a situation in order to make us feel safe. We belong to the group.

This example can actually be translated into many situations that has to do with belonging, groups, and actions that are against our "own free" will.

It actually has one more role, it's the lazy mind. Think of it as a playing device that has recorded something and it's playing it all over again. It refuses to accept new information. Whenever new information is send to it, it does a check. Say that I make the decision of, let's say start jogging every morning at 5.00 am. It takes in the information, does an analysis, chews it, and spits it out, saying; Nope, we don't recognize that idea, thought. We haven't done that before, and there's no place for something that's bothering our protective laziness.

So, it's a playing device that's playing every event that you've experienced in your life, from the time you were a fetus, til your present moment.

It's basis is created from day 0 of your life til the age of about 7. That's because, your brain waves, in that period are in a kind of hypnotic state. They move very slowly, and your whole subconscious is very much completely open. You lack the critical factor, (-analytical and rational mind).

And that means that every litle thing that's put there, not that it stays there, but it creates the fundamentals of your character, and your outcomes in life.

Who's putting in the information? Well, most of it comes from our parents. They are the ones in charge of our lives. Let me give you an example in order to clarify it more.

Remember I told you that, one of our basic needs is the need for security. Normally, when a baby starts crying, it is taken up by the mother, it continues to cry. The mother checks the diaper, changes it. The baby keeps on crying. The last step, -the one that always works-, is to bring the baby to the bosom, and stick a bottle in its mouth or feed it with breast milk.

That's when the baby finally stops crying.

What's actually happening? The need for security is fulfilled. Being brought up to the bosom, the baby, feels the warmth and care from the mother and the need for security is fulfilled. The only problem, is that it creates an association. The brain creates that association to food. In other words, when I get food, then I'm secure.

You grow up, and every time, you had a stressed day, you feel depressed, etc. etc. You find yourself putting something in your mouth. If you start to abuse food, you give birth to obesity!
But remember it has to do with the need of fulfilling ones security.

This is just one example. Other quick examples are, those very classical as well. Just think of how many parents out there are telling their children, things like "you're not worthy", "you can't do that", "you're bad", "you'll never be able to" etc., etc..

You guys get it now?! How many of those thoughts, are you own? I confess, they're part of my package all. And I believe I'm pretty normal.

So those thoughts are not even put there by ourselves. They're put there by our parents and by society. Free will ha?!

Just take a look at your internal self talk! If you're being honest to yourself you gone find them there. And you gone notice that you are just as bad to yourself as your parents were to you.

I have to mention that, we do have the contrary picture as well, and that contains a very nice self talk, which is there because of that nice program instead.

Does the picture start to take shape now!?

In summation of all this. It's pretty basic now, right? The real us, is our subconscious mind, because we're spending there about 95% of our daily lives. The subconscious mind is this device playing on and on the program we got, in there. The program is put there by our parents and by society.
What does all this has to do with trading then?

We'll get to that in the next article.

Till then trade well, and may the Trend Gods be with you all!


To be continued...

ZN 09-09 11 range chart: critical to scalpers

I changed the colors of my charts a bit.  I have NOT changed the indicators themselves, and that is very important -- don't get caught in the indicator game where you make changes every day or every other day to suit the current market.  No, no, no.  That is a trap.  Let me know what you think about my new chart colors!

I know it was only a few days ago I last spoke about why looking at a bigger time frame chart is so important, but I have the feeling a lot of traders are still just looking at one chart.  If you are making money, then keep doing that.

But, if you are losing money and looking for ways to improve your trading, then you need to check out my video.  I talk about once again why the bigger picture is so incredibly important.

Download HD full-screen MP4 video