Day trade with Daytrader's Bulletin

Daytrading Newsletter
for Active Traders

Winter 2001/2002  Vol. 5 - Issue 4
ISSN: 1529-7985

 
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D A Y T R A D I N G N E W S L E T T E R F O R
A C T I V E T R A D E R S ========================================================

+ Tips, Tricks & Techniques - Nasdaq Nuggets
Anticipation May Add to Profits
Trading for an Income - Revisited
Daytrading in Quiet Markets
+ Update to Lowered Commission Rate in Results
+ Daytrader's Tool Box - Mentor Updates (Mini daytrading lessons)
Rules for Trading the Trendline Approach

+ Amazing Shrinking Interest Rates
+ Spotlight on Winning Technique #3 - Sufficient Capital
+ Year in Review - 2001
+ Links & Resources for Traders
+ New Free Service - OnTheOpen - Pre-Opening Commentary
+ Recommended Trading Books - Daytrader's Bookstore
+ Software & Computer Tips
and Solving Browser Trouble - Real-time Signals page not updating
+ Trading Results 2001 Year-to-date

========= Tips, Tricks & Techniques for Daytraders
Nasdaq Nuggets - New Articles

ARTICLE : Anticipation May Add to Profits
by Ralph Russell

Ralph explains how anticipation can be used to be ready for the next trading signal. If you are following a system such as the Daytrader's Bulletin Real-time Signals for the Nasdaq or S&P 500, any time you are in a trade, you can anticipate the next trade (your exit or stop placement for instance) and have your order entry software ready to pull the trigger.

Read complete article: Anticipation May Add to Profits

ARTICLE : Trading for an Income Revisited
by Ralph Russell

In June of 2001 Ralph presented on online seminar in cooperation with Zap Futures. That presentation is archived at ZapFutures.com.

We have also posted an html version. The graphics are not as clear and there is no audio on our version.

We are often asked about the realities of daytrading, and in this article, Trading for an Income Revisited, Ralph addresses this question.

Read complete article: Trading for an Income - Revisited

ARTICLE : Daytrading in Quiet Markets
by Ralph Russell

The title says it all. The Nasdaq and S&P markets have both shown a reduced range over the last year. Ralph shares his thoughts about the reduced range.

Read complete article: Daytrading in Quiet Markets

These articles and more are found in our Tips, Tricks & Techniques section:

Details for reprinting or posting on your website?

========= Update: New Commission Rate Trading Results Signals

We have decided to change the commission rate we show in our trading results to $10/round turn. We believe this rate more accurately reflects current market conditions. Many brokers are offering rates as low as $5.00 and we have been advised by some of our subscribers they are paying that rate.

Consequently, starting January 2nd, 2002, our new rate will be reflected in the trading results shown on pg. 5 of our Daytrader's Bulletin Overnight Updates for both the S&P 500 and Nasdaq 100.

========= Daytrader's Tool Box - Mentor Updates
Online Lessons in Daytrading

Rules for Trading the Trendline Approach
by Charles Holt, CTA

The best way to develop a strong and effective trading approach is to find something simple and develop the discipline necessary to trade it without deviation. This approach is excellent for discipline training as it is simple to follow and simple to execute.

Read our Mentor Update for Trading the Trendline Approach. Links for Free Trial Library and Subscriber's Library are on the left-hand side of the above page and are also listed below.

This Mentor Update was sent to subscribers and current free trialers and is available to anyone taking a free trial in the future. If you have not had a trial for at least six months, request your trial today.

Mentor Updates Library
Our Free Trialer's Library are the Mentor Updates we make available
to give you a taste of our great content. Subscribers have access
to the entire library of back issues and also receive all new
Mentor Updates as they are published.

Links to the List of Titles in the Mentor Update Libraries are on
the left-hand side of the above page or directly at:

Free Trial Library
Subscriber's Library

Both libraries require a user name and password for access. If you have not had a trial within the last 90 days, sign up now:

If you have had a recent free trial and liked what you saw, now is a good time to subscribe.

+++-------------- Daytrader's Mentor --------------------+++

Daytrading Mentor. One-on-one with a skilled professional.
Overcome your limitations, break through to the trader you
know you can be.

Visit the Daytrader's Mentor site for more information.

+++------------------------------------------------------+++

=========== The Amazing Shrinking Interest Rates

Alan Greenspan to the rescue! Here is a chronology of the Fed's idea of saving the economy. If it were only this easy to shrink a few waistlines as well ;-)

January 3rd, 2001- After raising rates six times in 2000, Greenspan leading the FOMC (Federal Open Market Committee) orchestrates a complete about face in response to the rising concerns about the economy.

Starting rate - 6.5%
Rates lowered 1/2 pt to 6 percent on January 3rd.

January 31st, 2001 - When the word "recession" was first uttered, the Fed's again lowered rates 1/2 pt. This cut was done unannounced and caused daytraders some grief that day. New rate 5.5%

March 20, 2001 - Rates cut another 1/2 pt. As of March 20th, the new rate was 5%

April 18, 2001 - Yet another 1/2 pt cut. New rate 4.5%.

May 15, 2001 - 1/2 pt rate cut called to combat rising unemployment. New rate 4%. Visitors to a CNBC Internet chat room saw a post cited by "Asian Business" which stated: "[Greenspan] is an old fool who should be packed off to a retirement condo in Florida."

June 27, 2001 - Another cut, this time for 1/4 pt. Expectation was announced that the results of the January cuts would soon impact the economy as it generally takes six to nine months for a cut to show noticeable results.

Notice any pattern?

August 21, 2001 - Feds cut rates 1/4 pt, to new rate of 3.5%.
This is the lowest rate in more than seven years.

September 17, 2001 - Just six days after terrorists leveled the World Trade Center, the Feds announced another 1/2 pt. cut. New rate 3%.

October 2, 2001 - Another cut of 1/2 pt brings the prime lending rate to 2.5% -- its lowest rate since 1962.

November 6, 2001 - A 1/2 pt cut on Nov. 6th precedes the Nov. 26th
announcement that the US had entered into a recession in March. Who would have guessed?

December 11, 2001 - The 11th cut in 2001 of 1/4 pt brings the Fed funds rate to 1.75%, the lowest level in 40 years. Economists expect a rebound in the first half of 2002.

=========== Spotlight on Winning Technique #3 - Risk Capital

No 3 in 10 Winning Techniques of Successful Traders, featured in our Nov/Dec 2000, Newsletter for Active Traders states:

"Have sufficient trading capital, and only trade with risk capital they can well afford to lose."

Sufficient trading capital pertains to risk management and risk capital simply means money you can afford to lose. Traders often balk at the phrase, "afford to lose" in that they want us to understand: they do not like to lose, but will, if necessary.

Money you can afford to lose simply means money that if it were gone,
would not affect your lifestyle in any way. Risk capital is not your retirement fund, a second mortgage, or money earmarked for your child's education. It is money you do not need to afford your present (or future) lifestyle. Extra, non-essential funds -- that's risk capital.

Here are some simple risk management rules. Be sure to have your risk management in place before you begin trading and follow the rules. To truly master daytrading, you must first master your own impulses.

  1. Take no trades until the set-up is low risk. Place your stop on the other side of support/resistance or another area where price is unlikely to go.

  2. Risk no more than 2% of your total capital on any single trade. If your account is $10,000, and you are trading the e-mini S&P contract, you could afford no more than a 2 - 4 pt stop.

  3. There must be a sufficient range and trending action to pull the required points from the market.

One can easily see that the larger the trading account, the more easily a trader can be in the market and still stay within the parameters of his or her risk profile.

If what you are calling "risk capital" is not truly money you can afford to lose, you are setting yourself up for additional psychological issues regarding the fear of loss.

=========== The Year in Review 2001

What a trading year it has been! Blood in the streets, people have lost entire retirement funds due to companies suddenly going bankrupt. Daytrading has been difficult due to the small ranges we've been seeing lately (see article mentioned above, Daytrading in Quiet Markets).

How much can the current market be blamed on the events of September
11th, 2001? The markets were in trouble before September 11th, 2001. The entire tech sector was down. Long-time rock-solid companies were suddenly being de-valued.

Reports that were released after September 11th and before the markets were reopened were very negative even though the reports reflected economic data from the month before.

The signs were all there, yet we are now told the recession may be short lived. Tell that to the thousands being laid off. We don't know what the next year will hold, but at least we have some history behind us and can more effectively deal with whatever we are dealt in the way of market action.

Anyone can have a full week's trading with our Real-time Signals, if you haven't already had a trial in the past 90 days. All new free trials to the Real-time Signals have access to both the S&P 500 and the Nasdaq 100 Signals. You will also receive the Overnight Updates for both markets as well as Mentor Updates that are published during your trial.

If you have recently had a free trial and liked what you saw, now is a great time to subscribe.

========= Links Of Interest to Daytraders

Federal Open Market Committee:
Dates of the FOMC Meetings

CME Time & Sales

JavaCharts(c) - ProfitFinance.com provides JavaCharts which have an
incredible array of variations you can apply to the charts. Simply choose and drag your choice to the chart and it is instantly updated.

Market Skill Builder - If you are learning to trade, and especially if you are new to trading and want to tackle daytrading, you'd be well advised to spend some time with a simulation program before attempting any real trading. The Market Skill-Builder software is easy to understand and use to help develop skills and confidence to trade in the real arena.

========= Join our New Yahoo Group - On The Open

OnTheOpen allows anyone to receive our S&P 500's Pre-Opening Commentary. Subscribers receive this information in the Real-time Signals, a few minutes before the markets open. With OnTheOpen, and In as short a time as is possible (using the Yahoo Group's service), you too can obtain this valuable pre-market information outlining our analysis of the market's probable open, gaps, reports, what happened during the overnight session and what you might expect to happen for the first hour or two of trading.

While we are not able to predict the future, our analysis of the overnight markets is generally very good and accurate for the first hour or two of trading and can help you make a better informed trading decision.

Sign on for free. The OnTheOpen message is sent once a day on trading days only, and is an announcement list only (no posting by others). URL: http://groups.yahoo.com/group/OntheOpen


========= Favorite Trading Books: Bookstore for Active Traders

Our favorite trading books - Technical Analysis & Charting Favorites

Check the list of our favorites, many of which are on our own bookshelves. Amazon is hanging in there and still offering deep discounts on most books. Gas prices have fallen back to realistic levels. Maybe we can just keep riding this gravy train for awhile longer? You just never know...

If you are buying less than $50 worth of books it may not be worth the additional cost of shipping and the extra time to receive your order. I generally order several books at once, if ordering online, and then the savings are well worthwhile.

(Remember, to close the new window that opens when you click a book link, use Ctrl + W)

========== Software & Computer Tips

Today's Computer Power, More Computer For The Money

Computers keep getting faster and less expensive. It's getting difficult to keep up.

I've seen vendors that advertise specifically to daytraders, as if you have special computer needs. Don't believe it. It is simply marketing hype for computer system sellers to attempt to over sell the daytrader.

The average system today is well equipped to handle a trader's needs.
With a fast computer (over 1 Gb), plenty of memory (512 Mb or more), and an excellent graphic's card, you will be set, and you do not need to pay any more than anyone else for these features. If it is sufficient to play the more recently released games, then it is an excellent system for the daytrader. I'd expect to get a great system for $1,500 or less (not including the monitor). I wouldn't be afraid to spend an equal amount on the monitor ;-)

I prefer to buy and have the system built locally. If that nice name
brand system goes bad, you will either have to pay to ship the system
back, or you are expected to be your own service technician. You cannot take your system to a local repair shop without voiding your warranty. If we need service we can get a local computer tech to come by our office and fix it on site. We pay a small amount extra for this service and it's worth it.

Lastly, remember to make regular backups of your data folders. The hardest thing to replace is your data. At the end of trading just do a simple cut and paste of the entire folder which contains your data files, or create a backup macro to do this.

Ideally burn the backups onto CD, so you can re-install them on any system at any time. If that isn't possible, make a backup to another computer, buy a portable hard drive, or use a Zip drive, so the data isn't stored on the same hard drive as the original.

Expect to be able to buy twice as much at half the price next year!


~~~~~~~~~

Internet Explorer Browser Tips:

Problem: Web Pages Are Not Updating
If you are having trouble receiving the Real-time Signals (or any automatically refreshing content), then check these settings to be sure your browser is set to refresh correctly:

Internet Explorer: Go to Tools > Internet Options > General >
Under Temporary Internet Files choose Settings.

Make sure the box for Every visit to the page is checked. If it is not, check it and choose OK.

Then just click OK again to close the dialog box.


~~~~~~~~~

Problem: Password Protected Areas Won't Allow You Access.
This is generally caused by having too high restrictions set in your browser. Here's how to check:

Internet Explorer: Go to Tools > Internet Options > Security >
Click on the globe that represents "Internet" and then choose Custom Level.

Scroll to the bottom and you'll find User Authentication
Login. Here, to be able to access password protected areas, choose "Prompt for user name and password." Then click OK and OK again to close the dialog.

========= Year-to date Trading Results for 2001

S&P 500: Our cumulative net result up to and including December 21st,
2001 on our $30,000 model account is $33,600.00. This is a 112.30% year-to-date return.

Nasdaq: Our cumulative net result up to and including December 21st,
2001 on our $15,000 model account is $31,073.50. This is a 208.30% year-to-date return, trading one and two lot sets of the e-mini Nasdaq!

These results are posted after each trading session in the Overnight
Update and also can be viewed on our Cumulative Net Results page: http://www.daytradersbulletin.com/html/cnet.mv

========= Disclaimer

It is our sincere desire that our web site and Real-time Signals service is an informative and educational resource for you as a trader. Please be aware that you may trade in front of us, with us, or after us and that it is imperative that you make your own trading decisions based on your specific risk tolerance and
discretionary funds. There is a risk of loss in trading futures.

========= Prior Issues
Read our back issues

Good trading,
Kathryn Martyn Smith, M.NLP
Publisher, Daytraders Bulletin

 
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