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Trade Management Tips for The Bulletin Signals
The Daytrader's Bulletin provides real-time trade signals for the S&P 500 and the Nasdaq 100 futures contracts. Experienced traders either use the signals as a confirmation of their own signals or simply trade the signals, while less experienced traders can use the signals to gain an education into the realities and day-to-day experience of being a day trader.
Once you have a User Name and Password you may enter the Real-Time Signals via the Free Trial Bulletin Signals page. Signals are provided during normal trading hours (8:30 AM to 3:15 PM Central). Please note Subscribers would use the first link entitled "Subscriber Entry" while those using a free trial would enter via the link entitled "Free Trial Entry."
Types of Bulletin Signals
We issue many different types of bulletins including: Special, Entry, Exit, Management, Signal Alert, Market Open and Market Closed. Following are descriptions of each type. Refer to The Guide for more details and explanations:
Special Bulletins are informational in nature and describe anticipated market action; the behavior of indicators, trendlines, moving averages; and logistical information. Often they include references to moving averages.
Moving Averages All of our moving averages are 20-period exponential unless otherwise noted. We refer to these moving averages such as: "5M" for a 5-minute exponential moving average. A 30M moving average would mean a 20-period moving average on a 30-minute bar chart.
In parenthesis we then note the value of that moving average at that time -- as time progresses, these values change and the shorter period averages (such as the 3M and 5M) can change very rapidly with price movement. 5M moving average (1248.50) would mean a 20-period exponential moving average on a 5- minute chart and its current value is 1248.50.
See the previous day's 5-M daily chart for a legend of the colors used for the different moving averages.
Entry Bulletins get us into the market either long or short and are so described in the top right area of the Signal page.
Exit Bulletins unwind our trade 1 contract at a time or sometimes all at once depending on market conditions.
Signal Alert Bulletins will alert you to the probability of a trade being placed soon -- usually within minutes. We send these alerts when we have sufficient warning of a trade set-up.
Management Bulletins move our stops as price action moves in our direction.
The Market Open and Market Closed Bulletins announce the opening and closing of the market.
Errors and Mishaps
We, or our system, on occasion, can make an error. Once our system hiccupped and presented a buy screen to our Subscribers and Free-Trial users. Only by noticing the completely out of synch price would a trader be alerted to the fact that the signal was in error.
It is critical for you to verify that the Price @ Signal value is within the 100 Point Rule. If the entry price is far away from the current price on your data feed, you can assume an error posting has occurred.
These errors are rare but it is important that all traders realize that this can occur. Also, if you have a buy indicated, verify that the Management Field shows a sell stop (rather than a buy stop) and vice versa.
If the Entry Signal is not clear or you are uncertain, do not take that trade. We issue Special Bulletins noting any errors as soon as they are recognized by us or others.
If price moves a certain number of points (100 points unless mentioned to be a different value prior to the trade) beyond the Price @ Entry field value within 15 to 20 seconds of the Time Stamp, we will term the trade unabled. This value takes into account the natural noise background of market conditions and will occasionally change from our 100 point default.
This procedure is meant to reduce the amount of slippage if price runs in our direction. If price moves against our position by 100 points, it probably means the trade is in error. In either event, our terming trades unabled is meant to protect your capital - our primary consideration.
The resultant move of many unabled trades is in the direction of our original trade. For example, on Wednesday February 10, 1999 we had three unabled trades totaling 1700 points movement in our direction. Statically however, it is best to not enter unabled trades. If you do enter an unabled trade, either inadvertently or by design, we have some trade management approaches that work well:
How We Determine Fills
On the last page of the Overnight Update we show a Fill Price for all entries and exits we initiate on every trading day. If we do not have an actual fill on which to base our Fill Price, we use the CME Time and Sales to estimate the fill.
We do this by taking the median price value the CME shows for that day's Time and Sales 45 to 60 seconds after our Entry Bulletin Time Stamp. Why 45 to 60 seconds after our Time Stamp? This is the approximate time it should take to receive a Signal (10 seconds average), evaluate the critical fields (10 seconds) and either send an order in electronically (usually two mouse clicks) or to call into the pit (25 to 40 seconds) and get the order filled.
See the example below for details. This would be the Entry Signal: 9:49:38 Buy 2 S&P @ Market Price @ Signal: 1239.50 Following is a small portion of the CME's Time and Sales for the date and time period of the above Entry:
The median value we would use in this example would be 1239.50 which was coincidentally the same price as our Entry Signal Price @ Signal field.
There are two ways to place your trades when daytrading: electronically or by phoning directly into the pit. Each method has its advantages and disadvantages:
The ideal arrangement, in my opinion, is to place orders electronically when your system of choice is operating optimally. When there are technological problems with the electronic submission system, phone your order in to another broker and pay a nominal "give up" fee for the transaction.
The reason to use a different broker is that many other traders will
also be calling the order desk and that desk will almost always be swamped
when there are technical problems with that broker's primary submission
method. The give up fee of several dollars is not a consideration when
compared to the slippage of an untimely entry or exit or missing a trade
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