ping pong trading strategy

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The Ping Pong Trading Strategy

The Ping Pong trading strategy is one of Rockwell Trading’s most useful contributions to futures trading intellectual capital. This strategy, which is ideally applied in a sideways moving market, has been very carefully plotted in a detailed trading plan which they teach in their trading education materials.

This works best when it is clear that the market is moving sideways. Under these circumstances, the futures prices are fluctuating in a narrow band, and the money is made by buying at the bottom of the troughs and selling at the top pivot points of the charts. A clear set of rules about the price range is in place such that as an order is executed, the exit order is immediately placed at a price predetermined by the profit range defined by the rules of the strategy. A predetermined stop order is also place for unexpected movement of prices against the order.

A key factor in the success of the Ping Pong trading strategy is the use of “Range Bars” which make the entry and exit points a very simple mathematical matter. Rockwell Trading is one of the few trader education companies that teach strategies that cover every type of market condition. Since many futures traders sit on the sidelines when there is no trending in the prices to be followed, those that are fortunate enough to know how to use the Ping Pong Strategy are able to keep trading profitably using the Ping Pong Strategy, even when the market is in the doldrums.  We have used this strategy successfully many times.

The Ping Pong trading strategy is taught in the Rockwell Trading Ultimate Day Traders Course .

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Day trading signals for determining the right moment to enter a day trade is the key to all profits, and minimizing losses. Notice I did not say that determining EXIT points is the key. This is because exits points should always be determined in advance. Your profit target should either be preset with closing order which will take you out of the trade when it reaches your target, or a stop order at the price you were not prepared to go below.Folks who trade for a living take the emotion out by having their winning set-up already proven and then waiting for the set up to present itself.In recent times day trading signals have become easier to read through the use of Range Bars. See an excellent article at Futures Mag, which explains range bars.Once you have an idea of how range bars can help. Then go to Rockwell Trading where they have day trading signals down to a science using range bars in four proven strategies which use range bars to maximize the probabilities of attaining winning trades. You can even watch or copy the trades that Rockwell do in their own trading room each day. Become a Rockwell student and profit from joining the daily trading room activity.

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I am a new trader and have taken a few courses, this is one of the most informative and gives you all the basics along with the practical application (which other courses only generalize). The course is very good and would recommend it to anyone” – Dale S.*

Trading requires a trading strategy and a lot of study and practice. The only way to speed that process up is to get good training with sound advice. This course does that and more. It contains an invaluable trading snapshot with the bonus of a working strategy thrown in for good measure. I wish that I had done this course earlier on, I may have had an easier journey down the day trading route.” – Andre G.*

This is the best home study course I have seen. The information is well presented. This is a ‘one stop shopping’ course for traders as it has it all. Mark Hodge     is an extremely knowledgeable trading instructor with a unique ability to convey his knowledge to the student. I would strongly recommend this home study course for all traders.” – Joe A.*

Thank you Markus, Mark and the entire Rockwell Trading Team for this home study course. It’s obvious your knowledge on the subject of day trading is encyclopedic and that you have taken considerable time and made great efforts to produce these videos. The in-depth explanation of day trading and yet simple to understand lessons make your home study course the best and most comprehensive I’ve seen. Bravo!” – Rafik D.*

Yet again, Rockwell Trading have hit the nail on the head. Their success comes not only from the level of their knowledge and experience within the trading profession, but also their recognition of what traders need in order to become successful independent traders. Keep up the good work, Rockwell. Thank you.” Becky T.*

I have completed the Home-Study-Course and I would recommend this course because the knowledge it covers is exactly what a trader would need to be a successful day trader.” – Ken K.*

What a great way to get basic information! The technical analysis and the explanation of the popular indicators were simple to understand. The important aspects of risk management and trading psychology were covered in depth. The entire home study course offers a well rounded beginner education and inspires further study through the Rockwell Trading program.” – Fred E.*

I feel the content is presented in a way that is very understandable and will help me be a successful day trader. Every aspect of trading is covered making sure you understand the risks as well as the rewards of trading. These are tools that are at your finger tips to go back over and over again to ensure you understand today and in the future.” – Cherry H.*

Rockwell’s video course is well balanced on all aspects of day trading. Very good introductory course for the beginner trader. The experienced trader will also find useful tips. Highly recommended.” – Argyrios M.*

I think it is a VERY valuable resource for new traders. These videos should be viewed and reviewed as one gains experience and tries to iron out a trading plan that goes beyond the knowledge level attained at the end of the initial coaching. In addition it is a good reference for anyone who feels like they have gotten off track and needs to go over the fundamentals of trading, of RWT trading, and of being a professional.” – Ryan B.*

Any trader, either experienced or new to the business of trading, will find the format, content and delivery of the Rockwell Home Study course extremely valuable. Markus offers his students a wealth of THE RIGHT information and strategy for success. Furthermore, Rockwell Trading is extremely accessible and always quick to help.
Throughout his book and the course, Markus stresses the importance of having a trading plan and sticking to it – I am glad I made Markus part of my plan.” – Ryan C.*

I have read book after book, this course says it all. I spent years looking for direction in trading. This course puts you at step 1 and gives you the direction to take more steps to success in the markets. If I would have taken this course first, it would have saved me a lot of money, as well as time wasted, looking for the success I had hoped for. Good job, guys!” – Ron A.*

The Home Study Course is a great starting point for the beginning trader. It covers all the bases you need to get started and will act as an excellent reference tool as you advance in your trading.” – Troy Y.*

I wish I had a well rounded course like this one before. This would have saved me a lot of time and money searching for answers, which no other course I had taken in the past could do.” – Michael D.*

I am amazed to think of all of the information you transferred to me. I feel slightly foolish for not realizing all that I did not know, even though such a realization before the fact isn’t possible. Thanks for spending the time and making the strong effort to help my trading skills in a tone of honesty. The course is way above my expectations. Again, thank you for the honest tone in your teaching. That and your experience, I value more than anything.” – Luca T.*

If I had this when I started it would have saved me many thousands of dollars and much frustration.” – Vince Z.*

The course is an excellent and easy to follow presentation of the Rockwell Trading system that complement its quality customer support in an heart-felt plan to improve your trading. The best training plan on the market by far.” – William R.*

An excellent set of videos, replete with both technical and trader psyche info, clearly explained. A how-to foray into the world of day-traders, complete with a winning trading strategy, and an easy methodology for building a successful trading plan.” – Joe T.*

This is an excellent well balanced course. It gives in-depth coverage of everything a new (and not so new) trader needs to know before entering into what potentially should be a life changing venture. The course is professionally presented with clarity and definition. Of particular value is the coverage of the areas where 90% of traders fail and the techniques to avoid these pitfalls. I only wish I had this available when I stated trading, it would have saved many hours and a lot of money. Highly recommended.” – Anonymous*

This excellent Home Study Course on day trading futures is available here

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It beats me why anyone would even suggest that the words, Rockwell Trading and scam could be used in the same sentence. Having been around the block a couple of times, I can recognize a scam a mile off, and there is no scent of that here.

Day trading can be a very profitable, but it can also cause significant loss, so anyone offering education in this area has to be very circumspect about how they instruct their students to conduct their trading activities. Rockwell Trading does this TO A FAULT. In fact if one were to criticize Rockwell Trading for anything, it could be for being too conservative in the way they suggest that you enter the emini trade arena for day trading the futures market with extreme caution and wait forever before transitioning from paper trading to the real thing. The reason for this is that they are real traders, and they know the risks.

For me, the proof of a Rockwell Trading scam or not is the fact that they have happy customers, and they have a trading room where students can watch the Rockwell strategies being applied in a live trading environment every day. There is no better proof of the genuine article.

They make non of the typical scam-type claims such as, “day trading is easy”, or “you will make $100k per month with our system“. Their claim is that they can show you how to day trade the e-mini futures market successfully, using a handful of tested and working day trading strategies, the right mindset, and the appropriate money management.

Believe me, I would never recommend their products if I suspected even a hint of exaggeration or duplicity in what they offer. I have taken some of the courses myself, and find them very instructive, professional, business focused, and down to Earth.

Click on the Rockwell Home Study Course Testimonials link, for some customer testimonials that I clipped from their website, giving further credence to Rockwell Trading’s success in producing active, successful traders, from their Day Trading Home Study Course which is one of the best available. No Rockwell Trading scam here……

Here is a secret most people do not know – Rockwell now offers the Ultimate Day Trader’s Course which is a major innovation and is the best value for money available out there. Most trader education organizations think that because you can make good money from day trading, they can charge exorbitant  prices to teach it. A real day trading course can rarely be found for less than $2,000. Well all this has changed with this new incredible offer from Rockwell. – Get it here.

Avid Trader

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Rockwell Trading Review – the good and the bad about Rockwell Trading’s products and services

Summary evaluation:

Rockwell Trading is focused on a soup to nuts approach to day trading education. The scope of their products and services covers the full scope of learning how to day-trade including extensive education in technical analysis and setup, money management, psychological and mindset issues, setting up systematic strategies for success probabilities in trading, and then moving on to practical application of all these principles. Converting the theory to actual trading is where I think that Rockwell Trading has developed an edge over many other organizations offering trader education. Rockwell takes a handful of simple day-trading strategies and gives a window into many live instances of these strategies in action. This is further enhanced by the valuable “trader room” access that students can participate in, watching the professionals in action using the very strategies that have been clearly laid out in the home study course. Personal mentoring is also available.

BIG NEWS! – New Ultimate Day Trading System Offering - Rockwell has out done themselves this time. I unreservedly recommend the Ultimate Day Trading Course as a means for the novice and others who have not become successful as yet, to be introduced and become thoroughly versed in becoming day trading, as well as for the experienced trader to get new, uncomplicated, systematic, ideas for successful trading in the futures market.

What is so great about the new course?

  • Covers everything you need to know – charts, entry and exit, money management, keeping risk  low, trending strategies, sideways market strategies, using futures for stocks, forex and commodities trading …….
  • Provides all the tools you need – software and template setting for it
  • Works with broker with first-class systems and low trading capital requirements (starts at about $3,000). Free trial and free simulated trading facility.
  • Live trading room to watch, follow, emulate.
  • It starts off with guidance for modest trades and then shows you how to build on that.
  • Best value in the USA – this quality course will get you successfully trading for less than any other- Get it Here.

Detailed Rockwell Trading Review:

The core of Rockwell’s educational offerings is now the Ultimate Day Trading System

Strengths:

  • Hours of clear DVD instruction using live charts and examples Plus access to trading room to watch and follow live traders making futures trades
  • Comprehensive coverage of all required topics for trading success
  • DVD (or online) format allows repeated viewing of any topic for thorough learning
  • No assumption of existing knowledge, but good use of time so as not to be a waste for those with some knowledge
  • Some unique aspects to trading which will be of interest and profitable to experienced traders
  • Value for money – probably the most value for money available in the market – most other substantive trader education offerings require a substantial fee of anything from $2,000 to $12,000 for the course or classes. The Ultimate Day Trading Course has all the content and quality for a fraction of the price.
  • Personal touch – registered students have access to instructors and mentors within Rockwell, who will help them with particular points of clarification, pointers and tips. Support staff and traders at Rockwell give the distinct impression of being more interested in the student trader’s success than making a buck from the student.
  • Practical – the whole course is oriented towards producing successful traders so there is very little useless theoretical content. Very practical.
  • High tech – Using state of the art trading platform which takes substantial amount of trading overhead actions out of the process allowing the trader to focus on the trading indicators and signals exclusively. Rockwell teaches the day trader how to get the maximum out of rich functionality of a good trading platform.
  • Multiple Market ApplicabilityStrategies are shown to work in the emini trade area, foreign exchange trading, and commodity trading. Focus is on profiting from the E-mini futures market.

Weaknesses:

  • Focus is on emini trade with no strategies for trading stocks, options, or ETFs. (although with some diligence some of the strategies taught can be adapted to work for other types of securities).
  • Traditional investing, and fundamentals analysis, is not covered. The course does not purport to cover this area, so this is hardly a real weakness, but buyers should be aware that this is strictly for Day Trading. It does cover charting and indicators very effectively and fully.
  • The success of the strategies is very integrated with exceptional functionality of the trading platform used, so porting the strategies into another trading environment may not be too easy. However being a successful Day Trader is as much about using the right technology as it is about knowing how to do it, so in a way pointing the trader to an ideal platform for success could be said to be a strength.

About the reviewer: Basil Marais is a corporate finance professional who also has a passion for trading in the stock market. He has undertaken a number of stock market educational projects along the way and is eminently qualified to assemble a Rockwell Trading Review of their offerings in comparison to others. Basil does not endorse products that he does not believe are above the norm in quality and value. Basil will benefit from sales of Rockwell products resulting from this review.

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A Day Trading Class is one of the best ways to obtain the required knowledge for internet day trading. The important aspects about such a class are that they include all the day trading basics you need, and concentrate on emini trading which is the most popular and straight forward way to day trade in the stock market. We have identified an inexpensive and full coverage class, including day trading strategies and techniques.

Emini Trade Day Trading Home Study Course Video

The content of this course:

  • Contains several demonstrated examples of various emini system approaches that can be used to trade for each of the circumstances of an upward or downward momentum market and when the market is moving sideways. Includes live trading examples.
  • Includes in-depth instruction on the ins and outs of technical trading
  • Has strong emphasis on the risks with commensurate focus on preserving capital with correct risk-management. (Get the essential Money Management Course)
  • Contains clear instruction on how to have the correct psychological attitudes.

We do not believe that all day trading education is equal. For example the excellent book, “A Beginners Guide to Day Trading Online” by Toni Turner is not enough to prepare one for active day trading. It does not cover futures, and it suggests no actual strategies. It does bring alive the trading environment with all its dangers, pitfalls and unique eccentricities. A more focused book which you DOWNLOAD FREE NOW is “The Complete Guide to Day Trading” (more than 300 page E-book by a professional trader who tells it like it is)

Recommended Training:

The course we identified is one of the best offerings available. It is the e mini “Day Trading  Home Study Course (special low pricing on this link)”. The authors of this excellent package have compiled  a fully inclusive day trading class in a box. This is ideal in many very practical ways:

  • Contains all the required information set out in a clear, step by step manner – there are no gaps – all you need to know to start trading successfully is included.
  • Is inexpensive at less than $197.00 (Compare this to other common prices ranging from $2,000-$10,500 for education in this area).
  • Contains actual video clips of live trading, demonstrating several  strategies that can be applied in the Emini trading environment
  • Unlimited access via CDs in a box, or to the materials online to allow completion of the course absolutely in your own time, at your own pace.(The CD’s in a box cost a little more)
  • Produced by professional traders with a flair for education and mentoring others.
  • Shows how mini futures  day trading techniques can also be used to trade the forex and bond markets.
  • Full 30 day money back satisfaction guarantee
  • Includes live support from people who can clarify difficult aspects if necessary.
  • Another “nice to have” as part of a day trading class  is a next step whereby you can receive personal mentoring in an active trading environment.

Check out the e mini Day Trading  Home Study Course (special low pricing on this link)

HomeStudy Course

For more on E-mini Futures Trading, click here …….




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Day trading future - Using E-mini futures, the day trader can successfully take long (buy) or short  (sell) positions for a few minutes at a time, taking advantage of whatever trend or lack thereof is in force at any given time.  E-mini Trading is significantly different from traditional methods of investing in equities. Traditional investing usually involved a broker who is looking out for his own interests and investments which are made with the promise of medium to long term gain. E-mini futures trading is far more flexible in terms of time frame, giving the investor the opportunity to make many small gains in a day compared to a traditional investor taking positions with several days, months or even years between each transaction.

Characteristics of E-mini Futures  (or mini futures)

  • Emini futures are small-sized contracts to buy or sell the E-mini security in the future, based on a stock index, commodities, foreign currencies, or other financial instruments as the underlying assets. See comments on “how much money do I need to start?”.
  • E-minis are traded electronically, (“E” for electronic) affording retail traders the opportunity via online trading compete against institutional traders in day trading future contracts.
  • E-minis are derivative in nature
  • E-Minis typically grant the holder a 20:1 leverage on the underlying asset, thus giving the trader the ability to control 20 times more of the commodity than if the contract had been for a direct purchase or sale of the underlying asset.
  • A sample list of items that can be traded in e-mini form include:
    • /ES – E –mini S&P 500  (our favorite)
    • /QM – MiNY Light Sweet Crude
    • /TF – mini Russell 2000 index
    • /NQ – E-mini Nasdaq 100 Index
    • /YM – E-mini Dow Jones Industrial average
    • /EMD – E-Mini S&P Midcap 400
    • /E7 – E-mini Euro FX
    • /M6A – E-micro Australian Dollar
    • /M6B – E-micro GBP
    • /M6E – E-micro Eurodollar
    • /YG – mini gold
    • /YI – mini silver
    • /ZB – 30 year US Treasury Bond
  • An E-mini is a futures contract to buy or sell at given price for a given commodity
  • Mini futures contacts can be traded overnight
  • Futures contracts do not have the short-selling uptick rules as stock trading does
  • Futures differ from options in that the contract is not an “option” to buy or sell, but a  commitment to buy or sell. This introduces a strong risk element . (See Emini system necessities – managing risk)
  • Taxation rules applied are same as stocks and options traders
  • Each type of futures contract has a unique value per “tick” on the electronic exchange. For example the /ES (e-mini S&P 500) has a value of $12.50 per “tick”. In this case 4 “ticks” comprise a $50 “point”. Day traders use the “ticks” as the measurement value on which to place orders to buy or sell. See more on E-mini charts on Day Trading Emini Stock Tips.

Example of a typical day trading future trade.

A “sell” trade in /ES (E-mini S&P 500) futures could look like the one below.

In this example the price moved up from $1389.00 (entry point) to $1,397.25 (exit point) , a total of 8.25 points, which at $50.00 per point translates to a gain of  $412.5 per contract purchased. Entry and exit points are carefully planned according to a pre-defined trading strategy using indicators, volume, and average volatility.

This strategy and others can be learned in detail, step by step from the (lowest cost available for this course) “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post  Emini education  – Day Trading Class and Day Trading Seminars

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Day trading basics – the benefits, the risks, the realities. We cover these essentials with special reference to emini futures trading.

Day trading is interesting to certain folks for three main reasons;

  1. People who are unemployed are wondering if day trading the stock market may be an answer to replacing income from a regular job.
  2. People who are familiar with stock and options swing trading or momentum trading and now want to shorten the time horizon to day trading
  3. People who have retired from regular employment and who want to make some money on the side.

These are all legitimate reasons for exploring day trading but in all three cases, and especially in the first and last cases, we caution you against jumping in prematurely, before having an in-depth understanding of day trading techniques and day trading basics. Futures trading is not suitable for all types of investors as there is a substantial risk of loss in trading futures (and options). Many folk who have tried day trading as a profession have failed because they failed to do adequate preparation and to obtain advice from those have learned to do it successfully.

E mini futures trading is one of the most popular ways to trade the stock market as is trading with certain ETF (Exchange Traded Funds).

E Mini Future Trading – the Pros and Cons

Because the benefits of day trading align so closely with those of futures trading, this list covers both:
The benefits:

  • Work from any location with a high speed internet connection – no geographic restraint.
  • Low overhead costs – a little equipment, a connection, a desk in the spare room.
  • Volatility in the stock market generally can be very frustrating to the short or long term investor and may result in frequent losses or very reduced gains. Volatility in day trading is the trader’s friend (most of the time) and E-mini futures will track the volatility closely.
  • Low initial capital required – this advantage is unique to internet day trading of futures trading  – if you day trade stocks, ETFs or options you will need a minimum of $25,000 in your account. See my post “How much money do I need to start?”
  • Gains can be made when the market is going up, down or sideways. (See day trading techniques)

The disadvantages:

  • Day trading is a ruthless pursuit which endeavors to gain from causing the other person to lose. You can be on the wrong side of this equation.
  • Day traders need to have or develop a unique psychological approach to actions and situations which otherwise could cause health-damaging stress. (See good day trading advice – the right mindset). Trading e mini futures  is best approached by applying certain mechanical emini trading systems  which provide predetermined entry and exit point strategies and which therefore take the emotions of fear and greed out of the process. The removal of these emotions enables the trader to be mentally on a par with the professional who is also trading with preset plans and not “by the seat of the pants”.

If you are serious about eminis trading then you need to start with day trading basics. The best way to get the basics is to get in depth training via a high quality day trader course. One that we highly recommend is this Day Trading Home Study Course on day trading E-minis. This is also the lowest cost available for this course, so do not miss out.

More on why E-minis for day trading.

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Day trading techniques can essentially be categorized into three main types:

  • Trend Following Strategy
  • Trend Fading Strategy
  • Ping-pong Strategy

Using each of these day trading secrets involves reading and interpreting emini trade price movement charts together with multiple popular technical indicators. The objective is to establish a high probability that the price of the E-mini is going to move at least “x” points in a given direction. Based on this expectation the trader sets up a buy or sell order to enter a trade at a certain price, exit at another price for a gain, and protects the trade with a stop loss order for instances where the wrong view is taken.

A prerequisite for successfully using these techniques is that you study the history of the preceding trading days for the emini you are trading  to establish the average “daily range” of prices. The highs and lows and the distance between them on average will give you the parameters inside which you can potentially make a profit on a given move in prices.Range Chart

The Complete Day Trading Home Study Course – Download Version (discounted price)

  1. Trend Following Day Trading Technique

    Use this strategy when the market is trending strongly in an up or down direction. The day trading tip here is to recognize the strong breakout and place an order to buy or sell at a specific point and then place an order to close that position for a gain at a predetermined exit point. The predetermined exit point is set at an acceptable profit target, but inside the probable range where the price will reach a high or low and start turning again. This is takes the emotion out of the trade having set a mechanically executing exit point.
  2. Trend-Fading Day Trading Technique Use this strategy when the market has moved significantly beyond its normal range. This is related to a concept called “exhaustion” which sometimes occurs when a security has been in high demand, resulting in bidding the price up repeatedly until the buyers are all fulfilled, followed by a sudden fall in price as buying ceases. The underlying rule supporting the trend-fading concept is that prices tend to return to their mean, thus causing peaks to turn down and troughs to turn up. Capitalizing on the trend-fading will seek to predict the moments when the price is turning back towards the mean and profit from a part of that move.
  3. Ping-Pong Strategy. Use this strategy when the market is moving sideways. When there is no strong price trend, the emini tends to trade in a narrow range, with a small price difference between the upper and lower limits. The Ping-Pong technique studies the range and uses the predictable move from down to up, and up to down “scalping” a small profit from each move.

(Several tested and proven strategies are taught in the The Day Trading Home Study Course .

Typical indicators used to assist in interpreting the price action for all of these strategies are:

  • LINES - Sloping lines drawn to join lows or highs thus indicating a trend up or down. Horizontal lines drawn between common lows indicating support levels, and lines drawn between common highs indicating resistance levels.

    Stack Charts - Trend and Resistance Lines

Graphic from The Complete Guide to Day Trading – Download it FREE

  • MACD – a momentum indicator – watch this for evidence of “divergence”. Divergence is where the MACD indicator is showing a trend opposite to that of the actual price trend. For example where the price is going up implying strong demand but the MACD shows a weakening of momentum, the trader can expect an imminent reversal of the upward trend.Stock Chart - MACD IndicatorGraphic from The Complete Guide to Day Trading – Download it FREE
  • Moving Average Lines crossing – this is basically the same as above and is often plotted on top of the MACD bar chart. This uses two MA lines, one with a short frequency and one with a longer frequency. Where the one crosses the other usually indicates a change in the momentum direction.
  • Bollinger Bands – these are indicators of upper and lower price bands, set on a basis of deviation from the moving average. Using these bands it is possible to predict possible limits to price movements, and also to detect when a new trend is in the making as the Bollinger Band curves up or down, away from the established pattern. Another telling characteristic of Bollinger Bands is a that a breakout in price movement is often preceded by a “pinching” of the bands closer together, indication an imminent breakout.Stock Chart Bollinger Bands IndicatorGraphic from The Complete Guide to Day Trading – Download it FREE
  • Volume is the most common and dependable indicator because increases in volume imply excess-demand or excess-supply, which are the ingredients for sharper volatility, and an opportunity to gain from the price move.

Directions on how to use trade  E-minis successfully can be  learned in detail, step by step from the Day trading E-mini  “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post  Emini education  – Day Trading Class and Day Trading Seminars

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The broker usually requires about $3,500 ($3,500-$5,000) as “surety” or “bond” to cover an initial emini trading account. They may allow 5 to 10 contracts to be traded at this level. If your trade loses money, the broker may require additional “bond” money in the account to cover. The broker may offer some form of margin which will lower the amount of actual cash required in the account.

As you can see, this is a lot less than the $25,000 required for stocks and options, but the risk of loss with futures is high, and traders unfamiliar with futures trading can lose big, very quickly.

One of the advantages of internet day trading with an Emini trade system (See Day Trading Basics) is that you are only required to put up a fraction of the contract price. Unlike stock or options trading, where you are required to have $25,000 minimum to “day-trade”, it is different with futures. Instead of a minimum balance, trading emini futures requires a cash backing. Although funds are “committed” with each trade, the trader does not actually part with any money unless settling the contract for a loss.

A very common question is Can I make A Living Day Trading? The answer is is YES for some, and this is explained in a useful course called “Can I Make a Living Day Trading?” The course also give step by step instructions on how to set yourself up for success.

Each E-mini S&P 500 futures contract is valued at $50 x the futures price. Thus if the futures price is $700, then the contracts value being traded is $35,000 ($50 x $700). When the price changes 1 point, the value of your contract goes up or down by $50 for each point movement.

EXAMPLE: Case involving a real trading range over 2 days where H=$1,119.00 and L=$1,087.00

  1. Purch. 1 contract at $1,090, price moves up to $1,100 (10 points = $50 x 10 = $500.00)

Sell the contract at $1,100
$500.00 less commission deposited into account, (gain).

2. Purch 1 contract at $1,100, price moves down to $1,090 (10 points = $50 x 10 = $500.00)

Sell the contract at $1,090
$500 is extracted from account, (loss) .

Therefore the lessons to be taken from this are:

  • Paper trade (simulate trades) first, to establish and practice day trading techniques which result in more wins than losses, before you start live trading.
  • Trading single contracts only is best, until confidence and pattern established. Increase the number of contracts only when experienced.
  • An emini system necessity is managing risk so you must always have stops in place to protect against major loss if the trade goes against you.

Directions on internet day trading of E-minis successfully can be  learned in detail, step by step from the “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post  Emini education  – Day Trading Class and Day Trading Seminars

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The most important day trading stock tip to act on is to set your predetermined exit points for each and every trade.

Your  emini trade system must have the following methodical exit policies:

  • Stop-loss exits to protect your capital.
  • Profit exits to capture your gains.
  • Time based exits stops to free you up to do something else with you money or get ready for the next real move.

The following automatic exit order methods are recommended and are fully explained in the e mini future trading classes series called the Home Study Course.

Stop Losses and Profit Targets

1.)    A fixed dollar amount (e.g. $1,000)
2.)    A percentage of the current price (e.g. 1% of the entry price)
3.)    A percentage of the volatility (e.g. 50% of the average daily movement)
4.)    Based on technical analysis (e.g. support and resistance levels)
5.)    Trailing stops

Stop losses are not negotiable. They must always be in place. Even the most experienced professionals obey this day trading stock tip and place a stop loss order on every trade. They must also be cancelled once a trade is closed so that they do not become “sell orders” after the trade is closed.

The stop loss exit and profit exit methods are:

  1. Fixed Amount -  Specify the stop loss order at an exit price based on your entry price minus what you are prepared to lose. If it is a long position than it will be a “sell” to close the position, or if you are in a short position it will be a “buy” to close.For your profit exit add the amount of profit to your entry price to get the sell order price to enter as the exit.
  2. Percentage of the Current Price – This is similar to the fixed price method with the difference that you determine the stop-loss price by applying the percentage loss you want to the entry price and add or subtract it to get your stop loss price.For your profit exit, calculate the return you want on your entry price and add the resulting number to your entry price to get the sell order price to enter as the exit.
  3. Percentage of the Volatility – Using this stop loss method, the stop loss is higher for high volatility and lower for quiet markets. To calculate this, you first must determine the average daily range (daily high to daily low) over the previous 8 to 10 trading days. Then having established the dollar range, you multiply this by the percentage of that range that you wish to capture as a target profit (say 50%). For example, say your average daily range is $20. 50% of this would be $10.The idea of this day trading stock tip is try to maximize the chances of obtaining your 50% move up from the entry point before the peak is reached, and also allow for the e mini to move lower without getting stopped out. Assuming that your trade is not the bottom of the range, you can divide the volatility range you determined into half, and subtract that from your entry point (in our example 25% which would be half of the $10). Thus you have room for a 25% downward price move without being stopped out.The profit target will be the entry point plus the 50% (which in our example is $10) for the target profit exit point.
  4. Technical Resistance and Support Levels – Using this stop loss method, based on trend lines or other indicators of support levels, you may be confident enough to place your stop loss point just below the support line. This will mean that if the price falls through the support line, you will get stopped out.For profit targets established resistance levels will act as the guide as to where the price is likely to turn downwards again, and your target sell can be entered at a fraction below that so that your sell order is executed before the price turns down again.
  5. Trailing Stops -  Trailing stops is our last day trading stock tip and these are used to garner additional profits above your target profit. This may be the case where you enter a trade, place your stop loss and your target exit, but then find that the momentum for the up (or down) trend exceeds your expectations, so you temporarily remove the target exit order and let the trade move higher (long) or lower (short). To catch as much of the price move as possible, you then place a trailing stop of a small fixed or percentage amount which when the price trend reverses, will then kick in to close the trade and capture an additional amount of profit for you.  In this instance you will also remove your regular stop loss order at the time of placing the trailing stop order.

For a more thorough analysis and explanation of trading exit points, we recommend the emini day trading classes contained in the Day Trading Home Study Course.

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Good day trading advice will always include the importance of having the right mindset and knowledge BEFORE you launch into this. The following list includes everything you should understand to make a success of the emini trade opportunities:

  1. Have a day trading PLAN. - Day trading e-mini futures requires a PLAN framed around probabilities. The plan will be based on the probability that prices tend to act in certain predicable patterns. You pick one or more of these predictable patterns, ascertain the indicators which alert you to the “set up” of the pattern, and the set your PLAN in motion at the appropriate moment. You will not win every time, but because the probabilities are in you favor, you should win more than lose & therefore make money.

  2. Trade your PLAN without emotion. – If you have a PLAN and you trade your PLAN, then the emotional reactions which often attend the process of quickly rising or falling prices is removed. Your attitude becomes one of a professional. All professionals will give this day trading advice -You MUST have achieved this emotionless mindset otherwise you will either lose big or find it too stressful to enjoy it. Confidence is a key, but it must be placed in having a proven PLAN, not based on a misplaced bravado.
  3. Trade smallEmini futures trading is about many small wins rather then few big wins. When put at risk a small amount and lose some of it, you get to play again. If you risk much and lose some or all, then your ability to recover is limited.
  4. Limit yourself - In addition your day trading future system should include a target profit for each week or day, which, when achieved signals the end of trading for you for that week or day. This keeps the gambling emotions from creeping in. Feelings such as “I am on a roll” are totally out of place in your professional day trading environment. It also helps to reduce stress to restrict yourself to say, 3 or 4 trades per day, win or lose. Additionally, good day trading advice would say that you should not set your or weekly or daily profit target based on external needs such as $500 or $2,000 per day – this may give you unrealistic targets. You may reach this type of target with experience and more available capital, but do not overstep the mark when starting. Try measuring success in POINTS rather than $$$.

  5. Keep a record – You are a professional, so keep a record of your trades. An excel spreadsheet or word document recording dollars committed, timings, results (gain or loss amount), triggers (stopped out, took profits, hit target) , and personal comments about why you did what you did. If you regularly review your diarized comments you will begin to notice things that will make you better at what you do, and help you avoid recognizable mistakes.

You will get all the day trading advice you’ll ever need, from the emini day trading classes contained in the Day Trading Home Study Course. (Lowest cost version of this excellent day trading course available)

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In day trading basics we discussed the advantages of emini trading systems. In this article, we deal with the primary downside – risk.

First let us identify the risks in your emini system – trend reversal, time delays, slippage, over-trading, and premature entry or exit.

  • Trend reversal – this common occurrence is unavoidable. If your emini system or PLAN is well conceived and tested, it will produce more wins than losses. However, there will be some losses. The day trading risk management strategy to protect you here, is to put in place a pre-determined stop-loss order that will execute automatically if the price movement of the emini reverses and trends in the opposite direction. Some will ask if a trailing stop-loss would not be better as this would allow you to retain gains you have made already. The answer to this is to use the pre-determined fixed stop loss initially, and then only if the momentum is perceptibly strong in your direction AND you have already exceeded your exit point, then you could substitute your fixed stop-loss for a trailing stop loss with the short fuse so that you lock in some additional upside.Chart of Trend lines showing price reversals
  • Time Delay – sometimes you will enter a trade in line with the rules of your emini system with the expectation of a decent movement in the prices, and nothing happens – basically the price moves sideways. In these circumstances it is better to close the position and wait for another opportunity. This is because the trend you expected has clearly not taken place, and now it is anyone’s guess if it may breakout either up or down. So rather than be forced to rely on the stop-loss you have in place and have a 50/50 chance of losing the stop-loss margin, rather take the small profit or loss you have now, close the position, and wait for the next ride.
  • Price Slippage – this occurs when the market order you have placed it executed at a different price and you lose more than you expected on the trade. This is also a fact of life you cannot avoid in day trading. The key is to be trading in an environment and market that minimizes this possibility. Day trading emini futures automatically give you the best odds in this regard. Price slippage is minimal when there is a large volume of contracts traded (avoid the night hours trading) , the bid and the ask prices are close, and the security traded is popular with widespread trading. The S&P E-minis meets these condition. Be careful of using limit orders because if the prices are moving very fast, you may not get filled at your fixed price, leaving you in a situation where you take a much larger loss than you expected compare to you stop-loss price point.
  • Over-trading – Remember that every trade bears a broker commission. The key here is not to be making too many false starts. If you have practiced with your emini system before live trading you should have the odds in your favor. If you find you are not winning more than losing, or that you are entering trades that frequently go nowhere, then stop trading and practice a bit more or change your technique or PLAN. The same principle applies to frequent premature entry or exits – practice more.

Remember that with an eminis trade you are trading with a 1:1 value. It is similar to trading a stock. The delta is 1:1. If the price moves a dollar, your value changes by 1 dollar times the number of shares or contracts you have bought. In the case of S&P500 e-minis, the price moves one tick at a time and the value is $12.50 for each tick. So the prudent thing to do, especially when you are new at this, is to only take one contract and only look for a move of one point. – this will keep your exposure down. An investment of about $1,000-1,500 for a gain of $100 in a few minutes. Do this 3 or 4 times and you have $300-$400 for your trouble.

Emini trading money management is a very important subject that you MUST get right! A full and fail safe methodology is taught by Rockwell Trading in their Money Management Home Study Course. Get it now BEFORE you lose your shirt! It’s a lot cheaper than learning this later AFTER your account has been decimated by losses you did not expect. That is why we recommend the emini day trading classes contained in the Day Trading Home Study Course. After checking out a number of day trading courses, we found that these classes contain all you need including specific day trading strategies that will give you success, and they have a major emphasis on protecting you capital.

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Comparison of Futures Trading Platforms for Emini Trade the “must-have” important criteria.

  • It must handle technical chart analysis quickly and with infinite flexibility. This means that graphs depicting real time, streaming-data for stocks, options, futures and forex prices should be quick and easy to display for short and long time periods.
  • Charts must be fully editable with the ability to insert trend and resistance lines, other indicators as required
  • Charts must be supported with popular indicators such as Volume, MACD, RSI, Moving Averages, Bollinger Bands, Stochastics etc
  • Prices should be shown in candle and /or bar chart form, and be possible to track by bytes of time (5 min bytes, or 15 min bytes etc) or by the number of “ticks”. (A tick represents the minimum price fluctuation price action can make. In the S&P 500 Eminis the minimum movement is $12.50. So each “tick” is $12.50.)
  • Stop orders for entry and exit should be easily configured and should preferably display potential profit on the transaction.
  • Intuitive and easy to use
  • Multiple Markets information should be easily accessible (futures, stocks, options, forex, commodities, US, international)
  • Level 2 screens should be available
  • Broker revenue should be based on commission only and not on the markup and sale of  orders to its customers
  • Competitive commission structure
  • Easy to follow education, both general and platform specific.

Best of Breed – TradeStation - All Round Best Futures Trading Platform for Day Traders (and other traders)

The TradeStation trading platform combines the ability to create, test and automate or manually execute custom trading strategies with the speed of direct-access execution to major ECNs, exchanges and electronic markets. Long recognized as the Leader in Rule-Based Futures Trading Platforms, TradeStation believes that every trade you make should be based on a tested, informed analysis.  TradeStation’s award-winning combination of advanced technology and brokerage services provides serious, self-directed online traders with a complete, seamlessly integrated trading solution.

TradeStation is competitively priced on a monthly subscription basis and is highly recommended for the type of disciplined, systematic emini futures day trading  that you are interested in. It is arguably the most popular trading platform of all for professional traders, for all types of trading.

Tradestation technical charts

eSignal -  Customizable Futures Trading Platform with raw data feeds for the more sophisticated user

Based on its very reliable data feeds of market data, some sophisticated traders choose eSignal because, using its eSignal Formula Script (EFT – java based) the software can be customized to cater for special requirements.

The charting software is very respectable and contains all the required functionality, but it is not as intuitive to learn and use. Familiarity after extended use solves this problem.
The monthly subscription cost is a little higher than TradeStation and highly variable dependent upon which functionality and services you use.

eSignal Advanced Charting

ThinkorSwim – For the budget conscious trader.

This is the only “free” day trading platform that I would recommend. ThinkorSwim, (now part of Ameritrade) is the most advanced “free” trading broker in the market. By signing up for an account with Thinkorswim, the account holder has access to a wide range of impressive charting and market analysis tools, and the ability to trade in stocks, options, futures, forex and commodities. There is no monthly charge. Thinkorswim makes its income from commissions (which are very competitive) mainly, and regrettably, from margins on some resale of securities to its customers.

Thinkorswim does not have true level 2 screen access, and the set up of orders is relatively manual without the benefit of “on-chart” display of a trade’s main characteristics and profit target. Most of the info you want can be accessed by moving to another screen. The screens can be detached and displayed simultaneously as “tiled” windows, but this process is a little clunky compared to TradeStation.

Thinkorswim’s analysis and research tools are among the best around, so it is worth having a Thinkorswim account just to be able to use these tools.

Thinkorswim Technical Charts

Sign up for the almost free Day Trader Starter Package, and you will be able to try out one of these Trading Platforms for real. You can paper trade as if you are trading live and test the system. See if it works for you.  Move to live trading as soon as you are comfortable. Apply the trading principles and strategies taught in detail in the  emini trader “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post  Emini education  – Day Trading Class and Day Trading Seminars.

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