A relatively new member in my trading room stated "all I am interested in doing is learning your setups" during a particularly dry session I was reciting on the merits of consistently drawing trend lines.
Now, I realize that going over the correct technique for drawing trend lines is not exactly scintillating, but this new trader's brash statement was hardly the first time I'd heard this trading mentality.
E-mini trading is about thinking like a trader, not a collection of trading setups.
The context under which trading setups occur is far more relevant than the actual setup itself.
That is to say, there will be times a set up presents itself and it will be a high probability trading opportunity.
On the other hand, there may be times the same set up will produce a low probability trading opportunity.
So, any trading plan must contain some contextual reference to market conditions to be effective.
The simplest example of this can be illustrated with Reversion to the Mean trading and market trend.
When the market is trending upward, my trading data shows that initiating trading only when the market is in an oversold state (at least 2 standard deviations off a 200 period moving average) increases both winning probability and winning trade margin.
On the other hand, trading from overbought Reversion to the Mean channel resulted in significantly lower winning percentage and smaller gains.
Unlike most of the E-mini trading community, I enjoy trading in channels.
The general line of thinking on channel trading is that it is best avoided.
Since the market spends a good deal of time bracketed; I thought that there must be a way to trade channels.
I found that during the latter part of the morning session and lunch hour predictable channels sometimes formed on most equity index futures.
Using simple Support and Resistance and order flow software makes trading a 15 point channel a real opportunity to rack up some ticks with relatively low risk and a high probability of winning a series of 12 tick trades.
In short, I learned the daily context of continuation channels.
As a note of warning, I would suggest careful study of channel price behavior before embarking on a channel trading expedition.
My point is a simple one; being an effective E-mini trader cannot be accomplished by learning a wide variety of E-mini trading setups.
Learning to think like a trader and react like a trader within the context of current market conditions is essential.
In short, any good trader is analyzing and trading within the context of the market conditions he or she may be experiencing.
A trade that may be a dead ringer winner in most situations can be a very low probability trade in other situations and understanding the context of the current market movement is the difference between winning traders and losing traders.
Now, I realize that going over the correct technique for drawing trend lines is not exactly scintillating, but this new trader's brash statement was hardly the first time I'd heard this trading mentality.
E-mini trading is about thinking like a trader, not a collection of trading setups.
The context under which trading setups occur is far more relevant than the actual setup itself.
That is to say, there will be times a set up presents itself and it will be a high probability trading opportunity.
On the other hand, there may be times the same set up will produce a low probability trading opportunity.
So, any trading plan must contain some contextual reference to market conditions to be effective.
The simplest example of this can be illustrated with Reversion to the Mean trading and market trend.
When the market is trending upward, my trading data shows that initiating trading only when the market is in an oversold state (at least 2 standard deviations off a 200 period moving average) increases both winning probability and winning trade margin.
On the other hand, trading from overbought Reversion to the Mean channel resulted in significantly lower winning percentage and smaller gains.
Unlike most of the E-mini trading community, I enjoy trading in channels.
The general line of thinking on channel trading is that it is best avoided.
Since the market spends a good deal of time bracketed; I thought that there must be a way to trade channels.
I found that during the latter part of the morning session and lunch hour predictable channels sometimes formed on most equity index futures.
Using simple Support and Resistance and order flow software makes trading a 15 point channel a real opportunity to rack up some ticks with relatively low risk and a high probability of winning a series of 12 tick trades.
In short, I learned the daily context of continuation channels.
As a note of warning, I would suggest careful study of channel price behavior before embarking on a channel trading expedition.
My point is a simple one; being an effective E-mini trader cannot be accomplished by learning a wide variety of E-mini trading setups.
Learning to think like a trader and react like a trader within the context of current market conditions is essential.
In short, any good trader is analyzing and trading within the context of the market conditions he or she may be experiencing.
A trade that may be a dead ringer winner in most situations can be a very low probability trade in other situations and understanding the context of the current market movement is the difference between winning traders and losing traders.