Your primary job as trader is to devise a plan that will get you profits that are large multiples of your initial risk.

I emphasize, as I always do, that one of the keys to successful trading is to have an exit strategy in place before ever entering a position. That enables a trader to get out if he is wrong on direction. The strategy needs to be one that permits profits to run while creating a disciplined unemotional exit that initially is both clear and close to the entry. In that fashion, prediction no longer controls. The successful trader, instead, simply reacts to the price movement. Having a plan that incorporates money management, reward to risk potential and disciplined exit strategy can supply an edge that prediction doesn't. The key, of course, is to learn how to make the profits from the winners significantly exceed the losses from the losers.

There is no substitute for water.

An idea for research.

Lower support levels were thoroughly tested and successfully defended today.

At this time there is not much of an edge to be found. In time, that is going to change. But, until that moment we have to stay patient, protect our capital and be prepared for the next move in ether direction.

Inverse correlation.

If you look back in recent history you notice inverse correlation between U.S. Dollar and Equities. Meaning, when dollar goes down,  shares go up, and when dollar goes up shares go down. Now we can watch for the same pattern to continue and/or for possible divergence to get an edge.

U.S. Dollar Index

Closed above 50 day average price first time in approximately four months.

for more insights on dollar trade see blog 23 April

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities

follow up, Silver

Patience doesn't mean just waiting, it means being able to sit and learn.
 Learn whatever you feel you need to learn.

for more insights regarding silver trade see blog 25 April

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities

Silver's worst four-day drop in over 30 years.

According to historical precedent: 
Markets that show this amount of pronounced accumulation followed by sharp liquidation do not completely heal and repair themselves in weeks, but usually months, if not a year or more.

most important is to keep on playing the game

The most important thing you must learn in trading the market is to cut your losses short and never ever take too big a loss. I know this from my personal experience. Keep drawdowns low ( 5%loss needs 5.3%gain for recovery, and 10%loss requires 11.1%gain for recovery, and 30%loss requires 42.9%gain just to get even, think about it ) and keep on playing the game day in and day out. Remember that "position neutral is A position" and if you stay in the game long enough you make lots of money.

Energy goes from leader to laggard.

http://blogs.stockcharts.com/dont_ignore_this_chart/2011/05/energy-goes-from-leader-to-laggard-xle.html

"calm before the storm"

neutral bias here

Managing Risk.

Mark Minervini suggests those steps to reduce risk.


10 Steps to Take to Reduce Portfolio Risk 
1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap) 
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10.Upgrade in quality and reduce exposure to low priced stocks

mcp

                               

ung

\

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities

UNG now.

We are close to our break even stop 11.79, and emotions are rising. Remember, we can always buy it back, and as always,

the rule # 1 is "do not lose money" 

it goes on the watch list for now

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities

Tavis talks with billionaire financier and philanthropist George Soros.

http://video.pbs.org/video/1900738777

After two down days to start the month, watch for this price pattern.

Tuesday, May 3rd, 2011 at 6:55pm  (Rennie Yang from Markettells.com)

The S&P500 has kicked off the month of May with two consecutive lower closes, the first string of back-to-back
down days to start the month since last July. An effective way to trade early month weakness is to simply wait for
the market to recoup that loss. If it can, at any point before the end of the month, it invariably leads to a tradable
rally. The table below illustrates this point. The first date shown is the second session of the month when the S&P
closed lower for the second day in a row. The second date is when the S&P closed back above the previous month’s
settlement and the number of sessions elapsed. For instance, using the most recent signal, the S&P closed lower
two consecutive sessions at the start of the month on 7/2/10. Two sessions later, on 7/7/10, the S&P erased that
loss by closing above the prior month’s close. That’s the trigger date, and you can see the S&P rose 3.3% over the
next five sessions…
SPX Starts Month w/ Two Down Days, Before End of Month S&P Closes > Prev Month’s Settlement
07/02/10… 07/07/10 (2)… S&P500 +3.3% one week later
10/02/09… 10/07/09 (3)… S&P500 +3.3% one week later
09/02/09… 09/08/09 (3)… S&P500 +2.7% one week later
03/03/09… 03/12/09 (7)… S&P500 +4.4% one week later
08/04/08… 08/05/08 (1)… S&P500 +0.4% one week later
06/03/08… 06/05/08 (2)… S&P500 -4.6% one week later (*)
12/04/07… 12/05/07 (1)… S&P500 +0.1% one week later
03/02/07… 03/20/07 (12)… S&P500 +1.3% one week later
11/02/06… 11/06/06 (2)… S&P500 +0.3% one week later
03/04/03… 03/17/03 (9)… S&P500 +0.2% one week later
08/02/02… 08/14/02 (8)… S&P500 +3.2% one week later
04/03/01… 04/10/01 (5)… S&P500 +6.0% one week later
11/02/99… 11/05/99 (3)… S&P500 +1.9% one week later
08/03/99… 08/16/99 (9)… S&P500 +2.2% one week later
03/02/99… 03/04/99 (2)… S&P500 +4.1% one week later
06/03/97… 06/06/97 (3)… S&P500 +4.1% one week later
03/02/95… 03/10/95 (6)… S&P500 +1.2% one week later
10/04/94… 10/11/94 (5)… S&P500 +0.4% one week later
01/05/93… 01/14/93 (7)… S&P500 -0.1% one week later
12/02/92… 12/04/92 (2)… S&P500 +0.4% one week later
10/02/92… 10/26/92 (16)… S&P500 +1.1% one week later
11/04/91… 11/07/91 (3)… S&P500 +0.9% one week later
01/03/91… 01/18/91 (11)… S&P500 +1.2% one week later
05/02/89… 05/12/89 (8)… S&P500 +2.4% one week later
02/02/89… 02/07/89 (3)… S&P500 -2.6% one week later (*)
12/02/88… 12/05/88 (1)… S&P500 +0.6% one week later
10/04/88… 10/06/88 (2)… S&P500 +1.0% one week later
08/04/87… 08/06/87 (2)… S&P500 +3.9% one week later
06/02/87… 06/03/87 (1)… S&P500 +1.4% one week later
05/02/86… 05/05/86 (1)… S&P500 -0.1% one week later
The S&P was higher one week later in 26 out of the last 30 occurrences, or 87% of the time, significantly above the
57% random chance for a higher S&P one week later. Average gain was 2%. This signal will be triggered anytime
in the month of May on an SPX close above 1363.61.

"leaving the consolidation"

We are approx. an hour into the trading day and mcp volume is around 400% higher than yesterday at the same time,
looks like it wants to continue upwards. If the volume crosses 6.4mil. shares today we'll have a "pivot buy point".
Watch the overall market, there is distribution among leaders today. Keep your stops in place and don't let profits disappear and/or losses ride. Day-By-Day follow your plan.

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities

Reversal day makes higher high and closes below today's open and yesterday's close.

Looks like a danger signal to me. Not all danger signals are correct, no rules are 100% right, but if you pay attention to them consistently, you will profit in the long run.

On being wrong.

http://www.ted.com/talks/kathryn_schulz_on_being_wrong.html

" responsibility; ability to respond "

"it is human emotion that always gets in the way of intelligence"

The ability to respond at the right moment, regardless if the trade is going well,  not so well, or awful at that moment,  is the traders edge and must be a part of the plan. That’s what trading is all about. It is about the ability to make a decision.

The only way that I know of, that works for me, is to be moderate. When my positions are moderate I am emotionally detached, patient, acting in my best interest following my plan.

"consolidating"

"breakouts lead to trends, trends lead to extremes, extremes lead to backing and filling, backing and filling leads to consolidation, consolidations lead to breakouts"
Wash, Rinse, and Repeat.

check blogs,  March 31, China capping its annual rare earth output.
                     April 4,  Why can't most people buy the all time high ?

The information contained herein is not, and should not be construed as an offer to sell or an offer to buy any securities