You've Made Me a Trader

Memorial Day week the Dow is down 7 of the last 12, and up 12 straight from 1984 to 1995.

We saw "perfect" trading yesterday. Trader MCE said it best:

"1. I placed a limit order on OXBFD, the recommended call, today pre-market at 9.20 or less, and it filled at opening at 8.40.

2. I made some coffee and recalculated the Dow, and compared them to your projections overall.

3. I put the sell order in at 13.40, your top, thinking it would be right near r2, and it filled. Floyd, I had 10 contracts, and made a quick $5000.00, enough to pay for Level 3 for the year, and have money left.

4. Next I bought the put at r2, which was 2.30, for the OEWRQ June385Put. I made just one buy. You and I also emailed and you told me I could have also bought OXBRD The June 420P instead. Part of learning the count calculations has helped me understand the "mixed signals" and how a top could occur. I could not have said this 4 months ago, and would have thought that all the reasons the market went up today was because of certain news, when in fact it just triggered what was already going to happen, with your Dow projections.

You've made me a trader"

________________"


Here's Floydian logic on support and resistance:

1. It is perceived as important by the trader, and the floor, so it is important.

2. The longer the time frame (time spent at the support or resistance line), the more significant it is.

3. What is support may become resistance, and vice versa.

4. S/R defines price or action zones, not the exact price to buy/sell, but a "range"

5. Use of Open/High/Low/Close as indicators is more accurate than the "swing" areas around support and resistance. Study prior day facts, or recalculate once during the trading day.

6. Watch the market breathe. Sit back and simply note where the market moves, around support and resistance

Trader MCE simply followed the rules for his profitable return, and did not let "too much evidence accumulate"

And lastly, a bit of Floydian Therapy: http://www.oexoptions.com/pages/FloydianTherapy.html

A client shared with me that her Grandfather's Father had committed suicide many years ago. The Grandfather saw it. This affected the Grandfather and helped make him the volatile and angry man he was.

The Grandfather told his daughters about his father's suicide, and they in turn told their children. An entire "mental illness" was created from the Grandfather's suicide. Many members of this family for years have believed that much mental illness "runs in the family."

I'll ask you as traders: How does this affect a trader that I am working with, and her thinking? With what she knows, as an adult, does this information (the dark past of all families) affect her trading? Or could it?

Let me know your thoughts. I'll blog them in and "tell you the rest of this story" as the week progresses

Understanding your emotions is more important than the signal, as it is "being outside of yourself" to trade that makes you effective.