What if I said you could compete effectively against a sprinter who had 4.2 – 40 yard dash speed? How about competing with a marathon runner that runs 26.2 miles in 2:03:59? Well that might be a little far-fetched, but what I can tell you is with a Cable or DSL internet connection and a standard desktop computer you can compete with high-frequency computers that execute trades in milliseconds. Some of these high-frequency traders pay upward towards and sometimes beyond $100,000 per month just to try and keep their steroid induced speed on top. And, yes, you can compete right alongside these guys using the computer that you have in your home right now (unless its 10 years old, of course).
I’m here to tell you I’m just like you. I have been successfully competing with bigger and faster trading competition using a desktop computer and a cable internet connection and so can you. I have actually been competing with bigger and faster opponents my whole life. Being only 5′ 8″ I competed and became a 4 year starter at both the high school and college levels in football with bigger and faster teammates and opponents and stood next to 6′ 5″ traders in the 30 Year Bond Futures pit at the CBOT. Once you try you will find in the end it is not that insurmountable of a task. You just need to be smart.
You first need to understand and have a strong command of your strengths and weaknesses. No half-truths or ego chest pounding here. Our weakness is our computer speed, which isn’t that slow these days as standard high speed cable connections are getting faster at affordable costs ($60 – $100 per month). Remember no matter what you spend on computer speed, you will never be the fastest and if you ever do happen to achieve that status, it won’t last long. Another weakness we must face is that the market will always be bigger than our account size, so you need to know when to jump on the back of your bigger opponent for the ride and when to jump off and wait for the next opportunity.
What’s left is to be smarter. Putting your resources to use on becoming smarter has been much more productive. Find a mentor or somebody who is doing what you want to do and learn. Here is a tip to help you trade smarter and find the entry spot hours before your faster competition does. Even if, and when the competition does catch on, speed is not a necessity if you know what you want ahead of time. It’s just up to you to be patient enough to wait for the spot. You can even download software on your computer today to help you program pre-designed plays. Best of all, IT IS FREE!! The risk of the endeavor however is not perfect, as there are no guarantees. It doesn’t always work out as planned, but it has provided me with consistent successful results overall.
How do we get smarter? We are a society that follows winners and tries to emulate them. In order to get a feel for this in the trading world begin to study your favorite market and take note of each 24 hour range (High – Low) and the current location of price in relation to the range when you sit down to trade and place your orders. Some obvious things to note: Every time the price ticks up buyers are happy and every time price ticks down sellers are happy. We would all love to buy low and sell high but we don’t always know the best time to participate. The action can get a little more predictable as one side begins to control the day’s action. We observe this as price action moves across the 50% mark of the range (add the high and low, then divide by two). Once one side takes control I like to jump on the band wagon. I use their speed and power to drive the market to my objective, but first I want to wait and time the entry.
Here is how I do it: For long opportunities (buy first) I like to wait for the market to hit a new high for the 24 hour session, re-calculate the 50% mark. Since buyers are winning the action, I like to enter long or buy when price first re-tests the 50% price. Experience teaches me to wait for price action to consolidate in this area before entering blindly. In other words don’t try and catch a falling knife . Personally I use a 15 minute chart and like to see some higher highs before feeling confident when initially entering on the buy side. The ultimate objective on the long play is to exit the idea at the already known session top (again speed isn’t necessary here because you will know all of this well ahead of time). Experience also teaches me if the trend flips back down (lower lows on 15 min. chart) before prices hit the target, you can always jump off the idea and wait for a new opportunity. On short opportunities (sell first) I do the reverse, which is to wait for prices to hit a new 24 hour session low, re-calculate the 50% mark and enter short at the first retest of the 50% after I see some lower lows. The objective would be to exit the trade at the known session bottom. In this case if the market begins to turn back to an uptrend before reaching your objective you can jump off the idea and wait for the next opportunity.
You can’t always predict exactly how long this will take but a good rule of thumb is to look back at the chart and see how long it took to climb to that session high or low to get a feel for how long it may take to get filled on your entry price and then add that time to give you a gauge as to how long it will take to reach your objective. Here is a chart example to help illustrate the point a bit further.
Whatever you decide to try; you can’t win, if you don’t play!! Prosperity is at your fingertips! All you have to do is grab it!!
Trading Commodity Futures and Foreign Currency (Forex) contracts may not be suitable for all investors. You may lose a substantial amount of money in a very short period of time. The amount you may lose is potentially unlimited and can exceed the amount you originally deposit with your FCM. The material on this website is intended for educational purposes only.
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