No real surprises today as the excitement in the market continues unabated. The political uncertainty in the US, the Berlusconi-fueled Italian election and austerity fears, and Ben Bernanke saying a whole lot of nothing are a perfect storm for market movement and some sharp moves.
We needed to be a bit careful when Bernanke started talking (notice I didn't trade at all around this time) to let the initial chop come out of the market but once that was done the trading was fairly straight-forward stuff. The excitement of it all even allowed for some aggressive entry positions which was great and allowed for excellent profit potential.
The beauty of Emini S&P 500 futures trading is the potential for consistent profits in a limited timeframe. While many people absolutely love to trade all hours of the day there are many who can't commit to that or those who simply want more time flexibility to do other things. In just 90 minutes today I was able to pull out 10.25 points of profit while only risking 1.25 points at most on any given trade. While not every day goes quite that smoothly it's not uncommon for an experienced trader to see these kinds of results on a frequent basis.
The question then becomes, "if you already have 10.25 points do you really need to keep trading?" Even if you are a complete newcomer to trading and are using just 1 lot that's still around $500 of profit after trading costs. If you're trading 5 ($2,500), 10 ($5,000), or even more contracts then the numbers can quickly become incredible. There are a lot of people out there trading just two hours a day who enjoy a very nice living.
In the end though it's not really the money we should be focusing on. Too often new traders get completely focused on profits and the greed aspect of doing so often leads to numerous mistakes which kill their trading results. In order to achieve consistency what's truly important is managing our risk.
I focus on taking high quality trading setups and I minimize my risk when the market allows it. If I do that then the profits come naturally.
There's no excuse to not have a plan in place for managing your trading risk. It's an absolutely central part of any trading plan and without it you will likely fail in the long term. So keep the losses small, the wins bigger, and focus on the high quality setups in order to keep the win rate high. This leads to a massive positive trading expectancy and consistency you can count on.
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