Auld Lang Syne

Good Afternoon Traders,

I was all set to throw up some lyrics to the tune of Auld Lang Syne, and then chat about how the year has come to an end and we have 3 whole days to think about the coming year. And you go and ask about futures! Jeff is going to kill me! We're going from "Options Addict" to "Futures Fanatic" (yes, I just reserved the name)!

To be perfectly honest, I fell into it. It wasn't something I sought out. I'm a technical trader. I love price patterns, Fibonacci lines, and I use a few mechanical indicators to tell me when to get in and out. I've spent the last 18 months trying different systems, different approaches and different underlyings. It took me that long to discover a set of rules that I could trust with my money. As it happens, it was my networking that moved me to futures. At every meeting over the last year, one of the members of the user group would present a system to the rest of us. “Rich” made a presentation one day about his system which used futures and peaked my interest.

Frankly, the underlying doesn't matter. It could be a stock, an index or a futures contract. Hasn’t Jeff said over and over that the patterns are the same in any time frame? That if you look for flag patterns on a 1 year chart, they are just as valid on a 15 minute chart? The key is the rules you are using to get you in and out of the trade. What is your system? Have you got a system that you trust 100%? Does your plan tell you when you can and can't trade? That's the place to start. Make sure you have a trading plan and a system that you are willing to bet the house on.

If your system works, it shouldn't matter what you're trading, but until you have rules that you trust completely, I'd recommend staying away from futures.
Here is a part of my trading plan for my futures trading. I have different plans/rules for my other types of trades.

1. Follow the rules.
2. Use one time frame to trade.
3. One market.
4. Trend & Anticipatory B pivot trades only.
5. One contract.
6. Draw risk/reward on charts before entering a trade.
7. Only use bracket (OTO) orders when entering a trade.
8. Record on charts thoughts while in trade, or immediately afterwards.
9. No trading if tired, sick, hung over, or rushed.
10. Spend 15 minutes before trading with focusing exercises.

My rules for each trade are specific. Simple rules for entry and exit, and not many of them. A couple of them are as follows:

1. Enter trade when crossover of moving averages occurs at mid-band. R/R = 1:3 min.
2. Set stop 2 ticks above/below last pivot high/low.
3. Divergence must not be present.
4. Enter on right side of crossovers.
5. 1st target outer-bands or resistance/support.

I have been paper trading the system for 5 months. Literally, 5 months of 7+ hours of trading a day to make sure my system worked. My rules have proven consistent. If I break them, I lose. Period. Are your rules that clear? Now that it’s been announced that the markets will be closed on Tuesday, you have 4 days to get your rules written, and your plan figured out. If you have time, post your goals for 2007 in the comments section. If they are written they are more likely to be realized.

Thank you for tuning in this week while Jeff was away. It was a pleasure to help him, and keep the blog going. I wish you all the very best in the coming year.

Many happy (profitable) returns!


Hi Lisa!
Thanks for your insights this past week. A quick question on the rules you posted. What does your
"4. Trend & Anticipatory B pivot trades only"
I used to trade Comex futures years ago, back before I knew what I was doing. I'm interested in stepping back into that market perhaps with the minis which were not available back then. At this point, I don't even know where to find them on the Toolbox so any insights and pointers are appreciated.

Karen R.

Hi Lisa,

Thanks for your post,I'm going to look into futures. Been spending time trading the SPX. My goal for 2007 is to become a very profitable trader using a very solid and simple system.

Happy New Year to all.


Thanks Lisa, great post.

You said that you are using only one time frame. On an intraday base which one do you use? 5 minutes, 15 minutes?

Best wishes for 2007

Hi Lisa.

I'm also interested in your term "Trend & Anticipatory B pivot trades only". What's that mean?

Many thanks for sharing your approach.

Hi all,

The "trend" and "pivot" trades are names for trades in the same way that Flags, Head and shoulders are types of patterns.

You all know what a trend trade is. Trade in the direction of a trend. The pivot trades rely on pivots in price.

In terms of charts, in order to trade intra-day, I use a different set of charts, and I don't feel comfortable discussing it here.

My goal in sharing some of my plan and my rules was to demonstrate the specificity of them, rather than the details.

In the spirit of sharing, I'd like to see some of your rules. Show us what you've got!

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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