ES: How long have you been trading, and what software do you use?
AC: I have been trading for more than 20 years. Years ago when I was a large potato farmer, I traded Ag products during the winter months. Now that I no longer have the farm, I am a full-time S&P day trader. I have used Ensign Software programs since 1984.
ES: Which markets do you trade?
AC: I day trade just the S&P. 4 or 5 times a year I might make a position trade in an Ag market. I would consider positions in wheat, soybeans, cotton, sugar, heating oil, orange juice, US bonds, live cattle, feeder cattle, live hogs, and pork bellies.
ES: What chart time-frames do you use?
AC: I watch a 3-minute chart and a daily chart for the S&P. I don't look at anything else.
ES: What studies and tools do you use?
AC: None. I know you didn't want to hear that answer. I pay attention to the bar formations on the 3-minute chart, and have developed a sense or gut feel of how the market will behave. Yesterday was a huge down day, and my gut feel a couple hours into today's trading was that the bottom for today had been put in, and a sizable rally of 2000 to 3000 points would occur before the close. I watch for support and resistance levels and try to safely enter the market in the direction of the trend.
ES: How frequently do you trade?
AC: I trade 4 to 10 times a week. I am patient and wait for the market to establish a trend. If the trend is up, I try to board the trend using stops above resistance, or buy a setback. When the trend is down, I will sell short using stops below support, or sell a rally. But my trading is always in the direction of the trend. I never keep an S&P position overnight.
ES: What kind of market do you look for?
AC: One or two days a week, the market fits my style. I stand aside in fast markets because they can't guarantee fills and it is hard to know if one is in or out of a fast market. Presently, these dynamic markets are historic in their volatility. Markets like these have never existed before, so I don't think there is a system out there that has the experience to deal with today's markets. Even prior experience may not be sufficient. I am constantly learning and adapting to the market as it evolves.
ES: Since you don't use any of Ensign 6's studies or draw tools, what do you look for in a chart?
AC: I watch price congestion levels, flags, pennants, breakouts and retracements. I watch highs and lows, where the market closed the day before and where it opened today. I wait for the market to establish a trend and try to board using stops, or buy setbacks and sell rallies.
ES: What about risk management?
AC: When I place an order, my broker sends the order to the floor, and then while the broker is still on the phone, I place a protective stop. I never hang up with my broker without a stop in place. Years ago there was a time when my broker's phone quit working, and there have been times when a news event moved the market and one won't know about it in time. For example, I was long the S&P the day the Challenger exploded. I always place a protective stop while I am on the phone with my broker. Then I am not in a panic if the market turns on me and does something unexpected.
ES: What do you look for in a broker?
AC: The primary factor I need is best execution. That is more important to me than the commission. The way I trade, I am often in the market for only 10 to 15 minutes. My broker has a flash line to the floor. I basically quit trading the Ag products because their opportunities come only 4 to 5 times a year. But with the S&P's volatility, there is opportunity every day. For my style of day trading, I need quick execution.
ES: What is the ideal trade for you?
AC: The perfect trade is a small move with a large position in a highly predictable formation. The money I take out of the market is a small move in a short period of time, but with a large position. (ES: AC gave more details but wanted the specifics withheld.) I really don't like to suffer a lot. I am quick to be in and out of the market. If the market does not do what I expect immediately, then I get out of the trade.
ES: What advice would you share with the readers of the newsletter?
AC: Don't trade bigger positions than you are ready for. You need to get your trading style worked out first. Too often traders have a few successes, and then get their head handed to them on a plate. I work very hard at not having any preconceived ideas about where the market will go. Last of all, you have to do the work yourself. I remember years ago being in a pork belly spread at my broker's advice before a report. The broker said the spread was a safe way to play the report. The day of the report, each leg of the spread went limit against me. If you want advice from a broker, you should consider why he is a broker instead of a trader. You just have to do your own work. Trading today's markets is a technologically based art.
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