]f I were not slopped out, then Id wdit for the market to retrcice. The nestt lime it takes out the last higfi in an trp rnarkeh or the last low in a down market, Id move my slops forward another live ticks. As soon as my second contract woufd approaeti SlOO more in profits, Td calf in a market order to exit. Again, I wouldnt worry about sfippage. hly goal here would be to build my account so dial wlien a market does run, Id l>e able to go vyillj it for the big bucks,

If I were able lo ftandle only one contract at a time, tfien Id have take profits at or about SIOO. Period, the eid! Id take rny money and run, Id build my account. Td nibble away at the until I fiad enough money in my account to trade a two lot. Id be paiierit. Growtii rnay come stowly, but it would cor7"ie. Id be PATIENT!

Another point I need lo reveal about niy trading is tfiat wliun I lose, I have tendency to double up on my next attempt at a nieukei. \ dont always do it, but I often do it when I go right back into a market. My win porcertage is high enougfi tfiat it pays rne to go back in vilh double the contracts.

be showing ifiat later in the book,

Ciuipler 7 Onicriisi; timry Orders

From this point on, whenever I write about a conirac!-set, unless noted otherwise, I am talking about entering a market witfi tliree contr:iets. When I trade more th.ar tiiree or four contracts, I trade five or multi[)lus f>f five.

Wfiatever I do, i (U)nt vant to trade in odd lots. Its hard enougfi to get good fills tratjtng in numtiers that ctfier traders u[\lUe, Recently I spoke

10 fiad gotten a terrible fill m Orange Juice.

with a trar er w

s rppage on

tiis exit order was fifty [joints, Wfien I asked him fiow many contracts were riivofved, tfie answer was twenty-tfirce. I had to shako my fiead in clisbelief. Here he was in a thin market, trading at a time of the year {Spring) when the Orange Juice ntarkei was paper thin, and trading twenty-three lot. Es it any wonder ho liad slippage of lifty poirus?

Its also important to enter jjrice orders at nun{)rjrs that ari likely to be filled witfiout slippage.

For instance. Orange Juice is wrth $1.50 a point arid usually licks about five points at a time. This makes it extremely difficult to place orders that will not finve slippage, If I were to use five dollar intervals, I will be trading at nuntbers that enrl in ?ero or five. Yet $1.50 will not divide into $5.00 in any way otfier ilictn fractronally. A slniiilar th.ing is hue for UnSeaded Gasoline, Heatirig Oil ($4.20/pa!nt eacfi), ifie meats, and Lumber. All of these are thin markets to begin with. Unless a trader is aware of the digital endings that will get good fills, he is asking for trouble when he trades ihtm.

Order placement is critical in daytrading. Th.e number one thing I try to reriiember in ordenng is to be patient and avoid greed. I pEace all my eritry orders as STOPS at my entry prrce. That means I use STOP LIMIT orders. Where possible, I place my entry orders as STOP WITH LIMIT. "WITH LIMIT" means I give a price range in whicfi willing to be filled. If the market rushes past me and I am filled a little higher, 1 dont worry about it. Slippage is figured into what doing. By giving a price range for my fill Im able to control the amoum of slippage Im willing to take. However, in some markets Im forced to use regular STOP orders.

Using STOP LIMIT and STOP WITH LIMIT means I miss r-nany trades. 1 dont care if I do. If 1 cant have it my way, I don4 want the trade. Stop Ltniit orders have low priority on the floor. They will not always get rne a fill.

t generally do not place orders in the market before the open. Except at major entry t)oints. I fiave no resting orders in the market until the n«arket is approaching my entry point going in my direction on an intratlay basis. Tfien, and only then, do I f)iace a resting "today only" order in the market.

Tfie market will <dujn ga[) open past my eolry p<jir:r So wJLati 1 miss

t lat trade, I fiave tried to learn to think

IS rnanncr:

It doesnt iiapf>on

my v/ay, then let it go," 1 dont sit and (Jrool thinking, "Oh, if only I had put that [p as a market order, I could have made a fortune,"

The trade must tratfe throuyh price cud he fill-r(J in the manner 1 requested, or I forget It. 1 go luuk elsewhere.

Thrcjufjhout VVi manual I wflJ repeatedly stress liiat i must have tliis kind ot Oiscipiino. I take only those uncles that happen my way, and arc hUed according to my instructioris. 1 let everything else go by.

Exit Orders

Just as I want !o be careful about my entry order, I also want to expliciiiy state my ! exit order, I get out AT THE MARKET, I do not issue

"or better" orders. Just as soon as my objective is reached, 1 exit AT THE MARKET. If I want to be anticipatory, it is OK. That way I will be more assured of gcthng something for the risk Ive taken if prices trade near my exit point, I do not use "fVlarket If Touched orders" for my final exit order. It takes too long to cancei-replace a PvlT order with an At The [Market order. Not only that, but I could end up going the wrong way if the order is not in the pit fast enough. The only preferable way for final exit is AT THE MARKET. As soon as I see prices approach or surpass my goal, I get out AT THE MARKET. I cannot stress this enough. YeS, there will be slippagfi. Yes, I wilt not always got rny price. Yos, I will find plenty of reasons to curse the market, my hioker, and the [%x*jy&S door traders in tlio pit. Out nt least i will usually get out wiiTi son>othing,

Of course all ol the above presumes that I am actively watching the trade via a live data feed. AMov me to point out that if my obieciive is reached, and I am not able to watch the price action, I can place a MIT or s buy or sell stop in the market. In the case of the MIT as soon as prices tado at my objective, tiie MIT wilt become a rnarket order. In the case of a stop order. DS soon as prices trade through my objective price, the stop vjilf becon-te a market order and I will have my fil .

i must be extrenvely quick si canceling out any protective stop orders wheri tfie market l"ias moved ahead sulficientiy ;o warrant doing so. I dont want the ntarket to come back and hit themi.

It tfie trade goes ayainst me, I get out. I get out at rny stop, or, il [ am uEisure the trade doesrit seeiTi to be going according to plan, I gel out N0W1

Yes. I fTiay mumtjie and grumble. Yes, I may feel exasperation and frustration, hut t must take the hit and get out. Tliis vas not niy trade. Maybe I got a really Oad fill, maybe sorrie news hit tfie market and it began to move Topidly away from rny trade, Vvhatever the reason, there is o/ily one thing to do - GET OUT!

Will ( do it? Not always. Do I have the discipline to enter my orders the v;ay Ive stOiOd here? Yes, usuallyi Do I want to stay among the majority who lose in the markets? No! So 1 must do vjhat Ive written here,

I rernentber: where [possible stop limit, or stop with limit orders on entries. At Tfie fviajket orders on exits. With the exception of \w\](in 1 fsave to

use plain stop orders, oD.cr way

EVER

those situationsi

Cliaplcr S

f I oackcopiiig

Because eayuadmg is at times both fast and furious, 1 must keep accurate records of my trades. I must know the tirne 1 entered the trade, I must get a ticket nunber fo: tlie Irade. I must keep count of the contracts 1 have on rn each trade, I Icy, f.ot}ody said that daytrading Ls easy.

As soon as t soe prices tick at a.-.d then through rny entry point, I a.-surnc I have been rilled. I call rny broker. 1 nag that until he gets my order out. I cannot wait Italf an hour to find out if Tve been <illcd. I have to

know NQWI This takes a ol of effort on rny part, \ rnay l)c trying to watch several markets, f am trying to write down vhere I am in each market. I am wailing far the fill, and at the same iirric t need to call my broker and buy that broker without mercy until I know if and whore my stop (jrdcr was iiUed.

To do all that, 1 had better be one terrific housekeeper, if I am not toialiy organized, I will eat niy shirt. I wiite down all my potential entry points, I rriust keep track of those piices. When \ call in an order, I keep track ol those ticket numbers. Ticket 123 bought tfiree gold at 401.90. 1 v</t]ie it down. Ticket 345 sold one gold at 402,80. I wnte it down.

"/Vow, /ioiv 1,-) gold I slifi if)>" Whoa! Wait a minute,

ticket 678 to sell Puee SiP at 309,10 just got missed, the rnarket opened below me at 309.00. Quick, go: that order canceled. "Straight cancel ticket 67S selling th roe SfiiP s at wtiat????" Wfiat was that figure? "Oh, there it is,. 309J0, Thank goodness I wrote it down." ¹w, w/jere was Oh yesh... how many gold contfacts I shif holding? Two/" I write it down.

Im not exaggerating. Mo way! Daytrading a fiwo or even a fifteen minute chart is some kind of a busy job. I can do it only in short bursts. Anyone who is a nervous type will be eaien alive. I nuisi keep accurate records. ] miust know, and know tfiat I know, when I am flat, or when I stilt have one or more positions on. Tve had rny broker call to lelf me I wasnt flat - that I still had trades on. He was wrong. My record keeping was ryiore accurate than his, Ive had my broker call to tell me fie thoijght I was flat. I couldrit bo sure, because I got tarTos messed up and cifcfnt write something down. Tht next day I had a 52900 loss in the D-Mark staring mie in the face at the open. I was wrong, hiis record keepirig was no more accurate tfian mine. Thats when I started tape recording rny orders,

Ive had trie broker call to tell rno 1 was stifl long a Yen and did J want to sell it befoiC tfie closel* My records, and ~v lapr; rticnrding, showerf I was flat. He couJfini be sure i)ccauso die market v./as last and lie didnt know if all the tickets were in and accounted foe Whzii vrould fiave fiappened had I sold a Yen t:onUaci ai the market? \ would have been short one Yen contract at the close. The next morning saw a gaj) opening to the upside of $3700. Thankfully, I hadnt inadvertently gone short.

Do 1 need to keep accurate records? Absolutely, for sum, YES! So, I write it down, write it down, WHITE IT DOWN.

tf I miss Uckel nuniber. \ call back ami din \\ oui. [ write it tlown. Whenevef possible. I wntc out al) orders in advance. Then 1 read tiiem to the broker so I make fewer mfatakes. I use them as a script, so I wont say "buy when I mean "scM." I Tape record every order. Sooner or later tho day will come when J desperately want out of a narkct and will "sell it instead of "buying" it to get out, I need to know what t said, and I need to iiear what the broker said. I replay the tape just to be sure.

I time stamp every order by saying, "This is account 12345 at 8.22 a.m. on 1 2 Jufy ....."

When Irn in the fieat of battle, 1 fiave to be extra careful of what I say. In ifie rush to exit a trade, t may say the wrong thing. If 1 have had time to do so, I will have written out my ej<it order,

1 hate to say how niany times Ive been short tfiree contracts, and wanted to add five or ten contracts, in a hurry, watcfiing two or three other trades, and blurted "buy five D-Marks at tfie market" wh,en I reaNy wanted to say "se

hate to tell flow many times Ive been long three contracts, added to my posfhon witn five contracts, made a bundle on the trade, and [hen at e.tit time forgot I had eight still on and stid, "self live." TfiaiVs why I vjrite it down, write it (iowii, WRITE IT DOWNI I keep my fiouse clean.

Chapter 9

limk..-ts and Ct)inmis.sior].s

Then: js notfuog more importarn my daytrading than to fiavo a very responsive and accurate broker [)aridling my account, 11 discuss son-G of tho problems I encounter in dayUadiny that make diis so.

At tinges rny trading will be fast and furious. I txiay [le fong a five lot and need to foad up witli a fifteen lot. If this is fiappening m more than one market (which it often is}, I need a broker who is adtpE at keeping track of my trades. No one broker, unless tfiat broker is totally rledicaied io my trading, can pussitily keep uack of all diy Uadcs. ( need an alert broker witli a very competeru staff, all of whom are familiar wdh my trading.

I need a broker who can yet the orders back from the trading Moor quickly. Hes got to get ifiem out with all speed.

Tfiere will be times in fast markets v/hen I need to get out before I know exactly where I got in.

I caniit>t afford to use a novice broker. On tfu oilier liarud,

establ-slied broker will have other clirois who are iriij>orrant to itim.her wise also need attention.

I cannot afford to use any broker wfio will not deal widi me o a discount basis. Ihe absoh.ite tops 1 can yfford \o pay for comniriisjon is a lot less than many pay witfi a discount broker.

What 1 pay depend.s on rny trading volume, the si.e of my account, and, to a certain extent, upon liow much my broker needs tfie bi;siness.

I try vvherever possible to be able to call directly to the fioor,

t need li taroker vho has good desk posilion on tfie floor aruJ good rcfircsentatioii tn tfie pit.

Such hrokeis art." tiard to come by. 1 know, Ive 1 ( 1 long and luirii, When I hnd one, I will stay witfi him as long as possible.

In tiu. ficat of irading, thenJ are times when I have tromle reriembering c?(actly where and wfiat my vanuLf. positions are. HopefuKy. my broker vviN provide a good backup.

! also need a broker who will allow me to daytrade with 25% [no niore) of minimum margin. By rninmum margin 1 niean the rninimum margin fur a

commodity as set otd by tfie excfiange, rather than the brtikers minirrium margin.

Some brokers will clear me to trade at 2 % minimum margin on the S£(P, Ttiats not good enough. 1 wan! a liroker wfui wdl allow me to daytrade with 25% of exchange riunimum margins across liie board.