IntesaTrade

and

PRESENT

Building Your E-mini Trading Strategy

Prepared and Presented by Daniel Gramza

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Materials in this presentation are covered under current United States and international copyright laws. NO PORTION OF THIS PRESENTATION MAY BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE AUTHOR.

Daniel Gramza is currently completing two books: Trading in the Eye of the Storm The Handbook of Japanese Candle Trading Strategies You can be notified when these books are available by contacting Daniel Gramza. Daniel M. Gramza President Gramza Capital Management, Inc. 2227 Forestview Road Evanston, Illinois 60201-2009 Tel. Fax e-mail (847) 475-4760 (847) 475-4780 dmgramza@worldnet.att.net All Charts Created on Aspen Graphics Software Contact MIKE BRODROGI 1 800 359 1121
mbodrogi@aspenres.com

CME, the globe logo and E-mini are trademarks of Chicago Mercantile Exchange, Inc. All other marks are the property of their respective owners.

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Building Your E-mini Trading Strategy • Identify market you're going to trade • Determine your trading time frame • Select trading approach • Create trading strategy • Establish trading strategy parameters • Measure performance of trading strategy • Implement new trading strategy

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Section 1: IDENTIFY MARKET YOU'RE GOING TO TRADE CME E-mini™ Futures OPTIONS on CME E-mini™ Futures CME eFX FUTURES Gramza Capital Management. 4 . Inc.

000 400.000 Increasing Volume = Increasing Product Acceptance 0 CME E-mini™ S&P 500® Futures Average Daily Volume 5 N o v -9 7 F e b -9 8 M a y -9 8 A u g -9 8 N o v -9 8 F e b -9 9 M a y -9 9 A u g -9 9 N o v -9 9 F e b -0 0 M a y -0 0 A u g -0 0 N o v -0 0 F e b -0 1 M a y -0 1 A u g -0 1 N o v -0 1 F e b -0 2 M a y -0 2 A u g -0 2 N o v -0 2 F e b -0 3 M a y -0 3 A u g -0 3 N o v -0 3 F e b -0 4 M a y -0 4 A u g -0 4 N o v -0 4 F e b -0 5 .000.000 900.000 800.000 200.000 700.1.000 600.000 300.000 500.000 100.

000 0 Aug CME E-mini NASDAQ-100® Futures Average Daily Volume Increasing Volume = Increasing Product Acceptance 6 .00 Oc t 00 Dec -0 0 Fe b -0 1 A pr -01 Jun -01 Aug .000 350.000 400.000 300.50.000 250.02 Oc t 02 Dec -0 2 Fe b -0 3 A pr -03 Jun -03 Aug .99 Oc t 99 Dec -9 9 Fe b -0 0 A pr -00 Jun -00 Aug .000 200.03 Oc t 03 Dec -0 3 Fe b -0 4 A pr -04 Jun -04 Aug .000 150.04 Oc t 04 Dec -0 4 Fe b -0 5 A pr -05 .000 100.01 Oc t 01 Dec -0 1 Fe b -0 2 A pr -02 Jun -02 Aug .

OPTIONS on CME E-mini™ S&P 500® Futures Average Daily Volume Increasing Volume = Increasing Product Acceptance 14000 12000 10000 8000 6000 4000 2000 0 Aug-03 Aug-04 Apr-03 Feb-03 Jun-03 Feb-04 Apr-04 Jun-04 Feb-05 Oct-03 Oct-04 4/30/2005 7 Dec-03 Dec-04 .

100000 120000 140000 160000 20000 40000 60000 80000 0 Ja n -0 3 Fe b -0 3 M a r-0 3 Ap r-0 3 M a y-0 3 Ju n -0 3 Ju l-0 3 Au g -0 3 Se p -0 3 Oct-0 3 N o v-0 3 D e c-0 3 Ja n -0 4 Fe b -0 4 M a r-0 4 Ap r-0 4 M a y-0 4 Ju n -0 4 Ju l-0 4 Au g -0 4 Se p -0 4 Oct-0 4 N o v-0 4 D e c-0 4 Ja n -0 5 Fe b -0 5 3 /3 1 /2 0 0 5 4 /3 0 /2 0 0 5 Increasing Open Interest = Increasing Product Commitment OPTIONS on CME E-mini™ S&P 500® Futures Month End Open Interest: 8 .

500.200.000 600.000.400.000 400.000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 0 9 .000 1.000 200.000 900.CME and Growth of Electronic Trading Increasing Volume = Increasing Product Acceptance Average Daily Volume by Year 1.300.000 700.000 300.000 500.000 1.100.000 800.000 1.000 1.000 100.000 1.

Inc. 10 .Why Trade CME E-mini™ Futures? • Easy access • Virtually 24-hour trading • One central marketplace • Highly liquid • Tight bid/ask spreads • Leverage • No Margin Interest Charged • No Inventory Required for Short Position • No Short Position Interest Charged Gramza Capital Management.

Inc.S. stocks CME E-mini Russell 1000® futures Tracks 1000 largest cap companies in the U. 11 . Gramza Capital Management.S.S. stocks CME E-mini NASDAQ-100® futures Tracks technology. telecom and biotechnology issues CME E-mini S&P MidCap 400™ futures Tracks mid-size U.Why Trade CME E-mini™ Futures? KEY BENCHMARK INDEXES CME E-mini S&P 500® futures Tracks large-capitalization U. companies CME E-mini Russell 2000® futures Tracks small-capitalization U.S. based on total market capitalization.

CME E-mini™ FUTURES Contract Specifications
CME E-mini™ Ticker Symbol Contract Size* S&P 500 ES $50 x E-mini S&P 500 $55,000 .25 futures index points = $12.50
®

CME E-mini NASDAQ-100 NQ $20 x E-mini NASDAQ-100 $30,000 .50 futures index points = $10.00 Nearly 24 hours,
®

CME E-mini
®

CME E-mini

CME E-mini Russell 1000® RS1 $100 x E-mini Russell 1000 $64,000 .10 futures index points = $10.00

Minimum Price Fluctuation (Tick) Trading Hours Contract Months** Last Day of Trading Performance Bond Margin***

Russell 2000 S&P MidCap 400™ ER2 EMD $100 x E-mini $100 x E-mini Russell 2000 S&P MidCap 400 $56,000 $58,000 .10 futures index .10 futures index points = $10.00 points = $10.00 Sunday afternoon through Friday afternoon H, M, U, Z 8:30 a.m. third Friday of contract month $3,500 $3,500

$4,000

$3,750

$3,625

* Contract value fluctuates daily with market ** H = March M = June U = September Z = December *** ALL PERFORMANCE BONDS SUBJECT TO CHANGE AND BROKERS MAY REQUIRE HIGHER MARGINS

Expiration Dates

March 18, 2005 June 17, 2005 September 16, 2005 December 16, 2005

Trading may occur up to 8:30 a.m. Chicago time on these dates.

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How are E-Mini S&P 500 profits and losses calculated?
The CME E-Mini S&P 500 futures contract is traded in .25 increments = a tick = $12.50 per contract or 1 full point = $50 1301.00 $12.50 1300.75 $12.50 1300.50 $12.50 1300.25 $12.50 1300.00
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$50.00

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How are CME E-Mini NASDAQ-100 profits and losses calculated?
The CME E-Mini NASDAQ-100 futures contract is traded in .50 increments = a tick = $10.00 per contract or 1 full point = $20

1401.00 $10.00 1400.50 $10.00 1400.00 $20.00

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E-mini FUTURES COMPARED TO SPDRS VALUE OF INVESTMENT $55. Inc.00 $12.000/$110 per share = 500 shares CME E-mini S&P 500 1100. 15 .01= $5.00 per contract 1 contract Min.01 per share $12.50 per contract Tick Value 500 SHARES *. CME E-mini S&P 500 multiplier value = $50 Value of 1 E-mini S&P 500 futures contract = 1100 X $50 = $55.000) SPDRs Current Level $110 per share Quantity $55.50 per contract Gramza Capital Management. Tick Size $0.000 (Assume S&P 500 Index value = 1100.

000 S&P INVESTMENT SPDRs Margin 50% = $27.3% = $4. Inc.E-mini FUTURES COMPARED TO SPDRS (Cont'd) COST TO ACQUIRE $55.000 0 0 Gramza Capital Management. 16 .500 Plus Margin Interest If Short Plus Short Interest CME E-mini S&P 500 7.

0 3 3 Oc Ja Ap t.0 1 1 l.0 t.A V E R A G E D A IL Y V O L U M E 100.0 1 2 Ju Oc Ja Ap r.0 2 3 Ju Oc Ja Ap r.000 50.0 0 1 Ju Oc Ja Ap r.000 150.0 2 2 l.000 0 Ap r.0 0 0 l.0 Ju 4 4 l.0 3 n -0 r.0 4 t.000 200.0 t.000 300.000 250.0 t.0 Ju Oc Ja 17 n -0 n -0 n -0 l.0 n -0 Ap r.0 4 5 5 CME eFX Futures Average Daily Volume Increasing Volume = Increasing Product Acceptance .

• Changes in exchange rates typically have low correlations to the stock and interest rates markets. 18 . offers open and transparent FX pricing.TRADING CME FX FUTURES Easy access FX Futures offers portfolio diversification. CME is largest regulated FX market in the world Segregated accounts Gramza Capital Management. Tight bid/ask spreads Highly liquid Virtually 24-hour trading One central marketplace CME exchange environment. Inc.

3300 Gramza Capital Management. EUR/USD = Value of 1 Euro expressed in US Dollar terms. or via currency indexes. representing more than $1.88 trillion worth of transactions each day.3300 = 1 Euro = US$1. Currency trading is simultaneous purchase of a currency in terms of another currency. Inc. dollar (EUR/USD). Foreign Exchange = forex = FX = Currency Market = the exchange of one country’s currency for another countries currency. 19 . such as U.S.TRADING CME FX FUTURES Most liquid financial market in the world. such as the CME$INDEX(TM). Currencies are traded in pairs. EUR/USD = 1. dollar/Japanese yen (USD/JPY) or Euro/U.S.

250.50 1.3400 $12.50 per contract or 1 full point = $1.3300 $1.3302 $12. 20 .How are Euro Currency profits and losses calculated? The CME Euro Currency futures contract size is 125.250.00 1. Inc.000 Euro and is traded in .50 1.00 Gramza Capital Management.50 1.3399 1.0001 increments = a tick = $12.3301 $12.

Inc.3302 $6.3400 $6.00 1.3301 $6.0001 increments = a tick = $6.3399 1.How are E-Mini Currency profits and losses calculated? The CME E-Mini Euro Currency futures contract is 62.500 Euro and is traded in .25 1. 21 .25 per contract or 1 full point = $625.3300 $625.00 Gramza Capital Management.25 1.25 1.

22 . Inc.Section 2: DETERMINE YOUR TRADING TIME FRAME • • • • • Scalping Micro day trading Macro day trading Swing trading Position trading Your trading time frame creates demands on: Available Trading approach Trading technology to trade Gramza Capital Management.

Section 3: SELECT TRADING APPROACH • Fundamental Fundamental traders trade on the that other traders will react to the fundamental information in the same way as the fundamental trader. Inc. Technical analysis categories: reaction to − Direct analysis of price movement − Indirect analysis of price movement − Combination of direct and indirect analysis of price movement Gramza Capital Management. • Technical Technical traders trade the fundamentals. 23 .

• Trend Analysis • Japanese Candle Charts Gramza Capital Management. Inc.Section 4: CREATE YOUR TRADING STRATEGY Identify the tools that will create the foundation of your trading strategy. 24 .

TREND ANALYSIS Gramza Capital Management. Inc. 25 .

Inc. 26 .TREND ANALYSIS Higher Highs and Higher Lows = Uptrend Gramza Capital Management.

27 .TREND ANALYSIS Lower Lows and Lower Highs = Downtrend Gramza Capital Management. Inc.

Inc.TREND ANALYSIS swing high Gramza Capital Management. 28 .

Inc. 29 .TREND ANALYSIS swing low Gramza Capital Management.

TREND ANALYSIS Close above previous swing high = continuation of trend = Uptrend Close Gramza Capital Management. 30 . Inc.

Inc. 31 .TREND ANALYSIS Failed to Close above previous swing high = Potential Change in trend Close Buy IF Close below previous swing low = Downtrend Buy swing low Gramza Capital Management.

32 . Inc.TREND ANALYSIS Close below prev swing low = Dntrend Close Gramza Capital Management.

33 . Inc.TREND ANALYSIS swing high swing low Gramza Capital Management.

34 .TREND ANALYSIS Close below previous low = continuation of trend = Downtrend Close Gramza Capital Management. Inc.

35 .TREND ANALYSIS swing high Sell Close above prev swing high = Uptrend Sell Gramza Capital Management. Inc.

36 . Inc.TREND ANALYSIS Close Failed to Close below previous swing low = Potential Change in trend Gramza Capital Management.

Inc.TREND ANALYSIS Close above prev swing high = Uptrend Close Gramza Capital Management. 37 .

TREND ANALYSIS Buy swing low Gramza Capital Management. Inc. 38 .

39 .JAPANESE CANDLE CHARTS Japanese Candle Foundation Shape Close High Buying Body Open Selling Body Open Low Close Gramza Capital Management. Inc.

Japanese Candle Construction High Selling Shadow Close Buying Body Selling Body Open Open Buying Shadow Low Close Gramza Capital Management. 40 . Inc.

41 .Japanese Candle Shadow Development 45 min Candle High Selling Shadow Close Buying Body Open Buying Shadow Low Gramza Capital Management. Inc.

Inc.Japanese Candle Shadow Development (Cont’d) 45 min Candle 15 min Candle High Open Selling Body High Last Low Last Gramza Capital Management. 42 .

Inc. 43 .Japanese Candle Shadow Development (Cont’d) 45 min Candle High Open 15 min Candle High Selling Body Last Buying Shadow Low Last Buying Body Gramza Capital Management.

Inc. 44 .Japanese Candle Shadow Development (Cont’d) 45 min Candle High Last Open 15 min Candle High Last Buying Body Selling Body Buying Shadow Low Gramza Capital Management.

Japanese Candle Shadow Development (Cont’d) 45 min Candle Last High Open Selling Body Buying Shadow Low 15 min Candle Last Buying Body Gramza Capital Management. 45 . Inc.

Inc. 46 Buying Body .Japanese Candle Shadow Development (Cont’d) 45 min Candle Last High 15 min Candle Last Open Selling Body Buying Shadow Low Gramza Capital Management.

47 Buying Body .Japanese Candle Shadow Development (Cont’d) 45 min Candle High Selling Shadow Last & Close Selling Body Last & Close 15 min Candle Open Selling Body Buying Shadow Low Gramza Capital Management. Inc.

48 . Follow Through 3. Set Up Gramza Capital Management. Confirmation 1. Trigger Price 2. Lead up 4.Candle Pattern Development The identification and analysis of the price relationships that create a reversal pattern 5. Inc.

Inc. 49 .Candle Characteristics 1) Range 2) Body Color 3) Body Size HIGH TO LOW = MEASURE OF__________ GREEN =__________ RED =__________ ___________________ ___________________ 4) Shadow Location BOTTOM =_________ TOP =_________ 5) Shadow Size _________OF BUYING OR SELLING Gramza Capital Management.

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Candle Global Environment 1. daily or intraover what period of time and what is it's Gramza Capital Management. What is the current market condition? Is it day basis? Is it magnitude? on a yearly. Inc. weekly. monthly. 62 .

Gramza Capital Management.Candle Global Environment (Cont'd) 2. Inc. Through the analysis of long-term charts what is of the current market? At value. Undervalued the • Overvalued. 63 .

Candle Global Environment (Cont'd) 3. Inc. 64 . How does the market compare to: • • Other sectors both domestically and internationally Gramza Capital Management.

Inc. 65 .Candle Global Environment (Cont'd) 3. How does the market compare (Cont’d) Gramza Capital Management.

Candle Global Environment (Cont'd) 4. What is the market ? What is a relationship of the current market levels to ___________________________________candles? Gramza Capital Management. Inc. 66 .

Candle Global Environment (Cont'd) 5. 67 . Inc.) of the trade? the trend? current bearish or bullish candle Sell (better) Buy (best option) Gramza Capital Management. What is the • Are you trading • Are you going patterns? Buy (not rec.

Candle Global Environment (Cont'd) 6. Inc. What are price_________and price___________ at major highs and lows? Gramza Capital Management. 68 .

69 . What is the of major highs and lows? Gramza Capital Management.Candle Global Environment (Cont'd) 7. Inc.

Candle Global Environment (Cont'd)
8. Is the trade clean?


• •

Does it hit you between the eyes and scream at you to the trade? Does current information trade? Be patient and let the you. the come to

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POTENTIAL OUTCOMES OF A TREND REVERSAL PATTERN

Be prepared for any outcome!

Could result in

or

or

or

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Essential Considerations When Combining Technical Trading Techniques
1. What are distinctive CHARACTERISTICS of each study? 2. What is the IDEAL market environment for each study? 3. What LEAD UP
each study? creates the most profitable signals for

4. What are STRENGTHS AND WEAKNESSES of each study? 5. What are the SIMILARITIES AND DIFFERENCES between
studies?

6. What does each study

ADD

to your trading decision? buy and sell signals?

7. Do studies trigger the SAME
IDEAL LEAD TIME ?

8. If one study leads another study, what is the

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73 . Inc. What is the impact of an individual study and the of time periods combined studies on the NUMBER to complete a trading cycle from beginning to end? 13. What is the impact of an individual study and the combined studies on the MAGNITUDE of profits? 11.Essential Considerations When Combining Technical Trading Techniques (Cont'd) 9. What is the impact of an individual study and the combined studies on the MAGNITUDE of profits when the mathematical study FAILS ? 12. What is the impact of an individual study and the combined studies on the FREQUENCY of buying and selling signals? 10. What is the impact of an individual study and the combined studies on the HEAT INDEX for your trades? Gramza Capital Management.

Lead up 4. Inc. Set Up Gramza Capital Management. 74 . Confirmation 1. Trigger Price 2. Follow Through 3.Section 5: ESTABLISH YOUR TRADING STRATEGY PARAMETERS Trading strategy parameters are the identification and analysis of the price relationships that create a reversal pattern and it's profit potential and heat index characteristics 5.

75 . Inc. The LEAD UP phase is the candles and stochastic behavior making up the that proceeds the set up candle. Gramza Capital Management.ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd) 1. What are the characteristics of the lead up phase for profitable trades? of lead up magnitude (minimum to maximum) The of periods that create the lead up phase.

SETUP is the candle or candles and stochastic the reversal pattern. Inc. and stochastics is in a 0 oversold or overbought condition. behavior that What are the characteristics of the set up candle and the stochastic signal? (set up candle's body within / below / surrounding previous candle's body and or shadows etc.) (setup candle's body size and shadow location and size and stochastics signal lines have crossed over (magnitude of setup candle's high to low range) characteristics of setup candle Gramza Capital Management.ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd) 2. 76 .

to The TRIGGER PRICE is the price level used the trade.ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd) 3. Inc. For example: Buy higher highs Gramza Capital Management. 77 .

ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd) 4. should follow through occur? through? 5. Inc. should confirmation occur? is typical magnitude of confirmation? Gramza Capital Management. is typical magnitude of follow CONFIRMATION is the price action that verifies the completion of most reversal patterns. 78 . FOLLOW THROUGH is the type of price action that should occur after the trade is entered.

Japanese candles are being used for illustrative purposes. Buy higher highs Gramza Capital Management.1. Trading Strategy Evaluation Section 6: MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (The following Trading Strategy Evaluation techniques apply to all trading techniques. 79 . Sell 1st Lower Low greater than 2 ticks B. Inc.) Trading Strategy being created and evaluated: A. Trade exit Sell first lower low greater than 2 ticks A. Trade entry Buy new high of Japanese candle rejection pattern B.

Sell 1214. 80 . Inc.00 Buy 1206.00 Gramza Capital Management. For each trade what is the MAGNITUDE RANGE of profits? The magnitude range is used to determine PROFIT EXPECTATIONS for the trade.MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 2.00 Profit = 8.

25 to 10.00 What is the frequency Are there distribution ? of those profits? 4.75 IIIII IIIII IIIII IIIII IIIII IIII 5.25………………………….MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 2.00 points of profit and move stop to breakeven incl. Inc. Gramza Capital Management. For example: Lowest value to the highest value of profit is 4.25 IIIII IIIII IIIII III 4..00 IIIII IIIII IIIII II 5. brokerage.10.50 IIIII IIIII IIIII IIIII IIIII II 4.00 IIIII III I II I I II Possible trading strategy to PRESERVE PROFITS on a profitable trade is to Sell ½ position at 4. 81 .

There are two different types of profitable trades: Type one is a profitable trade where the market does trade below the entry price. 82 .MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 3.magnitude of strategy and placement of risk management ___ orders. Gramza Capital Management. What is the heat index range? The heat index range is used to determine point of trading . Type two is a profitable trade where the market trade below the entry price. Inc.

00 Exit Trade = 1289.50 Heat Level = 1282. Inc.00 Profit = 5. 83 .00 Heat = 1.00 Enter Trade = 12 84.MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd) Type One Trade Type Two Trade Exit Trade = 1289.00 Enter Trade = 12 84.00 Profit = 5.00 Gramza Capital Management.50 No Heat Stop Loss = 2.

Inc.00 Heat .00 Profit = 8. 84 .25 Gramza Capital Management.50 Heat Level 1182.00 Buy 1206.MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd) Sell 1214.

Inc.50 Profit = 7.25 Buy 1172.Sell 1179.75 Gramza Capital Management. 85 .

Sell 1205.25 Buy 1201.00 Gramza Capital Management. 86 . Inc.25 Profit = 4.

Sell 1188.00 Profit = 8. 87 .75 Buy 1183.25 Gramza Capital Management.00 Heat .50 Heat Level 1182. Inc.

50 No Heat Stop Loss = 2.00 IIIII IIIII IIIII 1.50 1.75 IIIII III I II .25 IIIII IIIII IIIII .00 Profit = 5.75.50 Heat Level = 1282.00 Gramza Capital Management.MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd) Type One Trade Type Two Trade Exit Trade = 1289.75 IIIII IIIII IIIII .25 1.00 For example: Lowest value to the highest value of heat is 0.25 to 1.00 Heat = 1. Inc.00 Exit Trade = 1289. 88 of the heat values? ? 1.00 Profit = 5.00 Enter Trade = 12 84.00 Enter Trade = 12 84.50 IIIII IIIII IIIII IIIII Potential sell stop is 2. What is the frequency Are there distribution .

MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 4. What is the probability of the trade working? The probability of a profitable trade is used in the of having a determination the profitable trade and risk reward relationship of the trading strategy. Divide the profitable trades by the total number of trades = % probability of a profitable trade. Profitable Trades Total Number of Trades

=

40 60

=

66% chance of a profitable trades

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd)
5. How many periods between the beginning of a trade to the end of a trade? The number of periods is used to determine to allow the trade to work. It provides a guide to increase the trader's level of by allowing the trade enough time to mature. to let the trader It can also be used as a know, when the trade has not been productive in a timely fashion and the trader may be overstaying his welcome in a trade. 6. What is the 7. Are the profits stable in of the trade? markets?

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Section 7: IMPLEMENT YOUR TRADING STRATEGY

• The essential steps in the trading process • Trading in the Eye of the Storm

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2.THE ESSENTIAL STEPS IN THE TRADING PROCESS. 7. Inc. What am I going to do to change this? When and how will I implement those changes? Gramza Capital Management. • • Trade Trade Trade Trade Profit and Loss Yourself Monitor above categories: Where am I the Where am I the ? ? 5. 6. 3. 1. 92 . 4.

intermediate. and short term? Is the market imbalanced to the buy or sell side? What are major support and resistance areas? Gramza Capital Management. Pattern Development and Global Environment) providing for the long.Identify and Evaluate the Trade • • What is your perspective? What market information is candle analysis (Candle Characteristics. 93 • • . Inc.

Inc.Identify and Evaluate the Trade (Cont'd) • What information is being revealed by mathematical studies? Does the current accumulated market information support or contradict new or existing market positions? What are the challenges to your trade? Is trade location favorable? • • • Gramza Capital Management. 94 .

consider the following: • • • • What is your mental state? Is this a full or partial position? What is considered positive or negative market activity? How. and where will the trade be entered. when. added to. reduced and exited? Gramza Capital Management. Inc.Trade Execution and Management Before the trade is entered and after the trade is executed. 95 .

month? Gramza Capital Management. 96 .Evaluate and Monitor the Trading Decision Process • What is the profit per trade production? • Is this on target? • What is the loss per trade production? • Is this on target? • What is your frequency of trades per day. week. Inc.

week. month or year when you trade your best? • Is there a time of day.Evaluate and Monitor the Trading Decision Process (Cont’d) • Is this within expected parameters? • Is there a time of day. month or year when you trade your worst? • Are you trading to trade or are you patiently selecting high quality trades? • Do you typically trade with or against the trend? Gramza Capital Management. Inc. 97 . week.

Inc.Evaluate and Monitor the Trading Decision Process (Cont’d) • Do you review your profitable and unprofitable trades at a minimum on a monthly basis? • Is one more profitable than the other? • Do you review your profitable and unprofitable trades at a minimum on a monthly basis? • What have you learned from your unprofitable trades? Gramza Capital Management. 98 .

how and when will you implement this into • How do you feel during and after profitable or unprofitable trades? • Does your trading time frame match your ability to execute the trade? • Are you asking something from the market that the market cannot give? Gramza Capital Management. 99 . Inc.Evaluate and Monitor the Trading Decision Process (Cont’d) • Are there distinctive characteristics between profitable and unprofitable trades? your trading? • If yes.

100 .Evaluate and Monitor the Trading Decision Process (Cont’d) • Does your trading strategy match the market and your trading time frame? “best” trading? • What type of trade were you doing when you felt the • What type of trade were you doing when you felt the “worst” trading? • What aspect of trading do you enjoy the most? • What aspect of trading do you enjoy the least? • What aspect of trading concerns you the most? Gramza Capital Management. Inc.

Evaluate and Monitor the Trading Decision Process (Cont’d) • What are you doing about these concerns? • Have you done your homework before you execute the trade? • Are you in good physical condition? • Does your physical trading environment support your trading business or is it a distraction? your trading approach? • Would you give money to yourself to manage with Gramza Capital Management. 101 . Inc.

TRADING IN THE EYE OF THE STORM • High performance trading occurs in the Eye of the Storm. • What storm? Storm = Markets = Trading = Others = Yourself A trader's objective is to stay in the eye of the storm. Inc. free from the distractions of the storm's movement Gramza Capital Management. 102 .

yet totally aware state. Inc. Gramza Capital Management.How does a trader stay in the eye of storm? The trader must recognize and accept that trading is a physical business that requires a synergy of thoughts and physical response in a relaxed. 103 .

104 .THOUGHTS • Create the trader’s reality • Direct the body • Basic elements of the thought process are: Thought Choice Thought Energy Gramza Capital Management. Inc.

• What is the payoff for keeping and maintaining a thought choice? .Weakness . the trader is responsible for that thought choice.Self-sabotage Gramza Capital Management. • A trader makes a thought choice. Inc. therefore. it will impact the thoughts that follow. but whichever the choice. to trading and life.Power .THOUGHT CHOICE • The thoughts the trader allows himself to have are his thought choices. 105 . • These thought choices determine how he reacts • He can choose a positive thought or a negative one.

Gramza Capital Management. • The amount of impact is determined by the amount of thought energy the trader gives each thought. Inc.THOUGHT ENERGY • The trader's thought choices have an impact on his life. 106 .

What are your first or typical thoughts when faced with challenges in your life? How you react to these challenges is usually how you will react to the challenges of trading.IDENTIFYING YOUR NEGATIVE THOUGHT DEMONS Thought Demons are negative thoughts that hold you back and prevent you from accomplishing your life and trading goals. 107 . In life or trading. Inc. do you choose and energize negative thoughts? Gramza Capital Management.

108 . Inc.IDENTIFYING YOUR NEGATIVE THOUGHT DEMONS The Negative Thought Demons Journal will help you: examine your thought choices identify your negative thought demons increase your awareness of these thoughts develop a specific target for your energy and efforts to make a change. Gramza Capital Management.

Inc. 109 .NEGATIVE THOUGHT DEMONS JOURNAL Identify your negative thought demons by answering the following questions: • When and what was happening before you had negative thoughts? • What were those negative thoughts? • What type of inward and/or outward reaction did you have from these negative thoughts? • How did you feel when you had these negative thoughts? Gramza Capital Management.

Inc. 110 .NEGATIVE THOUGHT DEMONS JOURNAL (Cont’d) • What are these negative thoughts taking away from you? • How are these negative thoughts holding you back? • What payoff did you get by keeping this negative thought? Gramza Capital Management.

why not? • Which thought management technique from the following section are you going to use to help you de-energize this negative thought and reach your ideal thought reaction? • When are you going to implement this thought reaction? Gramza Capital Management.NEGATIVE THOUGHT DEMONS JOURNAL (Cont’d) • Do you accept that you created this negative thought? If not. 111 . Inc.

Inc. 112 . Gramza Capital Management.THOUGHT MANAGEMENT TECHNIQUES • Thought management techniques are used to conquer your thought demons.

Inc. so objectively review the questions found in the Negative Thought Demons Journal as if you were questioning another person as a consultant. 113 . Imagine that you are a consultant. consultants are often used to provide an objective approach to finding a solution. Gramza Capital Management. The key to being a good consultant is asking the right questions.The Consultant Technique • When a problem arises. You have been retained to provide consulting services to a person with a situation exactly like yours. An objective review of the responses may provide just the point of view needed to implement positive solutions.

” Gramza Capital Management. Inc. 114 .The Consultant Technique (Cont’d) Albert Einstein said “You cannot solve a problem with the same mind that created it.

You begin to have negative thoughts relating to a situation over which you have no control. You consciously recognize that you have done all you can. 115 . and it is now up to the situation to complete itself. Inc. The situation is not under your control and you are not going to waste your energy on unproductive thoughts. Gramza Capital Management. You choose not to energize the negative thoughts or allow them to overwhelm you.Situation Control Recognition Technique • This technique allows you to control your negative thoughts by recognizing those situations you control and those you do not.

and placed your risk management stop order according to your strategy. Gramza Capital Management. Recognize this. 116 . and let your trade work. and what you do control is how you react to the outcome. You then allow yourself to become more and more emotionally involved with each back-and-forth market movement.Situation Control Recognition Technique (Cont'd) For example: You have identified a trade. The reality is that the market is in control. executed your order to enter the trade. You will either make money or lose money. Inc. and you have no control over the market. relax.

Gramza Capital Management.Remember. Inc. 117 . it is always within your power to change.

spoon or cup to your mouth and driving your car When trading. 118 . Inc.PHYSICAL RESPONSE • Effortless action is confident physical response without hesitation. executing a properly evaluated trade should feel the same way! Gramza Capital Management. trading. he stands a side and allows his trading strategy to work • Examples of effortless action in your daily life: tying your shoe combing your hair raising a fork. • The trader's goal is to achieve effortless action when • When he trades with effortless action.

Inc.PHYSICAL RESPONSE (Cont'd) Effortless action is the result of: • Taking time to "practice" a strategy through properly conducted research. 119 . • Having complete confidence in the strategy. • Total focus on implementing the trading strategy when trading and not on issues that should have been resolved during non-trading hours. Gramza Capital Management.

• Be prepared for all trading outcomes. • Create and maintain a relaxed state and stay in the present moment through: Proper breathing Relaxation exercises Visualization exercises.HOW TO BECOME AND STAY CALM AND FOCUSED • Choose and energize thoughts that support your trading objectives. Inc. Gramza Capital Management. 120 . • Develop and consistently apply a well researched trading strategy.

IntesaTrade and PRESENT Building Your E-mini Trading Strategy Prepared and Presented by Daniel Gramza 121 .

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