Step1: Physical and Mental Preparation

The purpose of this post if to share the physical and mental preparations I go through before I even start thinking about trading. Like a football player warming up before the big game, I want to make sure I am adequately warmed up before I engage the markets.


(1) Physical Preparation
> Adequate sleep: 8 hours sleep daily is a must. I also take an hours nap in the afternoon. The nap is necessary because I am 12 hours ahead of the US markets and trade during evenings.
> Physical exercise: I keep myself active by playing outdoors with my 2 daughters everyday. 
> Bottle of hot green tea on my trade desk: excellent drink to keep me alert without the nasty side effects of coffee. 


(2) Mental Preparation:
I affirm my trading philosophy the moment I sit down at my trade desk:
>  Be disciplined to follow trading rules: Buy lows, Sell Highs & Avoid middle of the range
>  Buy Pullback into Major Support; Sell Retracements into Major resistance
>  Be Patient and let price action come to session trading plan
>  Be Confident and Decisive in executing orders
>  Be strong and let the trade play out - Fear is not an exit strategy
>  Do not trade at dangerous times, zones and days
>  Protect capital by avoiding bad trades and cutting losses early if mistake is made

Trading Strategy Overview: 10 Keys

This post will provide a very broad overview of the 10 keys/steps I approach my trading session. I will describe the 10 keys in detail in subsequent blog entries. So here goes:


1. Prepare myself mentally, physically for the session ahead. 
2. Define Market Structure 
3. Devise Trading Plan for the session ahead
4. Wait patiently and listen to the market as price action approaches defined trade areas
5. Wait for Pattern to form in that area: 2 step, Breaker or Wave
6. Look for Confirmation trigger of the pattern
7. Execute the trade with confidence
8. Trade Management
9. Review the trade and learn lessons
10. Record and improve when session ends.

What Do I Trade?

As the blog title suggest, I only focus on Commodities Futures. More specifically, Crude oil (Symbol CL) and Gold (symbol GC). I pretty much ignore everything else.
The reasons are as follows:
(1) They never let me down in terms of intra day volatility. This is important because as an intra day trader, I want an instrument that gives me moves and setups every session.

(2) Decent volume, but not excessive volume, like the Euro (6E) and E-mini's (ES). This is important because I can reasonably expect my targets to be filled quicky if I execute my trades properly. The 6E and ES has too much volume and it takes too long for targets to be filled. I traded the 6E for 12 months and decided to give up as it was too slow and sloppy once my order is filled.

(3) Clean patterns. I will talk more about the setups and patterns I look for every session. What I want is an instrument where my favourite setups emerge and work out consistently.

Why Trade Commodities Futures?

I have finally decided to write about my experience with day trading commodities futures. I trade futures full time and look forward to share my ideas and methods with anybody who is seeking for an honest view of this profession. This short article though, is about the Reasons for becoming a Futures Trader. You see, I strongly believe if you have a strong reason to accomplish something, the method or strategy will show itself up soon enough. Most traders I talk to often give me a predictable answer to this question: Make $$! The problem with this answer is, you can make money in a million ways, why trade futures? Another problem is, trading futures is really hard and most people will give up too easily in the early stages of their learning curve because they do not see the money they envisioned when they started.

So why do I trade Futures? (1) Freedom: Trading Futures is a good fit for me as it gives me a lot of spare time to spend with my wife and 2 daughters. It also does not bind me down to customers, contractors, suppliers and other stakeholders if I were to operate as a traditional business owner. (2) Mastery: All of us have a sense deep down that we can really be good at something, if only we knew what it was. For me, my passion for trading is like my passion for playing the guitar: I really want to get it right to feel a sense that I am fulfilling the potential that I know is within me. I enjoy making money but I derive as much satisfaction by seeing the patterns work out the way I envisioned in my head. (3) Purpose: Since becoming a father, I found a purpose in life that goes beyond myself. I want to pass on qualities like discipline, patience, decisiveness, strength, perseverence and humility to my children. Trading trains and forces me to acquire and develop these qualities so that my children can truly view me as a role model and hero.

So that's it. How about your reasons for trading? Do not read another book or attend another webinar/tradeshow before you answer this question. The road to trading success is long and dangerous - if your reasons are not compelling enough, you will give up.

Cheers and happy trading.