Training – Trade Location, Order Flow, Tape Reading

“The fact is that 99% of the trading education available is totally worthless”

Training is a tricky subject to discuss in the trading industry. The fact is that 99% of the trading education available is totally worthless. Of course, there are lots of very pretty web sites with the usual exaggerated web sales hype and the “$3000 value for only $999” and “make a $1000 a day with only 15 minutes work”. This sucks in the gullible, relieves them of some of their cash in training fees. If they are unlucky, the rest of their money goes into losing with the useless strategy they brought. Many trading educators are simply failed traders that can talk the talk better than someone new to trading.

The expectations of traders are somewhat to blame. The common issues are:

  • Expecting a mechanical “if this then do this” set of rules to trade off
  • Expecting an automated program to do the job for you
  • Expecting to be profitable in a week
  • Expecting to be able to make 100% a month
  • Expecting to be able to trade profitable as a ‘hobby’ (as opposed to a business)
  • Changing approach every few weeks

The markets are tricky to say the least. There are a lot of smart people trading the markets and they are all putting in money with the expectation of taking more money out. Only a few can be consistently profitable. So – how would you actually get to the point of becoming a profitable retail trader, without the sort of backup that professional traders get when they start?

The starting point is in finding a market to trade and finding a method to trade that market. You need to be able to stay in the game long enough to become profitable. As such, you need to be able to trade risking small amounts relative to your account size. If your target is to trade the S&P500 e-mini, could your account sustain a few hundred losing trades at $50 per point? If not, is this really a good place to start? Will your choice of market combined with the money you can commit to trading force you to have to put on extremely small stop losses that will cause death by a thousand cuts? Think about it.

Once you have your market and your method, then you need to stick with it. You should write down a plan of how you will trade and read that plan every session before you fire up the computer. You must write down every trade, the reasons for entering, how you felt at the time, how much your winners went against you and how well you followed your plan. Over time, this record will become the most valuable thing you have. Only by sticking with something over time will you be able to assess how well it suits you and how profitable you can be. If you change approach after a few bad days or you change because you got some spam email promising riches using another method, then you will fail.

If you think you can do the journal, then you are probably going to look for a method to trade. In terms of trading web sites, trading books and trading forums, our recommendation is that you stay away from them completely. 99% of Trading educators do not trade, try asking them for audited account statements. 99% of people on trading forums don’t trade or if they do, they are making a loss. The death of the PALTALK internet trading rooms was due in part because of the amount of charlatons claiming trades they weren’t making. We don’t teach at Jigsaw Trading but we can recommend a few legitimate places fo find real information from people that actually trade. Of course, these fit in with our methods of day trading with the use of Tape Reading and Order Book Analysis as key tools. We can’t recommend trainers in other areas of trading as this is not what we do.

JPJ Trading

JP from JPJ Trading is an ex- Chicago pit trader and a master of Market Profile.  If you’ve ever read Jim Dalton’s excellent books “Mind Over Markets” and “Markets In Profile” but struggled to put them into practical application, then JP can show you how to do that. Using Market Profile is all about value, the markets are either in “price discovery mode” and moving to a new area of value or they are trading around an existing/developing area of value. Understanding where value is and seeing the market trade around it over and over again will change the way you look at the markets completely. JP uses the profile to assess what the market is trying to do and to trade around it. JP teaches his methods via a web conference room. He does a new intake of students a few times a year where he takes people through the basics over a 2 week period. Once this is done he goes to live trading. With the live trading, he calls out his trade locations IN ADVANCE and trades around them. Before the intake, JP does a one week trial where he calls his trades in advance to show people how it works. After 3 months in JPs room, you become a lifetime member. I spent 3 months in JPs room myself and I still have his trade locations marked on my charts for Bund & ES every day. Click Here to go to the site.

FuturesTrader71

This is a blog with mostly free information on trading.The blog is run by a professional index futures trader, trading out of the Chicago Board of Trade building. He trades for a living and has no other profession. He has his own proprietary trading firm and trains traders at his firm, people that have no prior trading experience. There are a number of free webinars available and there are some that you have to pay a small fee for. The proceeds for the paid webinars go to charity. We have watched them all and they are all well worth the small fee. You could pay thousands of dollars for training from a commercial trainer and still not have anything close the richness and value of information on this site. Click Here to go to the site.

Kam Dhadwar

Kam is a full time professional trader at a UK prop shop. He is currently focused on the Bund & the ES. For those of you that know FT71s work, the trading style of Kam and FT71 are very similar. Kam trades the Bund in the UK morning and the ES when the US markets open (just the morning session usually). He has a trade room he runs during the US morning session where he shares his pre-market analysis and his trades. He is very clear that he does not want people in the room copying his trades as his risk parameters and yours may be different. As with FT71, Kam looks for day trades by analyzing volume profiles and coming up with scenarios that might play out through the day. Kam also uses the order flow to refine/confirm his entries. I have seen all of Kams’ education materials and have attended one of his weekend training programs and he really is an outstanding educator. He has a way of cutting through the bullshit and laying things down in a clear and concise manner that is very refreshing. Kam has a number of free Webinars on his site here : Free Webinars and you can find more details on his offerings here : The Trading Framework If you are looking for a better understanding of where to apply your analysis of the Order Flow, Kam is someone you should speak to.

John Grady – The “No BS Guy”

John Grady used to be a professional trader in a US prop shop but now trades his own account. There is a very popular eBook/Video called “No BS Day Trading”. The focus of the book and video is US Treasury Trading which is done purely off the Order Flow, no charts involved at all. At $40, this has to be the best value piece of trading education material out there. For most people, the book and video are quite overwhelming. Mostly, this is because people read the book/watch the video without having looked at the DOM, so they are overwhelmed with the information. Anyone that is interested in using Order Flow should look at Johns material. The best way to do this is to read the book/watch the video, then spend some time looking at Depth & Sales (or XTrader) and then going back to the book/video again. Then things will become clear. Even if you don’t plan to trade US Treasuries, you will learn a lot from this material. To be 100% clear – there is nothing in here about charts or indicators; it is 100% DOM Trading. John also periodically does 1 month webinars where he trades live, scalping the US Treasuries and occasionally the ES. Johns site is here : No BS Day Trading.

Trading Courses

Guy Bower coaches traders at Genesis Trading, a proprietary trading firm in Sydney. Over the last 20 years, he has trained hundreds of proprietary traders. He’s been the CEO of a stock broking and funds management firm where he managed $1 billion. Now, Guy has organized this Trading Courses program to share his techniques with potential and active traders. Trading Courses will take you beyond charts to learn about depth of market, spreading correlations, algorithms, and active intraday strategies. Students build skills in the DOM Boot Camp, which puts learners to the test on a simulator. Next students power forward with Guy’s Morning Ritual course to boost a trader’s energy and focus. Finally the Speed Trader course gives students the drills to increase dexterity and skill on the DOM. Actually there are many more courses to follow those.  Click here to go to the Trading Courses site.