My Emini Trading Manifesto (or The Best of Emini-Watch)

Here’s my Emini trading methodology in 12 steps. These are the rules I trade by – they keep me on the straight and narrow. Use the links in blue to learn more about each topic.

#1 Trade one market and become a specialist in that market. Emini futures (symbol ES) are perfect but there are other markets if you can’t trade the US time zone.

#2 Focus on the first hour of trade and stop trading after making a small profit (4 Emini points). Over-trading will kill your profits.

#3 Keep your charts simple and stop using multiple price-based indicators. You will get better signals by using just 3 non-correlated indicators that analyze: trade size, volume and price.

#4 Professionals trade in size; Amateurs trade in singles. Better Pro Am measures average trade size and allows you to follow the Professionals and fade the Amateurs.

#5 Volume is the fuel that drives price. Better Momentum measures the waves of demand and supply volume and is superior to a price-based momentum indicator.

#6 Price movement alternates between cyclical and trending phases. Better Sine Wave measures both price cycles and trends and is much better than a moving average.

#7 The ‘Better’ indicators work on all timeframes and markets – even Forex and Crude. But they work best on tick charts and with multiple time frames.

#8 Markets turn with a repeatable pattern. Pick one entry signal and stick with it: my entry signal is a breakout into trend which I use with my day trading Rules of Thumb.

#9 Tight stops and trailing stops don’t work in volatile markets. Use wide stops and profit targets instead (4 Emini points, 1:1 risk-to-return). And don’t be afraid to exit with a small loss.

#10 The fastest way to become profitable is to stop repeating your most common mistakes. Track your trades with a trading log and focus on eliminating errors.

#11 Invest in your technology. Use the best charting software, best trading computer setup (like TradeStation on a Mac) and best Internet connection. And always have a trading backup plan.

#12 Trading is the hardest thing you’ll ever try to do and most people fail. So toughen up, trust your indicators and focus on becoming an unemotional, consistently profitable trader.

Why a Manifesto?

image of emini trading methodology12 Years ago my trading needed a Revolution.

Although I’d read and tested practically everything, my trading was going nowhere. Sure, I’d had some huge winners – that made me think I could live off my trading – but I’d also blown up my account a couple of times. I was in a slump. Time to pause, take stock, get back to basics.

What had I learned? What did I really know? What was solid? What did I have to do to be consistently profitable, day after day?

Well, this is what I decided was important – the rules of profitable trading. And this is what has turned my trading around. Every revolution needs a manifesto and this is my Emini Trading Manifesto.