Daytrading FAQs

General Trading Answers

General Trading Answers (cont):

10) Can I choose a different sound than the default used on the demo page?
Unbelievably everyone wasn't crazy about our original signal sound, so we have made available a few choices (provided by other helpful subscribers). Try the sounds and find one you like.

When you go to the Real-time Signals log in page, there is a drop-down list with the different sound choices. You may choose a different sound at that time, or later by using the text link on the Signals page entitled "Change Sound."

11) What is slippage and how is it calculated?
Slippage is the difference between where you want to get in the market at a specific price and where you actually do get in the market when your order is accepted on the floor.

Example: You place an order to go long at 1004.00. The market is already moving up, and your order is actually placed at 1005.00. This means you have incurred 100 points of negative slippage, or your placement was 100 points worse than you would have liked.

If the market keeps moving up, you're okay, but will make less profit than if the order had been placed at your original price. If the market suddenly turns against you and your initial placement was 1005.00, now you may incur a loss that you would not have had you gotten your original price.

Positive slippage is the opposite situation. You are selling and have been waiting for a retracement prior to your entry. Price begins to retrace so you place a market order to sell when price is at 1003.50. You are filled at 1004.50.

If price then turns and moves in your anticipated direction, you have just received positive slippage. You had better placement on the trade than you originally expected because now as the market moves down, your original entry price was higher.

This is why it is important not to chase the market. Slippage is directly correlated with time and market conditions. If a market is already marking a strong move and you attempt entry, your slippage can be horrendous because the market condition (a strong move) and time (your delay in getting the order in) were not in your favor. A noisy market condition with a great deal of movement back and forth can also add to negative slippage.

We attempt to only enter markets when we have recognized an opportunity but before the movement is under way. This reduces slippage or can produce positive slippage. You must also do everything you can to reduce the amount of time it takes from receiving a Signal to actually getting your order placed on the floor. For this reason we are strong believers in electronic order submission.

12) What does "Flash Fill" mean?
A flash fill is the broker giving you a verbal confirmation of your entry or exit price as you wait on the phone.

13)  What is a Turning Point?
This is a point at which the market is expected to change direction or move out of congestion. It is a term which is interchangeable with Cycle Timing. From beneath the chart on page 2 of the Overnight Update:

"Our Cycle Timing data is a timing system designed to help identify ideal times where a short-term turning point or a move out of congestion is likely to occur.

Critical windows that have the most potential for movement are mentioned in the Daily Commentary. For additional information on the use of these cycles, refer to the Daytrader's Bulletin Guide and Tips, Tricks and Techniques."

14)  Could you explain to me advantages or reasons SP futures are used instead of SP options?
I can't offer any reasons why we prefer the S&P futures to S&P options. It just happens to be the market we chose. Some trade stocks, some options, some the DOW, the S&P 500, etc. We used to trade grains, and currencies. It is more a matter of finding something you like. We started trading the S&P 500 and have been hooked ever since.

The S&P is an exciting market with a lot of trade opportunities every day. It is also a difficult market to master, which may be why we find it so fascinating. One market is not better than another, it is just an individual trader's personal preference.

15)  What are Halves and Handles?
Halves are price trading by jumping .50 and Handles are when price is jumping by 100. Slippage can be bad when price is trading this way, so we won't trade, if we see it happening, until it stops.

16) Can you explain Fair Value?
Fair value changes day-to-day and gets smaller as the contract gets closer to expiration. The triggering level also changes daily and is dependent on many variables. FNN (cable) gives fair value and triggering levels before the markets open every day.

These triggering levels may vary widely depending on the commercial's cash holding and rate-of-return on their fixed rate instruments.

We now provide the Fair Value just after the open to our Subscribers and Free Trial participants.

17) In your Daily Charting do you use 1-minute Ticks?
We do look at the 1M bars for timing entry. Most of the time we are looking at 3M and 5M. Our end-of-day analysis includes some longer time frames too.

18) Would larger stops be a mistake,considering high volatility, smaller contract (i.e. E-mini) and moving up to the large contract?
It depends on the win/loss ratio, average gain to average loss, and your account size, but in no circumstances (at our $30,000 account size) would any winning system risk over 300 points per contract. This applies to the E-mini or the S&P500. Due to many market factors, including volatility and price action, we have recently adjusted our account parameters to allow for a larger account size (i.e. larger stop) which requires a larger account size of $75,000.

19) Doesn't the TRIN give better direction than volume?
TRIN just indicates a sustained move, and is usually a lagging indicator. It can help give confidence, if it reaches an extreme. TICK divergence is an excellent leading indicator at price extremes. Here TRIN and TICK are discussed briefly.

20) Would appreciate knowing what parameters you use when setting up your Bollinger Bands (w/ the goal of price-bar penetration signaling a (pending) reversal)?
We use a standard 20-period, simple moving average and a 2.0 standard deviation for the bands.

21) Also, do these parameters vary according to the time-frame you are trading (i.e., 1-min different than 5-min, different than 30-min, different than 60-min, different than daily, etc.)?
No, we don't change these parameters for different time periods.

22) Who are the traders that send the signals?

We have posted the biographies of Charles Holt, CTA, who trades the S&P 500, Eddie Thornton who trades the Nasdaq 100 and Ralph Russell who previously traded the Nasdaq 100.

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