Traders and Investors alike are constantly seeking winning trading strategies, but these winning trading strategies continue to remain elusive for over 90% of all day traders. Why is that? What is it about winning trading strategies that makes them so difficult to identify? And why must you risk thousands of dollars of your own risk capital to determine if a trading strategy is a “winner” or a “loser”?

To help answer these questions about winning trading strategies, we’ve identified one key aspect of winning trading strategies that can help you to quickly filter out the overwhelming majority of the trading systems and strategies that you come across in your investigation.

This one key attribute of a winning trading strategy can be used to quickly eliminate most trading systems and strategies that you come across, leaving relatively few trading systems and strategies to examine.

The most effective winning trading strategies tend to be the most simple.

Quickly identifying winning trading strategies can be as simple as that. The best day trading strategies and systems tend to be the easiest to understand, learn, and master. They shouldn’t require knowledge of advanced statistical analysis, they shouldn’t require a highly complicated modeling program.

A winning trading strategy will be easy for the average Day Trader to quickly understand, learn, and then execute.

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Consider this: in the world of Technical analysis, most Day Traders don’t really “understand” the indicators they are looking for; they are relying on statistical analysis to “guess” market direction and movement.

But of course, if you don’t fully understand that particular indicator, how it is determined, and WHY the market should behave in a certain way, then can you really be sure that the technical indicator that you THINK you see is really there?  By and large, most technical or trend trading systems are difficult to learn and master, and should not be attempted by anyone but the very most advanced day traders.

But simple trading strategies don’t rely on complicated technical indicators, or trend lines. These winning trading strategies are simple to learn, understand, and execute, and the results show.

As you consider a trading system or strategy, the very first question you should be asking about that particular potential winning trading strategy is, how complicated is it? Is it simple? Do I really understand it?

If you determine that the trading strategy in question is NOT simple, and cannot be easily understood or learned, you can quickly eliminate that particular strategy or system and continue your search, without wasting valuable time in additional due diligence and analysis.

- About the Author: Some of the most simple winning trading strategies can be discovered in the Prosperous Trading Video Boot Camp training series. To claim you very own FREE copy of the Prosperous Trading Video Boot Camp, simple click the following link:Click here for: WINNING TRADING STRATEGIESDiscover winning trading strategies in the Prosperous Trading Video Boot Camp; claim YOUR copy while its still FREE! www.TheGuerrillaTrader.com   Article Source

by Robert W. Colby

Summary: Technology and Small Cap stocks are lagging behind. Technology stock sector Relative Strength Ratio (XLK/SPY) fell below the lows of the previous 7-months on 9/10/10. XLK/SPY is bearish, below both 50-day and 200-day SMAs, and with the 50 below the 200. The Small Cap Russell 2000 Index/L…

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There is a natural desire, especially by beginning traders, to want to trade excessively. This is not difficult to understand. A day trader cannot make money unless he or she is in a trade; this is the general outlook of most novice day traders. But this line of thinking has some serious faults, and it is important to learn to select your trades in a systematic and emotion free state of mind.

Of course, selecting high-quality trades is easier said than done. At various times, very unproductive trades form set up patterns that can be very enticing. Low probability trades are like the lure of Medusa, they look great at first glance, but can cause serious losses if systematic analysis of the trade is not undertaken.

How do you know the difference between a high probability trade and a low probability trade?

First and foremost, every day trader must make an assessment of whether the trade is with the trend or against the trend. While many popular courses on trading tout the wisdom of trading retracements and identifying peaks and troughs in trading patterns, these are all unsound trading methodologies and I know of few successful day traders who employ them. Great traders are masters at taking what the market offers, and not trying to create trading opportunities themselves. A novice trader’s ability to effectively identify trending patterns is an essential skill because the very best traders trade primarily with the trend. In my view, less than 10% of your trades should be countertrend trades.

Secondly, many novice day traders and a plethora of trading systems rely heavily upon oscillators and indicators to choose potential trades. On the other hand, most seasoned day traders pay close attention to actual price action when trading. Important principles like support and resistance are prime movers in determining whether a trade has real potential. For example, taking a short trade into a known support is the recipe for a losing trade. Obviously, a successful day trader must have the ability and experience to identify known areas of support and resistance to avoid taking trades into these hazardous trading zones. Most experienced traders can spot support and resistance by glancing at a chart; this skill is learned through observing thousands of charts throughout trader’s career. Of course, there are add-on programs to most charting platforms that can spot support and resistance for a day trader who has not acquired the ability to identify support and resistance on his or her own. For some, these add-on programs can be very effective and helpful. In any event, any trade that will lead a trader prematurely into known support or resistance is often a trade that is doomed to failure and it’s important to realize these trades are very low probability in nature. In short, price action is where the real trade selection takes place, and indicators and oscillators supply filtering information to reinforce the strength or weakness of the trade under consideration.

This is among the most difficult concepts to learn in trading, as many day traders are looking for a magic oscillator or indicator that will revolutionize their trading results. I am sorry to report that, to date, no such magical oscillator or indicator exists. Look to identify solid trades in the price action of any chart, and then calculate the potential to profit by identifying where support and resistance will affect the performance of your trade. Many traders use pivots and other predictive indicators to calculate support and resistance. For many years, I was in this camp. As I have grown older, I prefer to identify support and resistance as it develops on the chart, not through some artificial predictive means. This attitude is subjective in nature, and his a choice each individual trader has to make.

In summary, we have looked at trading against the trend and concluded that countertrend trading results in low probability trades, on the other hand trading with the trend results in higher probability trades. We have also noted that known support and resistance are prime movers in determining the feasibility and potential profitability of any trade. Price action is the name of the game, and learning to read and interpret what price action is telling a day trader is the real secret to trading success. If you can master reading price action, it is highly likely you can become a successful day trader.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

Countless numbers of day traders spend their time and money searching for that magic indicator that will unlock the secret of trading profits. To be sure, I have seen aspiring traders purchase trading program after trading program in search of the new indicator that will send their trading profits soaring. Unfortunately, no such indicator exist and it is unlikely that a magical indicator will be developed that can revolutionize profits for the e-mini day trader.

On the other hand, thousands of e-mini day traders successfully trade every day without any wondrous and magical indicator. Of course, it would be much more convenient to have an indicator that unlocks the secrets of e-mini trading. To date though, we are far from developing any such trading tool. So that leaves us with the trading tools we have at hand, and there certainly is no shortage of indicators for the e-mini trader to utilize. The question remains, though, which indicators are the best ones to utilize?

While some indicators claim to be leading indicators, that is to say that they have a predictive quality in their results, the evidence suggests that this predictive quality is sketchy, at best. Most indicators are lagging indicators and indicate the status of current trends based upon recent history. As any good trader knows, recent history can be helpful, but the market contains a random element that can easily deviate from past history. We are left with indicators that give us, at best, an educated guess as to the path the market price action will take in the near term future. In short, short-term trading can be a rather inexact science, at best.

One important aspect of trading is often overlooked by traders who depend solely upon indicators and oscillators to time their trades. In my world, price action is the driving force in my trade selection. While I do employ oscillators and indicators, their purpose is primarily to confirm potential trades I spot by observing price action. I pay careful attention to support and resistance, volume, and price movement in choosing my trades. Obviously taking trades into known resistance or support it is risky business, at best. Unfortunately, strict oscillator and indicator traders do not have a handle on where or support and resistance may lie and often blindly take indicator or oscillator indicated trades into these danger zones.

Further, price movement and price analysis can give a trader a unique view in which the market functions. Specifically, I analyze each bar and note whether the bars make higher highs and higher lows. Conversely, I am also interested in the opposite price action, and that is whether the bars are making lower highs and lower lows. Each of these price formations can be indicative of potential market moves in their respective directions. From there, I can have a good look at my oscillators and indicators to determine the strength and velocity of these potential moves and decide whether or not the trade is a high probability or low probability trade.

Price action, along with support and resistance and volume, are often overlooked in trade selection. But learning to actually read price action will give any trader a much better understanding of what is actually happening in the market and provide the trader with insight into high probability trades and conversely, help him or her avoid low probability trades. Very few traders are excited about entering low probability trades and seek to avoid them at all costs. It is my contention that ignoring price action and relying strictly upon oscillators and indicators will often lead traders into low probability trades.

A second common mistake made by oscillator traders is the failure to recognize the trend in the market. Regardless of whether the oscillator or indicator being used indicates a nice trade, if it is against the trend you will often find yourself on the losing side of the trade. From a statistical standpoint, a trend is likely to resume (after a short retracement) 80% of the time. Obviously, trading with the trend is a habit all traders should cultivate. The only way to truly ascertain whether or not the market is trending is by observing the price action and subsequent retracements.

In summary, we have stressed the importance of observing price action and the benefits price action has to offer traders. Trends, retracements, and then market noise can all be identified very easily by observing price action. We have also noted that strict oscillator trading can often lead a trader into low probability trades, which should be avoided. Watch the price action and you’re trading will improve immeasurably.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

S&P 500 Composite Closing Price Fell Below 7-Week Lows by Robert W. Colby

Summary: S&P 500 Composite (SPX, 1,047.22) closing price fell below 7-week lows. Energy stock sector Relative Strength Ratio (XLE/SPY) has been bearish since peaking on 7/1/08 and fell below 8-week lows on 8/26/10. Financial stock sector Relative Strength Ratio (XLF/SPY) fell to a new 9-month…

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Stocks Broke a 4-Day Losing Streak by Robert W. Colby

Summary: Stocks broke a 4-day losing streak. But is it significant? Financial stock sector Relative Strength Ratio (XLF/SPY) fell to a new 9-month low on 8/25/10 and remains bearish. Absolute price fell to a new 12-month low on 8/25/10 and has been in a bearish trend since peaking on 4/15/10. Cru…

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It goes without saying that every e-mini day trader prefers to trade a trending market, they are the easiest to trade and have the highest probability trades for success. Unfortunately, markets tend to trend only about 30% of the time. The remainder of the trading session consists of normal backing and filling operations, sometimes referred to as “market noise.”

As a e-mini day trader, I prefer to avoid trading during periods of market noise over trending markets, which only makes sense. But there are times that the market presents some trading opportunities during periods of consolidation. From the onset, though, I’ll recommend very conservative e-mini trading techniques in consolidating markets as the price action can be very unpredictable. Specifically, I would trade fewer contracts than normal and make sure that a trade does not run away to the downside from your profit target. Of course, this is easier said than done and it takes extreme vigilance to successfully day trade periods of market noise. But it can be done.

1. The optimal e-mini consolidating market will follow a repetitive serpentine pattern rising and falling at nearly the same level in each cycle. Using strict scalping technique, a e-mini day trader can do quite well as the market tends to stay in these cycles for extended periods of time. The technique to day trade this type of market is relatively easy; you would place a support and resistance lines at the peak of each cycle and the trough of the cycle. I generally set my stops tighter than usual when employing this technique and set my profit targets to whatever length the cycles are averaging. Obviously, if the peaks are occurring 12 ticks from the average trough, it would be unwise to set your profit target at 26 ticks. Using oscillators, you can generally target the peaks and troughs and trade them accordingly, either long or short. I have made a good deal of money trading and this particular style.

2. If is the consolidation period is narrowing into a wedge shape, I will often put buy and sell orders one point above and below the range of the narrowing market. In doing this, I can take advantage of any breakout or breakdown that will occur. Consolidating markets that show a tendency to narrow are often followed by a significant breakout or breakdown. By putting a buy order above the established range, you will pick up the trade if it breaks out long. Just the opposite, by establishing a sell order just below the range of the consolidation, you will pick up a breakdown in the day trading action and potentially capitalize on it. This day trading technique can be very effective, but does carry some risks should the market widen just a bit and then return to the consolidation pattern.

3. There are some consolidating patterns that are indecipherable in terms of patterning. My recommendation is to avoid trading this sort of consolidating market, as the traders have not established any sort of discernible pattern during the period of market noise. At best, this type of consolidation pattern is treacherous. As I said, I avoid market noise that displays a high degree of randomness in the price action.

In summary, all e-mini day traders prefer to trade trending markets. But there are some non-trending markets that display enough movement and enough predictability where a trader can be effective in choosing potential trades. However, all consolidating patterns are not created equally and highly random consolidation patterns should be avoided.

- About the Author: Sign up for our free daily e-mini instructional videos and get a feel for the method and techniques the E-mini Trading Professor employs. The videos are free and there is no obligation so click here and start learning immediately. You can learn to day trade emini contracts at an affordable price using time-tested techniques that give potential traders an excellent chance for success. Article Source

Loss of Confidence Surrounding the US Fundamentals by Darrell Jobman

EUR/USD Risk appetite faltered in Asian trading on Wednesday and the Euro retreated back towards the 1.31 area against the dollar as confidence in the global economy deteriorated. The US trade deficit for June was sharply worse than expected with a 21-month high of US$49.9bn from a revised US$42…. Day Trader:..>>>   More »

Overnight Developments

• European stocks are trading mildly lower with the European Stoxx 50 down -0.28%. Sep S&Ps are down 4.80 points (-0.44%). S&Ps are on edge ahead of this morning’s Q2 GDP report (expected +2.6%). There is also some caution ahead of Sunday’s expected release of China’s purchasing managers index due to talk of a sharply weaker figure. The market consensus is for a moderate 0.7 point decline to 51.4 from 52.1 in June. The Eurozone July CPI rose to a 20-month high of +1.7% y/y from +1.4% y/y in June, which was in line with market expectations. However, the core CPI rose to only +0.9% y/y from +0.8% y/y in June. Meanwhile, the Eurozone June unmeployment rate remained at 10%, the highest level in almost 12 years. The IMF said today that US banks may need as much as $76 billion more in capital. A senior executive from Moody’s said that Spain, already on review for a possible downgrade, will probably lose its Aaa rating. Spain has already lost its triple-A ra ting from S&P and Fitch. The Moody’s executive also said that the U.S. needs a "clear plan" for tackling its deficit.
• The Asian markets today closed lower across the board: Japan -1.64%, Hong Kong -0.30%, China -0.32%, Taiwan -0.49%, Australia -0.68%, Singapore -0.33%, South Korea -0.83%, Bombay -0.69%. Asian markets were undercut by the report that Japan’s June unemployment rate rose to a 7-month high of 5.3%, which was higher than the consensus of 5.2%. In addition, Japan’s factory output fell 1.5% m/m versus the consensus for a +0.2% rise.

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Overnight Developments

• European stocks are higher with the European Stoxx 50 up 0.55% after hitting a 3-month high. Sep S&Ps are up 5.70 points (+0.52%). European stocks received support from positive earnings reports from AstraZeneca and Volkswagen and from positive confidence and employment reports. The European Commission’s business and consumer confidence index rose to a 2-1/3 year high of 101.3 from 99 in June. Meanwhile, Germany unemployment fell by 20,000 to 3.21 million, which was the lowest level in 1-1/2 years and was the 13th consecutive monthly decline. The Germany unemployment rate fell to 7.6% from 7.7%. French Finance Minister Christine Lagarde today said she expects a "serious pickup" in global growth in 2011, "if only because global trade has significantly improved." UBS upgraded European stocks to "neutral" from "underweight," cut U.S. stocks to "neutral," and cut Japanese stocks to "underweight."
• The Asian markets today closed mixed: Japan -0.59%, Hong Kong +0.01%, China +0.50%, Taiwan +0.18%, Australia -0.13%, Singapore +0.41%, South Korea -0.17%, Bombay +0.19%. Asian stocks were undercut by Wednesday’s U.S. Beige Book report, which suggested lackluster U.S. demand for Asian exports. Panasonic fell 7.7% today after news that the company would offer stock to help it purchase full control of its Sanyo Electric and Panasonic Electric Works units.

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