LBR FUTURES LIVE TRADING ROOM PHILOSOPHY

Welcome to our real-time trading and market analysis via the internet.  We comment on the analysis and trade set-ups that we may take for our own accounts as well as various exits and trade management strategies.

Our trading consists of a mixture of S&P daytrading and short swings (1-5 days) in the  futures markets. As we post our dialogue and commentary throughout the day, please keep in mind that these are trades that we may take for our own account and are not intended as trade recommendations. 

We login at 8AM EDT.  We start trading when the New York markets open at 8:10 and Chicago financials open at 8:20.  Pre-market commentary for the index futures and equity markets starts at 9:15 EDT.

Trades and the majority of commentary are provided by Linda Raschke.  Phantom is Linda’s trade assistant and is typing in commentary as Linda dictates.  We only post trades in the room that we are able to point out ahead of time.  We feel that mentioning any trades taken after the fact reflect poor sportsmanship. Please recognize that we are working multiple contracts in several accounts.  We try to post our fill prices ASAP, so our client gets an idea of what a realistic fill might be.  Sometimes, we get filled at multiple prices, in which case, we may report an average price.  Other times, as in the case of some New York markets, is may take awhile for us to get our report back from the floor.  Though we do not post our actual stock trades, it will be fairly obvious when we are working a position in a particular stock by our commentary, as we still give the trade setup we are looking at along with the objective levels we are playing for.  If you see a trade but we are not calling it in the room, it does not mean that it is not a legitimate trade setup.  It may just be that we are busy in another market, or do not see it ourselves.  If you have questions about a particular pattern or setup in the index futures, feel free to private us and ask us if it is valid. 

If possible, please refrain from privating us in the first hour of the morning.  This is the period when there is most opportunity, and we can serve you best if we give our full concentration to the markets during this time. 

The members’ room is a forum where people can share their ideas and research, and keep an open dialogue with each other.  Not all trading room clients choose to be active in the member’s room.  Please respect that this forum is provided for you to exchange your commentary with each other while maintaining an air of professionalism.  We suggest that new members watch this room for a bit and refrain from making overly chatty small talk until they get a feeling for the existing flow.

OUR PHILOSOPHY

We tend to use market orders in a trending market and limit orders in a trading range environment.  We rarely scale in to a trade, but often scale out in two parts.  If you are trading a single contract, we suggest exiting on our first exit if you are following along.  
Don’t overtrade.  All that is needed is one trade a day in the SP’s and you must have patience to wait for the higher probability trade.  Remember, if you can pull out 8 SP points a week with consistency that is over 100,000 a year per 1 big SP contract. Capturing a piece of just one trend day a month can lead to a high percentage of your profits.

We tend to average 2-3 SP trades a day and 4 – 10 trades a week in other markets.  With scalp trades, we risk no more than 3 SP points.  On any trade taken off a 5 minute time frame or higher, we use a 5 point stop unless stated otherwise.   Our stop in all other markets is $500 per contract unless stated otherwise.  If there is higher volatility in a market like coffee, we will use less leverage and a wider stop.  We have found it best to use a wide initial stop, but tighten it up when the market moves in our favor. Once the SP moves 2 points in our favor, we either look to take half off or pull our stop up to breakeven.  If stopped out, we may reenter in the same direction within a minute or two.  We will state this at the time it is happening if this situation occurs.  We have found it best to keep resting stop orders in the market.  If stopped out, it is easy to re-enter.  However, it is hard to exit where your stop would have been if the market picks up momentum against your position and you did not have a resting order in place.

It is each trader’s responsibility to know their own risk profile and mange their risk and degree of leverage accordingly.  If your account size is small, and you do not feel that you can tolerate a wider stop, do not take the trade.  The smaller your account size, the quicker you should be to get in and out of the market.  Trade on the shortest time frame  until you are able to build up your equity curve. 

Please do not ask what leverage to use in your account.  Different people have different overall net worth profiles.  If you do not know what an appropriate contract size would be to trade, then we suggest you start with the smallest size possible.  Always take into account that three losers in a row at your maximum stop out point is a realistic mathematical outcome.

Even if you do not trade every day, it is never a waste because it takes time to learn the patterns and train your eye.  If you do not see the trade, do not take it.  Our goal is to teach you to read and analyze the market for yourself….we comment on the things that we are looking at, but keep in mind that different people process information different ways.  There is not right or wrong way in the market….only the way which consistently makes money for you!   The average learning curve in the markets tends to be about three years.  Much of this time is spent finding a market and style that fits your temperament.

If you do not know how to manage a position, you should not be in it.  When in doubt, get out.  If in trouble, immediately start to “get smaller”.  Execution skills can count for up to 50% of the bottom line.  This is an area that can only improve as you gain in experience through lots of practice.  Trade small if you are on the early part of the learning curve!

                             “Trading in stocks is more than a business; it is
                              an art, a science, a profession – whichever you 
                              choose.  It demands study and concentration if 
                              one is to make a success at it.”  

                               – Richard Wyckoff