For this week’s free trading tool, we turn our attention to the Market Profile Calculator provided by the good folks at MyPivots. It’s free, available online (i.e. nothing to download or install), and a breeze to use. This tool is a pretty nice way for those not currently using the profile to painlessly tinker with the concepts. This particular profile generator uses time-based TPOs to build the profile, which means the POC and Value Areas will be calculated using whatever period of time you choose. I put this out there simply because you’ll commonly find profiles get built using one or a combination of the following methods – time, volume, or tics. We will discuss these methods further, but in a separate article 
Using the calculator is pretty straight forward. Pick your instrument, get some high/low data for whatever timeframe you’re interested in, paste it into the data box, set your parameters, and click “Generate”. Presto! Insta-profile. Here’s a visual aid:
Market Profile Calculator
How you get the data to paste into the calculator will depend on your data feed or broker feed. You can also go to Google or Yahoo! for free historical data. Not aware of free intraday data, so if anyone does let me know and I’ll update with a link.
So there ya go, take a few minutes, throw some data at MyPivot’s Market Profile Calculator, and check out some profiles for different instruments, days, and timeframes. If you are new to the Market Profile, be sure to check out our list of MP related resources. Enjoy and have a great weekend
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Anton Chigurh: Don’t put it in your pocket, sir. Don’t put it in your pocket. It’s your lucky quarter.
Gas Station Proprietor: Where do you want me to put it?
Anton Chigurh: Anywhere not in your pocket. Where it’ll get mixed in with the others and become just a coin. Which it is.
Anton Chigurh: Don’t put it in your pocket, sir. Don’t put it in your pocket. It’s your lucky quarter.
Gas Station Proprietor: Where do you want me to put it?
Anton Chigurh: Anywhere not in your pocket. Where it’ll get mixed in with the others and become just a coin. Which it is.
— From No Country For Old Men
What is something you commonly find with successful traders? They journal religiously. What is something you commonly find with unsuccessful traders? Missing, sporadic, or incomplete journaling. I’m not suggesting that if you journal you will succeed, but I do believe that not keeping a trading journal makes an already tough path even tougher. This week’s free trading tool focuses on trading journals, their importance, formats, and what some pros have to say about these little gems.
It would probably make it a more palatable suggestion if I added that all you need to do is spend 5min a day, jot down some quick notes, and you’re good to go. Maybe that works for some people, but if it does, I haven’t met or talked to them. An effective journal is going to require you to keep specific information relevant to you, your performance, and your trading style.
Along with the information, you’ll need to decide (or discover) what type of format works best for you. Some different approaches include a hand-written journal (spiral, etc.), any of the standard writers (MS Word, Open Office Writer, etc.), an online app (Google Docs, etc.), spreadsheet (Excel, OO Calc, etc.), or a blog (Blogger, Wordpress, etc.). I know several traders who journal directly on their charts (@FuturesTrader71 uses a similar method). Get a screenshot, add notes and details via Paint or Snagit, print it out, and there ya go. Got a webcam? Do a video trading journal. Got video screen capture software? Add that to the mix too. There are also journal apps available (like iDailyDiary, Trading Journal Spreadsheets, and others). Personally, I like Google Docs (Document and Spreadsheet) plus Snagit.
Like trading or anything else you do, you will need to figure out what format works for you. This can take some time, some trial and error, and in six months you may be using a completely different format for your journal.
Now that you have your journal, what do you put in it? Everyone should love this answer: you have to decide what you put in your journal. I know, I know, but it really shouldn’t be surprising. One of the key goals of your journal is to be useful to you. If there are emotional, personality, or psychological elements you feel are impacting your trading, track that stuff. If you believe you really have your mental stuff in check, what do you do really well? Write that stuff down. What about your trading itself? What strengths do you see? Are you a master at position sizing? Managing order entry? Finding reversal points? Going with breakouts? Channel surfing? Write down the stuff you already feel you do well. Ideally, your journal will help highlight or uncover lots of things you do well, things you want to do more of. It’s one thing to look at things you think need improving, but the path of least resistance is doing more of what you already do well.
If you take a few minutes to search the interwebs, you will find several resources on journaling from some highly respected folks in the trading world:
Okay, if you weren’t already on board with trading journals, maybe this collection of professional perspectives can help reframe the topic for you. If you already journal, I hope these resources provide some new ideas or directions you find useful.
An important thing to always keep in mind: How am I separating myself from unsuccessful traders? What things can you do to help stack the cards in your favor? Keeping a detailed journal can be one such tool.
All this brings us back to the quote at the top of the article. It’s from the movie No Country For Old Men, and I think this scene very bluntly parallels the life of a trader. You just made a trade. Win or lose, what are you going to do with it? What will it mean to you? What will you take away from the trade? A journal helps you keep that, and every other, trade from mixing in with all the other trades and become just another trade. Which it is.
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Posted by
Derek Date:
Saturday, October 17, 2009
Categories:
Free Trader Tools
Tags:
day trading, Dr. Brett, Dr. Doug, Education, Free Trader Tools, mike bellafiore, Psychology, Tools, trading journal
We got some positive feedback last week when we highlighted a futures heat map, so this week we are showcasing a heat map from FinViz for our free trading tool. This time it is a map of the all the stocks in the S&P 500. But, wait there’s more!
Seriously, without trying to sound to gushy, the folks at FinViz have put together a really nice set of free data visualization tools. Yes, you can quickly glance at the S&P 500 heat map and see where the market is at that time, where various sectors are sitting, and what the individual stocks are doing. You can also see what they have done for a week, a month, or other timeframes. Does EPS growth factor into your interest in a stock? P/E? Dividend yield? Short float? You can check those and other metrics on the S&P and world markets via the heat map. Very cool. Need more cool? You can also take a look at relative volume for the S&P stocks, world markets, and ETF’s.
Since we’re all about data visualization, now seems like a good time to share some screenshots of some of the maps we created with just a few clicks:
S&P 500 1-day Heat Map
S&P 500 Relative Volume Heat Map
Global Markets Heat Map
So there it is, this week’s free trading tool – FinViz’s awesome collection of market heat maps. Go check it out and dig into the other cool free stuff that FinViz offers.
Have a great weekend
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Innovative data visualization is a passion of ours. We think that’s a good thing since we are a charting service provider. And since we do this within the global trading industry, we are most passionate about trading related data visualization. New, innovative, effective ways for traders to better see what is going on in their world. This week’s free trading tool happily highlights Barchart’s Futures Market Heat Map as an example of this type of thinking.
The map is very straight forward – there are nine clickable squares inside a larger square. Top left corner is the biggest percentage gainer and bottom right is biggest losing market. Click on any of the smaller squares and you’ll see a heat map for that market. You can also click on the center square (All Markets) and see how the different contracts did in all the markets represented. Below is a pic of the main heat map and of the All Markets map.
Futures Heat Map
All Markets Heat Map
So there it is, a “who’s hot and who’s not” for futures traders. Super easy and completely free to use. Now, in a matter of seconds, you can see what the whole market is doing and how your specific markets fit into that overall picture.
If you found this week’s free trading tool useful, click the little thumbs-up icon or leave us a comment
Have a great weekend!
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I’m not sure if I’ve mentioned it before, but I really like Google Docs. This week I’m using Docs to create another free trading tool – a customized trading form.
Docs lets you create forms, complete with multiple choice, check boxes, text boxes, and more. So I’ve created a sample form that lets you record your trades, which in turn tracks the inputs in a spreadsheet. You can also view the results of the forms in a summary view, with charts and graphs and so forth. Normally, you would create a form to share with others and collect their responses. In our example, you are just collecting your own data.
Here’s a screenshot of an example form I put together in about five minutes. You can make one as brief or complex as you want, just make sure you tailor it to your style; make it something you will use. When you get your form ready, you’ll have a URL you can click on, save it as a bookmark or favorite, and voila! Now you are one click away from accessing your new trading form next time you are ready to trade. And, yes, you can also embed your form into a website, like your blog.
The spreadsheet tracking and summary review stuff is neat, but one of the biggest benefits from something like a trading form is creating the habit of justifying and quantifying the trade before you put it on. Clearly, if you scalp in and out of the market hundreds of times each session, there is probably a more efficient way to track your trading. Otherwise, be looking at ways you can differentiate yourself from the mass of traders who never succeed. Do most of the unprofitable traders take these kinds of steps? If not, it may be another thing that can help separate you from the trading status quo.
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This week’s free trading tool takes a queue from last week’s Profit and Loss Forecaster, but this time it is a profit factor calculator. Here’s the logic behind the calculations:
PF = Net Profit / Gross Loss
In an effort to head off any confusion regarding the actual profit factor, let’s take a look at a stripped down example demonstrating that a PF of 1.0 is not break even. If I paid $1 for a $2 bill, my PF is 1.0 or 100%. Here’s how: $1 (net profit) / $1 (gross loss) = PF of 1. Break even would be, well, break even. Pay $1 for a $1, you have a PF of 0 and you broke even.
For a trading example, if you grossed $1,000, had $50 in commissions, and had $200 in losses, you would have:
GP (Gross Profit) = 1000
GF (Gross Fees) = 50
TL (Total Loss) = 200
NP (Net Profit) = 1000 – 50 – 200 = 750
GL (Gross Loss) = 1000 – 750 = 250
PF = NP / GL = 750 / 250 = 3.0
The result shows you how much it cost you to do business today ($250) and what kind of profit margin you produced (3.0 or 300%). This simple example doesn’t include other business expenses (i.e. data subscription fees, charting fees, platform fees, internet fees, advisory fees, and so forth). You could easily add up your monthly fees and figure out how much it cost you to do business each day, even if you don’t make a single trade. This would give you a more telling PF number as it relates to your business operating costs to trade. Another more granular and trading focused option would be to calculate it on a per trade basis.
Use it here any time you want or download an XLS copy of it:
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With so much heated discussion regarding discretionary and rules-based (or systematic) trading methods, we thought it would be helpful to share an article Jim Dalton wrote on this subject. Anyone familiar with the importance Jim places on context will be rewarded to see that theme expanded in the article. Along with providing his perspective on what the two styles of trading mean to him, Jim also shares some suggestions for non-trading related reading material.
I think this article does several things very well. First, it gives traders a dose of reality on the differences between being a typical discretionary trader and being a successful discretionary trader. It also highlights the fact that the successful discretionary trader still has a plan and that the systematic trader can exercise discretion as he trades; neither is an all-or-none proposition. Jim also addresses the commonly seen trap of traders trying to use Market Profile like a recipe or template; Market Profile is just one, albeit an important, tool in the trader’s toolbox. The most important tool will always be the trader himself.
Go download the article and feed your brain some good material on discretionary trading.
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Today’s free trading tool comes to us from Henry Carstens (@VerSol) over at Vertical Solutions. Henry does a lot of great, innovative work within the realm of market derived statistical analysis. But trading is not just an academic pursuit for Henry, he is also a trader. With his Profit and Loss Forecasting Tool, Henry has created a freely available tool traders can use to statistically evaluate their trading results.
From his site, Henry describes the P&L Forecaster:
The P&L Forecaster is for discretionary and automated traders who wish to forecast their future P&Ls and gain insight and understanding into their edge in the markets.
The Forecaster is based on the average win, win percentage and win/loss ratio of trades for a trader, trading system or portfolio. The path is generated using a normal distribution (bell curve) around the inputs.
To use the P&L Forecaster, enter the average win, percent wins and win/loss ratio and press “Forecast”.
For example, to get a two year P&L forecast, enter statistics from your historical weekly results. The forecast will then correspond to the next 100 weeks of trading.
It’s super easy to use and is a great way to dig a little into your own trading patterns. A great weekend exercise, you know, as you review that staggering collection of monster green days you had this week. Because you wouldn’t keep checking your P/L sheet while you trade, right?
Henry also reminds everyone:
Running the Forecaster multiple times will yield different paths to similar forecasts.
There is as much information in the path and its slope as their is in the endpoint; remember it’s a forecast and not a guarantee.
and we will remind as well: the forecast results are for educational purposes and do not reflect or guarantee future trading results.
Also be sure to read Henry’s post on small edges. Still not sure why you need this in your life? No worries. Dr. Brett has written about it a few times, so maybe he can help shed some light on the ways you can use this tool to enhance your own trading game.
Go check it out, read up on what Brett thinks of it, and run your own series of tests on the P&L Forecaster.
Hope you enjoy this week’s free trading tool … have a great weekend!
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Posted by
Derek Date:
Friday, September 11, 2009
Categories:
Tools
Tags:
Dr. Brett, Free Trader Tools, Tools, vertical solutions
Now that we are dedicating more time and resources to readying our software for release, we have decided to, at least temporarily, shelve the daily blog recommendation. We will still be doing a weekly menu of blogs we like via the 7 Blogs page, complete with a little run down of what the blog is all about. I’ll also highlight a blog or two through the week. And we will be featuring more Market Profile and trading material throughout the blog
Thanks for the feedback and suggestions, keep it coming
p.s. Keep an eye out for information on our Charter 100 plans
3 people like this post.
Posted by
Derek Date:
Thursday, September 10, 2009
Categories:
7 Blogs
Tags:
7 Blogs
I can’t spend much time on today’s entry into 7 Blogs. It would be a disservice to the whole premise for the blog itself. Go to Learn Something Everyday, and you can do just that – learn something everyday. It’s quick, random, and mildly cartoonish. And each post gets thousands of views everyday. If you are really concerned about the veracity of the facts, make sure you do your due diligence
Have fun … entertain your brain!
Posted by
Derek Date:
Tuesday, September 8, 2009
Categories:
7 Blogs
Tags:
7 Blogs, learn something
