Frequently Asked Questions

What is ES?

ES stands for E-Mini S&P 500 futures. ES is a futures contract on the S&P500 stock market index. It is usually offset from the actual S&P500 index price by a fixed number of points (usually about 5).

What is a trendline?

A trendline connects two points on a price graph. An uptrend line connects two lows. A downtrend line connects two highs. A breach of the trendline indicates a change in trend.

What is a buy/sell signal?

The most fundamental type of buy signal is when one candlestick rises above the high of the previous candlestick. If you buy when a candlestick rises above the previous candlestick high and sell when a candlestick drops below the previous candlestick low, this is referred to as breakout trading. Obviously not all buy/sell signals yield profitable trades by themselves.

What exactly do you mean when you say “ES is headed to xxxx?”

That is the price that I expect ES to head to. However if I say ES is headed to 1000 and currently ES is at 1100, this does not mean that I am going to go short at this very moment. It means that I will look for opportunities to get short. I may get an opportunity, I may not. That is the nature of trading. Sometimes I believe that ES is headed to 1000 and it does go to 1000 but I am not able to profit on it. Other times I am dead wrong and it doesn’t go to 1000. But the idea is that when I believe ES is going somewhere I will look for trades only in that direction. When my trading system gives me the green light to trade in that direction then I will take the trade. I will avoid trades in the opposite direction.

The main point is that I may think ES is headed in a certain direction and not even trade in that direction! Because I can think that ES is headed up but feel it is not worth the risk to try and profit off of it. This is very important to understand. No trader can capture every single market wiggle.

Then when do you actually take trades?

The only time you can be sure that I have actually taken a trade is when I explicitly say so!

But here are some more details:

Every professional trader has some kind of system that they use to enter trades. It could be as simple as following the slope of a moving average curve or complicated involving fancy elaborate equations. A good trading system not only helps you enter trades but it also keeps you out of trouble. My job every morning is to come up with some kind of idea as to where the stock market may head today. I then follow my system and enter trades in only that direction. Sometimes I think ES is going up but all I get are sell signals from my trading system- and that keeps me out of trouble.

What time zone does the timestamp refer to?

New York Time. Post before 11/4/2011 are off by 4 hours.

What is the blue dashed line/purple dashed line/yellow dashed line on your charts?

Blue = 20 day moving average
Purple = 50 day moving average
Yellow = 200 day moving average

Which trading platform do you use?

The charts shown on this website are from ThinkOrSwim by TD Ameritrade
For trading I use Sierra Chart and Velocity Futures

Submit other questions to spycharter@gmail.com and I might answer them here.