Trading Emotion-Driven E-Mini Markets

Any trader who has spent even a minimum amount of time reading about trading psychology has read, over and over, about the evils of allowing your emotions to influence your potential trading decisions. As an e-mini trader, it doubly difficult to control your emotions when the markets themselves take on a very emotional nature. It sometimes seems a doubly cruel joke when markets behave more emotionally than even the most emotional e-mini trader.

It is not particularly unusual for markets to trade in an illogical fashion; but there is generally some semi-rational explanation for moves that, at face value, don’t seem to make sense. On the other hand, we are in some unique times in the e-mini markets. In several decades of trading I have seen some dire circumstances in the United States economy: the 1987 market crash comes to mind; the meltdown of the dot.com stocks; or the sky-high inflation of the early 1980′s and Paul Volker’s dramatic inflation fighting antidote. But I have never seen a constellation of world-wide events with the potential for catastrophic consequences as we currently face. These events include problems like:

- The US housing crisis, which (in my opinion) has a good deal of correction left before we see any dramatic improvement

- The European Union is in desperate straits, with a collapse of the Euro currency a distinct possibility.

- The US employment problem, with unemployment rates hovering around an economically unsustainable level near 9%.

- Massive Central Bank intervention on a scale not seen since World War II.

In addition, there are a host of problems like wars, natural disasters, and regional conflict in the oil-producing Middle East which all contribute to an unparalleled level of economic instability.

How do trade the e-mini markets when the markets are locked into a news driven mode? The market seems to rocket upwards on the pontifications of politicians, even when the political statements make little sense and are, at times, laughable because they are unfeasible to accomplish even in the best of conditions.

The methodology, especially for the small retail trader, to trade these volatile markets is to realize the limitations of your trading style, and precise and methodical execution of your trading plan. For example:

- There have been several days in the past month that have been too volatile for the small trader to execute trades within prudent stop/loss parameters. Using the Average True Range (ATR), we have seen days when the 3-minute ATR has exceeded 25 points for extended periods of time. A smaller trader simply cannot expand his stops far enough to be economically feasible given the size of his or her account.

- In other situations, the market has reacted to news reports (often conflicting reports) to extent that any set-up is, at best, an educated guess. In e-mini trading, we like to think we are step above the educated guess style of trading. When the market pays no mind to support/resistance and moves randomly, it is unwise to trade aggressively, or even passively.

What is the answer to these problems? I turn the computer off. I am well aware of my limitations as a trader and wildly volatile, high emotion driven markets usually entail erratic and unpredictable movement. I can’t trade these markets with confidence, so I don’t.

On the other hand, we have seen volatile markets that are tradable because they tend to trend a bit, and retrace in broad strokes, but then resume the original trend.

For this type of market action, it is possible (though difficult) to execute your trading plan, but it must be done with precision.

- Take care to enter trades in the highest probability set-up configuration possible.

- Though this type of market can trend for extended periods of time. I generally set fairly modest profit targets and remain vigilant in watching for dramatic changes in market direction.

- If the trade does not begin in the fashion I had envisioned, I generally exit the trade immediately. This is not a good time to hope that Lady Luck will come to the rescue.

- Finally, my constant advice is to trade with the trend. I cannot count the number of times the trend has saved me in a mistimed trade entry.

In summary, news-driven markets are volatile and unpredictable. Know you limitations and don’t let your ego keep you trading in a market that is not conducive to your e-mini account size. If there is some order to the market, make solid entries and avoid being greedy in seeking profits. If a trade gets off to a bad start, I generally exit the trade before I get too deep into the trade. Finally, trade with the trend.

Building Lists in Network Marketing

We all read about “list building,” yet no one ever seems to give step by step directions on how to build this list.

I’d like to offer suggestions on how to build several different lists for your network marketing business.

The first list I suggest you build is a customer list. Customers are the lifeline of any business. You can send customers information once a month or even once a quarter. Consider creating a customer newsletter. You can include new product information, sales item information and even information on existing products. Your customer list can include those who have ordered in the past and also those who have expressed an interest in your products but have not yet ordered.

The next list I suggest you build is a business lead list. This list should include anyone who has ever requested information about your business. I’m very careful on the amount of information I send out to these people. There are two options with this list. You can enter the names into an auto-responder and sent out information on a regular basis or you can send out personalized information a few times per year to see if they are now ready to join your business.

I work very hard on keeping personal contact with my lead list. I want to be the person they come to when they are ready to join the company. If all I’ve ever said is. “Join me,” I stand a good chance of losing them to the next person who says, “Join me.” When I take a personal interest and take the time to get to know them, I am often rewarded with those wonderful words “I’d like to join you.”

The next list to work on building is a newsletter list. These are people that are interested in what you have to say. These are people interested in the topic you are writing about. On my website, I have a subscribe button for my newsletter. The newsletter is not about my business. It’s about the topic of my website. Each newsletter is signed by me, with a link to my business. It’s a very passive way to let others know about my business and to build a relationship with those who have not yet expressed an interest in my products or business. I write this newsletter once a month. It keeps my name and my business in front of people each and every month.

Comparing Email Marketing to Print Marketing

Just in case you don’t read comments on this page, I wanted to point out a very important conversation going on about the future of email marketing – and comparing it to print direct mail.

At a recent post I made – I started a conversation about the end of free email.

Someone agreed and made an interesting observation:

“While I have no problem doing (print) mail outs, with the rising cost of postage and materials plus the clutter, the US mail has never looked worse. Email will still likely be cheaper… I just don’t like the idea of having another channel that is pressuring the ROI based on the whims of the gatekeepers. RSS looks like a nice alternative based on price AND control.”

A very interesting point that many people assume is correct- email marketing is cheaper. The problem is that, in many cases, it is a very dangerous (and wrong) assumption.

I definitely agree with the above point that email will always be cheaper than direct (print) mail. But, it depends on how you look at it – I see email as being much more expensive than direct mail in many cases.

How could email cost more than a physical stamp?

Results.

Both my own results and those of many other marketers who I know that test both email and print marketing.

For example:

Let’s say you have a list of 1,000 people to market to – and lets also assume you have both email contacts and offline info as well.

To email those 1,000 people will cost you nothing right now (well – the cost of the email service you use)

The average open rate is 20% (some lower some higher – for the purpose of this let’s say that is accurate)

Let’s say the item you sell is worth $100 and you sell 1% of those who open it.

200 people opened it and you made 2 sales (1%) for total sales (and profit) of $200

Now, send those same 1,000 the exact same sale letter in print for a total cost of approx $600 (stamps, paper, printing, stuffing)

Even if we stay at the 1% conversion (in print it is typically higher) you still make MORE money…

1,000 people x 1% conversion = 10 sales x $100 = $1,000

Your profit is $400 ($1,000 minus the mailing costs)

DOUBLE the profits from the same list.

And that doesn’t factor in that every new paying client is now twice as likely to buy again. So the email list got 2 new paying customers – the offline campaign got 10 – 5 times as many clients who are now twice as likely to buy again.

So, up front, email does look like it’s cheaper – but in the end it costs you more in lost sales – and in lost paying clients.

Simplified explanations but ask those who do both on and offline marketing to see if they have similar results… I’d be willing to bet they do.

Great topic though!

The reason this is very important to any, and every, business that does effective marketing – is that you have to look at results – not perceptions.
There is a big difference – up front, it looks like email is free and direct mail costs you a fortune. When you look at bottom line results (key word: results) – many times direct mail ends up making substantially more money. So the “savings” you make by sending email only actually is taking raw profits out of your pockets.

The facts:

1) Most people who do both on and offline marketing to the same list see substantially higher returns from their offline efforts

2) Direct mail investments are going up

3) Direct mail is working as good – many cases better – than ever. Why? Because most people fall for this belief that email is cheaper. It may cost next to nothing up front – but it is costing you pure cash every time you ignore the facts.

My thoughts on the best marketing? Both on and offline mixed. Offline is still preferred by people – they like to hold paper in hand. Proof? E-books vs. print – print is still the preferred choice. E-books have a place – but the best way to sell a book is both e-book and print book. So print mail gives you better conversions and sales – but email gives you the flexibility to build a stronger relationship with your client at a very low price.

Do both online AND offline marketing to see the biggest “bang for your buck”.

The results tell the true tale.