Q: How do you determine your risk/reward ratio with the large bars we have been seeing on the 2, 3, and 5 minute charts?

A: As long as the risk to reward ratio remains in your favor this is actually a welcome change since the opportunities to trade have also increased. I enter a trade knowing where my stop has to be based on a three line moving average. I also know where I plan to take my profit based on the moving average of the next time level. I may enter a trade with indicators placed on a five minute chart and I'll look at those same indicators on a fifteen minute chart to give me an exit level. If I wasn't able to get in the market where I wanted I will give it a bit more time to test my entry level again or just forget that trade and wait for the next one.

Q: What size account balance do I need to start trading?

A: Since the creation of the e-mini S&P and the e-mini NASDAQ, new traders are fortunate because they're able to get started with much lower capitalization than in prior years. In either case, you need to make sure you're not undercapitalized. This can seriously affect the way you trade. You need to enter the marketplace with the right comfort level in order to give yourself the best opportunity to be successful.

Q: I'm a beginning trader; will I be able to understand your trading information and updates?

A: We try to make the information as understandable and easy to follow as possible. Paper trading for a week before risking actual funds may help you to feel more comfortable with the information. If there's something you don't understand, the traders' glossary of terms will help with many of the most frequently used terms.

Q: How much money can I make trading a 3 lot in say the S&Ps?

A: The amount of money to be made shouldn't be the issue at hand. The issue at hand is “how can I be a successful trader?” You can be a successful trader trading a 1 lot, 3 lots or even 10 lots. Remember that the money must not be a factor. If you‘re a successful trader, the money will take care of itself.

Q: Since the markets seem to be much more volatile lately, don't you think going with a wider stop would improve my chances for a profitable trade?

A: You need to look at and remember the principle "Have a favorable risk to reward ratio." If the markets are more volatile, it may very well be that the placement of the stop orders may require a much wider range, but that should mean that the profitable side of the trade may also have increased. If the ratio isn't in your favor, skip that trade and start looking for another trade to develop.

Q: I don't understand about "filling the gap." What does that mean? And what does it mean from a technical standpoint?

A: When the market leaves a gap (an area of space on the chart where no trading took place because the market opened much higher or lower from the previous day's close for example), the gap is "filled" by later trades a very large percentage of the time. Markets like to run and fill these gaps so they can act as a target or an objective. Once those objectives are met, the market tends to resume the trend it was in originally.

Q: My exits are very early because of fear of loss (I have a limited account). What advice do you have for me?

A: Before I enter into a trade, I know what my risk is and what the reward is. I use a two-minute chart for my entry and placement of my stops and maybe a three-minute or five-minute or higher to see what my objective will be. I only move my stop once and that's when I have achieved my objective and I'm trying to stretch a winner a bit farther. I use the same criteria on all my charts, the only thing I change is the time frame. I suggest you do the same.