3 Trades Taken On The Crude Oil Market.

Market Content September 21, 2009

Another profitable day at the School of Trade! Volume is slowly but surely crawling back into the market and it certainly gave us plenty of trading opportunities for our members as well as guests in our Live Trading Room. We took a total of three trades today, and all on the Crude Oil (Symbol CL) for a total of $ +40.00 on 4 Contracts.
The market action on the Crude Oil today looked to be squeezing any and all buyers from the market. From the beginning of electronic trading, the Crude Oil market had dropped from roughly $72/barrel down to $70/barrel by the time the open outcry pits opened at 9:00am EST. With the obvious short trend, we began to notice that a trend reversal was about to take place, and so when looking for a trend change to the long side, we watched as a possible 2-step set-up on the Crude Oil. At 9:07am EST we entered the Crude Oil market long with a basis of 69.50, with anticipation of a pullback in price from its dramatic drop early on in the morning. We watched intently as the momentum slowly began to curl in our favor to the long side and with it more buyers entered the market, giving us the opportunity to lock in profits at +4 ticks (2 contracts), +2 Ticks (1 contract) +2 Ticks (1 contract) for a total of +12ticks on the trade ($10/tick)(+$120).
Our second trade of the morning came shortly after the opening of the U.S equities market at 9:30am EST. Since the start of the open outcry pit at 9:00am EST the Crude Oil (Symbol CL) market had retraced about half a dollar/barrel and looked to continue its trend to the long side. After a strong rally in price, we looked to enter in continuation with the uptrend on a breaker set-up to the long side. We entered the market long at 9:46am EST, but once in the trade, we noticed that the momentum in both price action and on our indicators were showing a slowdown to the long side, so without hesitation we closed the trade at our entry price, with a breakeven trade +/- 0 Ticks. Getting out of a trade early that isn’t going in your favor is crucial to becoming a successful trader, especially when your technical indicators are telling you to exit. This is why we use them so much, to help us react to the price action and not predict it; in my opinion closing a trade at breakeven is as good as a winner.
The final trade of the day for us at the school of trade came after the 10:00am hour, where we looked for a continuation of good price action and volume. Price action after our second trade had once again trended to the short side, and with price action looking to continue that trend, we began to qualify our trend continuation trade, the breaker. After breaking one of our levels of support provided by our auto line levels indicator, at 10:12am EST we looked to continue in the down trend by entering the market short with a basis of 69.20. once in the trade, we waited patiently for the sellers to take more control of the price action, and although we believed the sellers were there, after seeing our first profit target missed three times, we decided to exit the trade early, closing with a small loss of -2 ticks on the trade (4 contracts) for a total of -8 ticks ($10/tick) (-$80).
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