September 8, 2011
- in Uncategorized by schooloftrade
Day Trading Crude Oil Inventories helps hit our daily goal
How do we use the news?
New trader: worry about when the news is, so we can avoid it. 5minutes before and 5 minutes after we avoid the news.
Experienced Trader: we begin to trade the reaction to the news. Not predicting, reacting.
Professional Trader: clues to what the news may be, and how the market will react in the future.
830am est
Jobless Claims come out higher than expected, another week above 400k is NOT good for Obama and the fight against loss of jobs.
Gold futures are giving us three distinct price structures that we will use today:
Price Channels are very easy to trade using the directional bias of the channel.
Bull channel has higher highs and higher lows and you will buy pullbacks with new highs. Buy at support when price falls.
Remember, trying to buy the highs of a bull channel will always be difficult, especially if the market is slower, or low volume.
Bear Channel has lower highs and lower lows, and we want to sell retracements with new lowers, and sell at resistance when price rises.
Remember, trying to sell the lows of a bear channel will always be difficult, especially if the market is slower, or low volume.
The key to trading breakouts on a channel is to wait for the support below or the resistance overhead to be broken, and then look to buy a pullback with new higher highs and/or sell a retracements with new lower lows.
I use the ‘Trend Channel Drawing Tool for NinjaTrader 7’ to perform this task easily, and I provide all of this to members.
Inside day tells us to trade INSIDE the range we are currently in.
Inside day tells me the opinion of value is the SAME from one day to the next.
If we break above or below the previous day’s range we then can assume the opinion of value has changed.
We buy the PLOD and we sell the PHOD on an inside day. We also look to sell at the next level of resistance and buy at the next level of support.
We do not expect to see many successful breakouts on an inside day, so look for the Fake-Out Breakout when price is inside the range from yesterday.
If price breaks above the PHOD we buy pullbacks, and if it breaks below the PLOD we sell retracements.
Price Wedge tells us a very specific market personality.
Lower highs and higher lows is called ‘consolidation’ and that occurs when the market participants are searching for clues for future direction.
In other words, a wedge pattern tells us the traders don’t see value higher or lower, so they are waiting for news, something to spark the next move.
We trade a wedge the same way we trade an inside day or a sideways range, sell the highs, buy the lows, and avoid the middle.
At some point there will be a potential breakout of the wedge.
We expect fake-out breakouts at the highs and the lows of the wedge, until we break above resistance overhead or support below the wedge.
I’m buying pullbacks when we break through overhead resistance and selling retracements when we break support below.
Our plan of attack on Gold:
Bull channel tells me to buy pullbacks with new higher highs, and to buy at support as price falls.
Inside day and Price Wedge both tell me to sell as price rises and buy as price falls. Price Wedges and Inside day’s are always giving us fake-out breakouts.
As price rises im selling the channel highs, wedge highs, and the PHOD overhead.
As price falls im buying the channel lows, wedge lows and the support levels below me, including the PLOD.
If we break above the PHOD we then buy pullbacks, if we break below the PLOD we then sell retracements
930am est
Market personality is pretty sloppy, so we need to be following our plan, buying the lows, selling the highs, avoiding the middle.
We tried a few times to buy the channel highs on gold and we AGAIN remind ourselves how tough that can be.
Russell Futures give us three price structures:
Price Wedge tells me to buy the lows and sell the highs of the wedge. Also tells me to ‘fade’ the breakout. So looking for fake-out breakouts.
Inside Day tells me to sell the PHOD, buy the PLOD, and sell as price rises, buy as price falls, look for price to stay contained inside the range we are in.
Sideways Market / Range tells me the same things. Sell the highs of the range, avoid the middle, and buy the lows.
My plan of attack on Mini Russell today:
– As price rises im selling the PHOD 710.8 and the highs of the wedge.
– If price makes new higher highs it becomes OUTSIDE day, however, the price wedge will make it higher risk to buy with new highs. I will be look to sell the new highs first.
– If we break above 712.7 then we look to buy pullbacks. But beware of the fake-out breakout so momentum will need to be almost perfect.
– If price drops im looking to sell below 700.00 to sell the highs of the wedge.
– Final target on the short is the 34r BMT at 690.4
– Im then buying at support 694.2, 89.4, 84.4 and the lows of the wedge and PLOD 684.4
1015am est
Markets are sloppy ahead of 11am this morning, waiting for obama and bernanke we assume.
Gold futures sloppy and sideways market right now.
Buy the lows of the range, sell the highs of the range.
We then sell retracements with new lower lows.
Beware the channel lows, so buy the channel lows around 1845.0
1135am est
Market personality is very sloppy and slow, and we know that traders are sitting on hands waiting for obama and bernanke later today.
We learned a few valuable lessons today:
– Hard to buy the highs of a bull channel (gold)
– Sideways Range on Crude oil buy the lows and sell the highs
– Crude Oil inventories are often mis-read and the goal is to be patient and wait for the news to react and then trade the reaction
– Look for double confirmation when we have conflicting signals (bearish news, and then a hurricane)
– It’s almost a sure thing to buy the lows and sell the highs when you have a price wedge and inside day
– Be conservative on your final target until the market tells you differently.
