Day Trading the News Strategy; Crude Oil, Gold, Euro and Russell Futures

– Day Trading the News

o Pros

 We all can easily see the biggest moves come from news releases

o Cons

 Tough to predict what the market reaction will be
 Lack of liquidity around the times when the news is released can be VERY dangerous to trade around.

• Tough to get in and tough to get out

o How do I conquer this obstacle?

 Focus on 1 market and 1 news event at a time, and master it!

• Crude Oil Inventories, Wednesday @ 1030,
• 13-range chart of Crude Oil Futures as my focus.

 Pick one of the most important news events that we see each week/month/quarter

Existing Home Sales
Pending Home Sales
New Home Sales
Housing Starts
EIA Petroleum Status Report (Crude Inventories)
EIA Natural Gas Report
Producer Price Index
Philly Fed Survey
GDP
Durable Goods
Industrial Production
Personal Income / Outlay
Jobless Claims
Consumer Sentiment
FOMC Day
FOMC Meeting Minutes
Retail Sales (mon)

• Crude Oil Inventories on Wednesdays
• Im watching crude oil futures
• I want to be an expert on this news event

o What has the previous announcements done for the market?
o What other news events will have an impact on this event?

 Example: I will use durable goods to predict what the reaction will be to the Crude Oil inventories
 Once I understand this news event, now lets prepare to trade it

• Open your daily chart, look for the most important levels of support and resistance

o I use range charts, so use 144-range as your daily

 Slower timeframes will be used to trade the news

• Look for the BIG Picture on the Daily chart
• Plan ahead of for the news release and what you expect to happen
• Look for entry pattern on the 34/21/13-range charts

– Fast Track Method

o Simple and effective method for new traders to learn:

 Discipline and patience
 How to handle a loss
 How to read tape, volume, speed
 How to wait for the best patterns

o 11_24_10MembersTraining
o Help you learn and EARN at the same time

– When do the other markets rollover?

o Gold every other month
o Crude every month
o Dollar Index rolls over quarterly, just like the e-mini and the currencies, bonds, DAX,
o We rolled gold forward to the 02-11

– Average True Range

o ATR = the range in the market you are trading

o I want to see ATR rising, not falling

– How do we set up the pace of tape indicator (POT)

– Use on a 10-Second chart for the pace of the tape in a very real-time format.

• Can be used on any timeframe and any symbol
• You can use three (3) different colors to make different distinctions in the pace of the tape

o Red: Slow Speed of the Tape, Signals a Higher Risk Trade

o Yellow: Moderate Speed of the Tape, Signals a Lower Risk Trade

 o Green: High Speed of the Tape, Signals the ideal environment to trade

o Use The ‘Pace of Tape’ Chart Template to ensure all the correct parameters!

o The EURO has its own Pace of Tape template, with different setting.

– Please Note:

– We use a different TEMPLATE for the Euro and the Dollar, so when loading your Pace of Tape template, look for templates designed for the Dollar & Euro in the description.

– What type of entries do we use?

o Use limit orders and buy/sell stops
o Trap Entry technique

 Watch the video in the advanced course
 We will train you on this

o Never use market orders, too sloppy

– Is the Russell correlated with the dollar index?

o Everything is dollar-correlated

– Interactive Brokers, stay away!

o Too high fees
o Too high margins
o They use filtered tick data (no!)

 Two connections to power your charts

• Connect to the IB platform
• Then also connect to your NT charts
• That’s 1 too many connections, too many moving parts, tough to keep it stable

o Think or Swim also has very sluggish execution

– Auto-Trader Beta

o More in Wednesday’s members-only training
o More coming soon to incorporate this into our trade room

– Any chance of a Euro reversal?

o BUY THE lows of the price channel above 1.3110
o Take profit at 3150 and 3200 PLOD