January 18, 2011
- in Uncategorized by schooloftrade
Day Trading Strategy for Crude Oil, Gold, Euro, Russell and Dollar Index Futures
Click Here To Review Our Auto Trader Results From This Morning
815am est
– We noticed the volume on crude oil for the 02-11 contract is now slightly less than then 03-11 contract
– We want to trade the contract with the MOST volume
– We don’t usually see crude oil rolling forward until later in the month, so this movement towards the next front-month is a sign of rising prices in the mid term.
– You can roll forward to the 03-11 contract as soon as the volume is higher than the 02-11, but we know on days like today when we are ‘sharing volume’ that Both of these contracts will likely be the same.
– Ill wait for the 9am est crude oil open of the pit and then see how the volume goes from there.
830am est
– 830am news came out as expected, so not going to see any big movement off the empire manufacturing number.
– We begin our day every morning with the news events, set the alarm clock, and then look at the dollar index futures market.
– The dollar is at the lows of the trading range on the DAILY CHART using a continuous contract in Ninja Trader 7.
– Three scenarios on the dollar
o Dollar rises off the lows
§ Selling opportunities on the markets we trade
o Dollar falls through the lows (create new lows)
§ Buying opportunities on the markets we trade
o Dollar stay at the lows and chops around sideways
§ Beware of trading other markets when the dollar is flat, slow, and sideways
– We can get a much better picture of the dollar price action if we can use a faster timeframe.
– Open the 34range chart of the dollar index and you can see the candlesticks tell the story.
– Sideways, up and down, and flat trigger line on the 34range chart confirms our concerns that the dollar is not moving much, its resting on support and waiting for the market to move up or down on conviction.
– Lack of dollar conviction is a tell-tale sign of things to come this morning
– Lack of dollar conviction = more difficult moves to trade on the markets we trade most often.
– 13range chart shows us a mess of price action.
– Flat trigger lines, momentum is choppy, and the candlesticks are sideways and sloppy
– The faster timeframe tells us this dollar market is NOT going to be easy.
– Check the dollar average true range to get the PULSE of the market conditions.
– Dollar ATR is not at the highest level of the day (best for our trading) but its not at the lows of the day (worst for our trading) so the best thing is to be patient and wait for the dollar to begin to move.
– I want rising ATR, rising speed, and I want new highs or new lows to spark the other markets into moving as well.
850am EST
– we see the volume on the 03-11 crude oil contract is now more volume than the 02-11, so we will roll forward to the 03-11 contract.
900AM EST
– we see a big price gap when we roll forward to the 03-11 contract on crude oil
– we’re trying to reload data and waiting to see what happens when the charts reload.
– We saw the 9am open along with news from Canada and long term ticks flows all at the same time we are rolling forward on crude oil.
– Lets wait a little and see where the next high percentage pattern will be showing up.
– It makes no sense to force a trade on the CL until we know more about the situation at hand.
– Gold futures are trading in the middle of the wedge pattern
– We need to avoid the middle and sell the highs and buy the lows
– Being in the middle on the 34 range chart means that swing traders and longer term day traders need to wait patiently for the highs or the lows of the wedge to be tested before they can trade.
– Scalpers and day trader can trade long or short in the middle of this range, just make sure we buy at support and sell at resistance.
– Now lets make sure all of our trend lines are drawn properly and we are ready to look for patterns on the faster timeframes.
– We add a few trend lines and we see an opportunity to sell the highs below 1372.0
925am est
– We took our first trade of the morning on the gold futures
– Placed our final target at the trigger line support on the 34 range chart
– I can use many different levels for my final target
– Short trade = swing low, trend line, trigger line (as support for this short trade)
– When we use a DYNAMIC (always changing) final target (trigger line) we need to always be watching the price level because your final target will always be changing.
– We took our final target off at the 34range trigger line, only to see the market trade to new lower lows and we could have made more money
– I will only get greedy (push the final target out further) after the market gives me some more feedback.
– I will take profit quickly until the market tells me to do differently.
o If the dollar starts moving
o If the speed picks up
o Average true range is high and rising
o And we SEE the price moving well
955am est
– Waiting on the news at 1000am est
– We took our 2nd trade of the morning on the gold futures for another 3 taret winner.
– We sold the highs at resistance and took our profit (covered our short) at the support level on the 13range chart.
– Now we see momentum is oversold and pointing up (confirms a long trade) and we are sitting at gold support.
– This is the perfect time to buy the lows (sitting on support, with momentum curled up from oversold territory)
– We have news @ 10am est so no buying on the gold until we see how this market reacts to the news.
1050am est
– We take another winning trade on the crude oil futures and we used the MACD indicator along with speed, momentum, and support levels on multiple timeframes to plan our final target.
– The MACD is a great took for trade management:
o The histogram bars are not as important than the background color
o Green bars = rising momentum = rising price
o Red Bars = falling momentum = falling price
o Green background = above zero line = buyers in control = cover your short trade
o Red background = below zero line = sellers in control = take profit on long trade
o Remember the trade management uses the auto levels indicator so you can plan your final target using the most important levels of support and resistance.
1100am EST
– We are trading now after the news for the morning and before the European close
– We call this time the DEAD ZONE, and should be considered higher risk unless you know how to read tape and use the speed and momentum to plan your trades.
– Experienced traders can trade the dead zone, but newer traders need to focus on more HIGH SPEED times of the day.
– Wait for 1130am est when the euro markets close for the spike in volume that we look to see.
Click Here To Review Our Auto Trader Results From This Morning
