January 21, 2011
- in Uncategorized by schooloftrade
First Trade Loss leads to Big Day Trading Profits on Crude Oil and Gold Futures
825am est
– We begin with the dollar index futures 34-range chart
– We see the dollar trapped below the price channel and above the trend line as support
– Dollar rises back up into the price channel above (looking for selling opportunities on other markets)
– Dollar goes sideways (slow speed, dropping ATR) we expect the other markets to also be sideways and sluggish
– Dollar drops and makes new lows, we now have buying opportunities on other markets, so look to buy levels of support on the sideways ranges of gold and crude oil.
– The average true range tells us a valuable story about the dollar index
– Lower highs means that the dollar has a lack of BIG RANGES, which makes our job harder.
– Higher lows means we haven’t had the really narrow ranges like we did last week, but we still need improvement.
– Is the ATR rising? No. we want to see the dollar atr rising because that will bring wider ranges on the markets we trade most.
830am est
– There are a few things today that are telling me to be careful
o No news
o Sideways and quiet dollar
o Narrow sideways ranges on the markets we trade
– Lets look at the daily chart on crude oil futures
– We see major support at the lows of the wedge (87.30)
– Major resistance @ 92.72
– Now move to a faster chart, look at the 34 range chart
845am est
– We’re looking for two possible trades on crude oil futures
– 2-step pattern long, but we need to get above 89.66, which is the trigger line on the 34range
– If momentum curls over and points down we will take this as a wave short. Rather than trying to trade long through resistance, why not sell the resistance?
900am est
– Speed on the crude oil is the most important issue to watch right now.
– We have no news today, and the dollar has been slow
– Watch for more consistant speed on the pace of tape indicator on the crude oil
915am est
– We took our first trade on the crude oil and realized we are on the wrong side of the market
– We tried to buy at the highs at the open on crude with big money buyers, but the momentum indicator was overbought, which made us concerned we were trading against the market.
930am est
– We’ve taken 4 trades, 1 loss and 3 winners.
– We saw the gold market make new lows but the price action left us very concerned about selling the lows
– We see momentum oversold so we buy the lows and use a simple price reversal pattern (2step) to buy the lows on the 13range chart
– Then we take profit at the 21r trigger line, and it turns into a wave short from the 21range chart.
– We then get short, take our profit at the lows of the day.
945am est
– We see price action lacking consistency in speed, momentum, and patterns.
– The speed of the markets are always my top concern.
– Lack of consistent speed makes my job harder b/c I cant simply take every trade, I need to wait for the best pattern and confirm with speed increasing.
– Dollar speed is the biggest of concerns
– Dollar average true range has been rising, so that is a good sign, but we still need more movement.
– Lack of news today and it’s a Friday most likely is the big reason for this lack of speed and movement.
1000am est
– The dollar remains very slow
– Speed is slow, range is narrow
– We’ve already earned 90 ticks of profit so we don’t want to force a trade late in the morning on a Friday.
1035am
– We’re looking for the e-mini reversal at 1030
– We’ve made over 150 ticks today so we’re content on this Friday morning
– We need to be careful we don’t lose track of time
– The later we get on a Friday morning the higher the risk gets for our trades.
