SchoolOfTrade , Maket Commentary, Futures Trading

Market Commentary August 25, 2009

Today was a great day in the markets, granted we saw low volume, but once again we were able to take a few trades; and even closed the day with some profits!! We were able to take two trades later in the morning, both coming on the Crude Oil market (symbol CL).

Notice my first trade was taken at 10:22am EST on the Crude Oil (Symbol CL). Prior to entering this trade, we saw a strong price movement to the short side and originally looked for a James Wave short, but after failing to meet our trade requirements, we looked for a quick trend reversal instead, the 2-step. Once price broke below 73.40, we started to read the tape and watch to see if price formed a double bottom, or stutter step; a common way to identify a 2-step is in the process of forming. Once we saw our double bottom, we were given two entry prices, one being at 73.47 and the other at 73.50; the more conservative. Because it was already 10am EST and we hadn’t taken a trade yet, we decided it was better to be conservative and not rush into a trade. We entered the market at 10:22 with a basis of 73.50, after seeing yellow and green POT bars we felt confident in our position, but soon found out the buyers hadn’t officially taken over, and we were quickly stopped out for a -4 tick loss, trading 4 contracts, which totals -16 ticks ($10/tick).

Our second and final trade of the day came shortly after our first, and yet again on the Crude Oil market (Symbol CL). The Crude Oil market began to make a deep pull-back after its previous buying pressure started to reverse and the short-term trend changed to the down side. After disqualifying a James Wave set-up, we once again waited to qualify our 2-step to the long side. This time, we saw the follow through we needed. After the Crude Oil gave us a swing high, we looked to enter the market above 73.65, and were filled with a basis of 73.69 at 10:35. With Green and yellow POT bars, and price quickly moving in our favor, we were able to secure our first two targets of +4 ticks (2 contracts) and +6 ticks (1 contract), our final contact we let run, and closed out at a +12 tick (1 contract) winner, totaling 26 ticks ($10/tick).

Even though we were 1 for 2 today, it was a great example of how the School of Trade’s trade management provides our traders with the ability to take a loss and still end the day with $100 in profits!