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Warrior Trading Blog

A Trio of Trades +$2,355 | Steve’s Futures Pulse 183

Steve_7.30

Hey, what’s up fellow traders? Happy Tuesday to you.

Well, we’re all done trading for the day and we ended up scoring two out of three winners and amassing over $2,300. What were the three markets? Light sweet crude, the bonds, and the Japanese yen. Which one do you think was the one we had to call it quits on to preserve our capital and gains today? Well, you’re going to have to watch this video to find out. Enjoy.

Alright, let’s dive right into the light sweet crude to kick things off here today in the futures pulse recap. This is going to be probably a surprising one for some of you given where we see the market has actually popped higher in the crude oil market. You can see it’s up, but we actually made our money on the earlier morning breakdown trade here.

So let’s zoom in here on a couple areas I want to focus your attention. So this morning we logged in early to the futures trading chat room and those that were early birds actually were pleasantly rewarded with a nice break down trade. So right over here, this demand level, that’s that green horizontal line, compliments of Taz Boxes. Comes in at $57.24 and it was very close to the same level we saw over here. This was $57.23 on the 30 minute time horizon. You notice we’ve got 10 and 30 minutes side-by-side timeframe. I’m always looking for confluence whenever possible before I knew she had a breakout mode trade.

So long story short, you can see that the market did start to give us some closes down below both of those zones, and so we acted fairly quickly here to initiate a short position at $57.19, which is right there where I’m highlighting with a yellow, horizontal line right there, and the price was $57.19. Our initial stop on this one was $57.51, which actually was 32 cents. So that’s a $320 risk per contract. Again, that’s our apocalypse prevention plan. If everything goes terribly awry before we’re able to get out of the tray with some profits, that’s the place we call it quits on the trade. Well, guess what? We did get the breakdown we were looking for, and in short order we were able to grab a dime on first nine of our units and then we grabbed another two at $57.09, and that was good. So we felt pretty good about that.

Last but not least, our trailing stop came all the way down to $57.26 so again, we start at $51. We actually came down to $41 as a pit stop, then $31, then $26, and then right here as the market started to work its way back up at $26, we got stopped out. So we ended up giving back $70. So the first 11 units we made $1,100 in the crude, give back $70 so $1030 in the green on the crude oil. And we’re off to the races here today.

Let’s go look at the bonds now cause that was our next trade. In similar fashion, we started to see this market go into breakdown mode. Of course, we’re looking at this here a little bit later in the session, so the chart looks different than it did at the time. But similar story, we saw the market go into breakdown mode on both timeframes. So over here we saw the market going down. You can see the breakdown below our demands on again when we were closing down below that demand zone. It’s the bottom of the balance area, bottom of the what we call value area, where all that activity is likely to be occurring. So when we break away from that, in this case to the downside, it’s kind of like that part of the highway I say where you can finally put your foot on the gas. There’s not a lot of traffic on the highway anymore.

So on that level over here on the 30 came in at $154.24 here. Over here you could see it was $154.27, so we initiated a short position at $154.23. It was right there.

Our stop on this one … We did work a wide stop on this one, and I knew we needed to work a nice wide stop given the volatility factor that we saw on the chart. But I also looked at these double tops here that we saw back to back just four bars apart. I really wanting to make sure that we stayed above those, so we put a stop at $155.05, which is just two two ticks outside those levels. And we needed that because, look, the market came up here, but it still stayed down below that $155 zone. Then the market retreated down, down, down, down. And then as the market came on down, we were able to cover portions of our positions at 19 and 17 and then our last unit 19. When it was all told, you can see up here at the top $1625 on 12 by 12 trading in that contract.

And we wrapped up today in the Japanese, yen. Now, this was going to be our one small loser, as you’ll soon see. And in fact you can see it here. We ended up losing $50 a contract times six, in my case. So $300 give back.

But I want to talk to you about how this trade kinda came to life, why I liked it at the time, and then why I decided to let my life stop kick in, which means I’ve got other things to do other than sit in front of these computers 24 hours a day. So we saw the market here on the Japanese yen start to break down and as it came down to this $92.33 zone rate here, we started really liking some of the possibilities at $92.33, which is down here. And the big kind of catalyst for me putting this on as a possible trade was that volume gap down below.

Now, focus on the 30 minute chart right here. See how you can see this indentation on the volume? Let me redo that again here. I’m gonna outline our Taz market map, which gives us volume profile. And again, if you’re new to that term, it’s taking volume that you see at the bottom of most charts like this, and we reformulate it with market profile. We flip it sideways here so it sits behind the price bars, and what it does … It may seem like big deal, why do I need that on my chart? Well, it’s different. Because of its orientation horizontally, we now point to prices over here. So now we can see distinctly at what prices all the activity is, and the zones where there’s very little volume in meeting of the minds between buyers and sellers. In those zones, markets will move fast and vertically. So imagine being able to pinpoint the direction and knowing in advance when the market is likely, not guaranteed, but likely to move fast in that direction.

So anyways, long story short, we initiated at a $92.33 rate here. We didn’t risk a whole heck of a lot on this one. We put the stop initially at $47 up here. Market just didn’t follow through. It came down a little bit, enough to trigger the trade we had. The world’s smallest profits at one time. And then we hung in there on the trade. Eventually, we just ended up calling it quits at $37, giving four points to the market at $12.50 per point, $50 a contract. I had six, as you could see earlier., and so I gave give back of $300.

So those were the three trades today. All in all, when you add it all up, over $2,300 so still a good day. Not complaining in the least bit. And we’ll get back to work on Hump Day on Wednesday. So hope you learned something here today and look forward to meeting you back soon. Until then, trade well and be well. Bye-bye.

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