Warrior Trading Blog

Going Bananas for Breakouts | Steve’s Futures Pulse 134

Missed it by that much. What am I talking about? We almost had our second consecutive three win trifecta day today in the Future’s Trading Chat Room, but we failed just short. Now, we still had a green day in two markets, the E-mini S&P, and the mini-Dow.

We found nice intraday scalp opportunities, on the long side, earlier in the morning. Now, we almost followed it up with nice breakdown trade in the gold, but we got stopped out by one tick. Now, we’re always glad to be in the green in the Future’s Trading Chat Room, but I want to show you how it went down, why it went down, and that’s what I’m about ready to do here in today’s Futures post. Come on.

All right. I’ve got the charts up on my screen, here. From left to right, this is the order in which we took the trades and, of course, the markets that we took them. Over there, on the far left, you’ll see that this is the E-mini S&P Futures, and I’ve got a 10-minute chart on my chart there. Let’s focus on what we saw this morning when we turned on our screens and got together in the chat room today. We saw that there was a big breakdown here earlier in the morning off of our value areas. Now, remember, these levels, right here, this is going to identify specifically where those value areas, or what we call, fair auction, exists. When we close down below that bottom green line, that’s a breach of the demand zone, you want to trade in that direction.

Again, this had already happened early in the morning, before the chat room got together. What we saw is the market very quickly got over extended to the downside, so our next opportunity, where we wanted to focus our attention, was going to be on the long side. We found a long buying opportunity, 2885, that’s right about where I’m circling, right here, and it was on this bar, right there. That’s the long position. Let me write long there. Took three units on the long side here. Market actually pulled down and got right down to the demand area, but we were still safe there, because we worked a nice liberal stop, down here, at 79 and a half, two ticks down below that recent technical lull, the initial risk on the trade.

Typically, when we get into these trades, when it’s most volatile, in the morning, we like to work a little bit wider stop. Then we’re looking for our first opportunity to take a good chunk of the risk, if not all, in our trailing stop. We’re glad that we worked a wide stop. Market came right back up and we’re able to grab two points right out of the gates here. We took one of the three contracts off for two points, at 87 even, that’s 2887. Then the market came down a little bit, and we saw what I’m soon show you here, as an opportunity, in the mini-Dow. Before we actually scaled out of lot number two in the E-mini S&P, we saw a buying opportunity that emerged as we started getting about that 261-171 level. So we initiated long position, in this case, 26-184. There you go.

We actually did quite well on this one, here. Instead of putting the stop all the way below that technical lull, that would have came within a $400 risk to contract. It looked too much for a day-trade timeframe. I look for a $250 risk by putting our stop just down below that POC, which is that aqua color line, or point of control. The place we put the stop was 26-134, so it came with $250 risk. Then we saw the market, basically, give us this price to action higher. At one point, it actually was starting to look real good, like we were going to follow through this back-to-back long range bar, here. A whole lot of space up here. In fact, still there’s a lot of space up there, but the market did, ultimately, retreat.

We end up taking some profits out of that total on $305, in total, for the three unit. What I wanted to tell you though is that we started … This is our first trade. This would be our second. Since we had two long positions going in stock index products, I wanted to lighten the load a little bit in the E-mini S&P, so I did scratch at 28-85. Remember the trade back here, 28-85? I scratched the second unit, just as a risk mitigation move, is actually all it was. Then the market gave us the surge higher. Again, it was right around the same time where both those markets were heading higher, and we trailed our stops higher to 88 and three-quarters. We did get stopped out at 88 and three-quarters. So we end up pulling out of the S&P a total of $287 when it was all said and done. On this chart here, I’m scrapping this here. This one was a $305 chart. Again, leveraging this price action, right here.

Then, last, but not least, and this was our almost three for three day here, is the gold market. Let me actually move this a little bit bigger, so I can show you this. There we go, nice and big. There we go. When we looked at this chart, we’re looking for a breakdown trade on the close down below this demand area, which came at 13-08-3. That’s this level, right here, that green line. So initiated a short positions on the breakdown below at 13-08 even, so right up in here. We initially started with about a $300 risk on this one, putting the stop at 13-11-10. Very quickly, we were able to bring the stop down. We brought it down $1 to 13-10-10. Then we brought it down a bit further to 13-09-10, as we started to see this market really going sideways. I was looking for the breakdown below here, and it was really being stubborn in doing so.

Here’s where we got stopped out, right on the high of that bar, right there. We ended up losing $110 on this one per contract. I did have three, so we get 330 back. Hey, we still ended up in the green on this, but, as I told those that were in the chat room, one of the most important things to remember, as a trader and the way that I teach trading, revolves around market profiles. When you make two, three, four trades in a day, as a day trader, you don’t … It’s not about, maybe, winning on every single trade.

Remember, it’s trying to be green for the day. I always preach, put yourself in a position for good things to happen. So, even a trade, like this, the one loser we had in the gold, we were in a position for some positive things to happen for a very nominal risk. $110 risk, was what we got that risk down to. Markets had other idea. We got stopped out, but that’s really the name of the game for futures trading is, given the leverage nature of these products, as long as you’re just managing risk, making the risk better, that risk-reward pendulum starts to swing in your favor. Then you always are just, again, one move away from a single, or a double, turning into a triple, or a home run. But you got to have, again, risk management in place, and that’s what we preach in the room.

Another green day. We’re two for two this week. Two trading days, two green days. We’re going to do it again in the morning, and I’ll see you there. Until then, trade well and be well. Bye, bye.

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