Warrior Trading Blog

Gold Gains in 31 Minutes +$700 | Steve’s Futures Pulse 150


The fact is some people are not even at their cubicle yet to start their work day and I’m done for the day thanks to an opportunity in the precious metal gold this morning I got in front of the charts in nice and early with fellow members in the Futures Trading chat room and I saw top heavy gold. Through market profile analysis, we took a short position and in an all told, 31 minutes of screen time. I’m done for the day and $700 to the good. In today’s futures pulse, I’m going to show you the live recast recording of how it came to life, why we exited it and why, so that you too can start looking for chart patterns just like this.

Now, my biggest decision today is what am I going to do the rest of the day? What should I eat for lunch? Maybe I should go to the driving range. Maybe I should wash the car. Maybe I’ll head over to the park with the kids when they get off school early today, whatever, be the case I’ve got work to do and you do too. I’ll meet you back at the market soon. Until then, trade well.

Hello. Good morning Futures Warriors. Happy Thursday. It’s sunny in Chicago, which is a great way to start a day. No time to waste. We’re short the June gold, 1281.20 a stop up at 1284.10, $290 per contract risk. Look what we’re looking at here. Right away this morning here you see the big break. There it goes. 1280.50. Love to see that market come on down on that chart on the left. Look at that key level, that demand level, green horizontal line. If we start to break that, we’re going to have a nice little slip and slide here, here it goes, through that long range bar. Watch it, watch it. Here comes, I’m short six units right now, just like that. Up $600, $100 a contract.

You’ll see I posted that in the announcements as well as the chat. Early bird gets the worm here in Chicago. Woohoo. All right, so we got to stop again above that supply area. See, that comes in at 1283.50. Our stop’s a little bit above that and we’re going to continue to… We’ll see if this thing’s going to break to the downside for us. That’d be a beautiful thing. 1280.50, just a smidge down below it. There it goes. 1279.80. Looking good, looking good in the neighborhood.

Let me grab my drawing tool here so we can talk about what we’re doing here right away this morning. Look at… Down, down, baby, down and off to the races. Just like that. I mean, this thing is volatile. Make no mistake about it. We liked the trade because look at that whole… We are moving right through, right here. So our short entry came right here, just south of that POC because I did see that volume aggregation zone up here. So our stop is up here. Here we go. I’ll put the stop as best I can chicken scratch up above. So across the highway. We’ve got those pressure points up above to help the trade and we’re looking for this follow through breakdown on the 10 minute chart. Over here on the 30, you can see we’re still above the boxes, but I like the idea that we’re through that long range bar here. Okay. Other things I like about the trade here. Again, we have exhaustion warning on the navigator on both timeframes and overbought. We’re above that plus 40 mark on the Taz navigator down below.

Watching, waiting, anticipating, as I like to say. It’s your job as a trader. I’m bringing up the EMNS&P chart over on the right as well so we can keep a beat on that. We’re starting to come on down through this long range bar, like to see it come just a smidge lower here. Okay, here we go. We’re doing risk reduction here. I’m going to get this to the position where I basically have kind of a free trade here on my runner. Okay. So I just bought back moments ago, closed out $500 on that one. So I grabbed a full dollar on five units. So I’ve got $500 profit in what, five minutes? And then I got my stop up above. Remember, initially at 1,284.10, want to move that thing down now as well. I’m going to tell you where I want to bring that stop down. So we still have one single unit on the short side. You grabbed a quick profit with me here. If you took the short earlier, whether you’re trading two, three, four… You’re just trading one, remember, you have a decision to make.

You’re going manage either this trade as a singular or you’re going to grab your $100 in about five minutes and run off to the breakfast joint here on me. Move your stop down here. My point being move your stop down here. I want to reduce our risk to a 1282.10 which is going to put it right here. So just a $100 risk left on the trade for me. And you want to make sure you adjust the quantity as well. Okay, so pulling your stock down. 1282.10. Remember, our short entry here is 1280… I’m sorry. 1282.20. our short entry is 1281.20 so we have a $1 risk, $100 a risk left in play. Trimming that $290 risk per contract down to just $100 here now and we still have an opportunity to see this market break a bit further. Possibly. Give us a give us a little more. We’ll see.

All right, so we’ve got this in a position here where now we’re going to see if this thing’s going to make a run for us. Okay. Come on down, you’re… You can come on down here. The water’s warm down here. In fact, I highly recommend the area that we call about 277.50. That’d be my recommendation. If you want a nice warm place to go, market, that’s where I’d suggest you go. Again, our stop’s up here, our risk management move very quickly as we took our stop, initially up here and we’ve now moved it down to that yellow line that I’ve drawn right there on the chart. Okay. Let’s see if we get the break.

One thing I do like if I’m doing a counter trend trade like this one is here. I do like when I see a setup where our new supply area, that red line comes into play rate about a very close to where the technical high of the session ends up coming because then you’re able to put that stop across not only the supply area, value area, but also, you’re putting it above that technical high. This area down below here on the gold as you’re watching this year, because, I had this on a five minute, by the way, you’ll see as we start to get down towards this 1277 area, we do start getting to some congestion zones right there. Okay.

Sorry. Misspoke. 10 minutes, not five minutes. Right here. So this is the area, again, we want to punch our ticket at the meat counter for profits before we get down to that zone. In fact, if you’re looking for a kind of a sure-fire, as a sure fire as a order in the market ever is, it’d be looking at the that 1278.20 area which is right here. So kind of towards one tick off the low of that long range bar. So you’re just looking for the market to possibly retest that low of that bar if we get there. Okay. So you’ve got risk right here. Just a $1 or $100 risk on the trade. Trim down from $290 a contract. And then down here you’d be taking profits at $300 okay.

I thought I’d post that so you guys kind of get the lay of land for some folks that are just tuning in here. We entered short position in the pre stream. We seem to be getting these pre stream opportunities here quite often. So it pays to be an early bird and get logged in here in the room. We took a short position, 1281.20 was our short position. I took it on six units and then very quickly we did get the move down here. So we’re able to grab $100 a contract on five in my case. So I took $500 profit, still got that runner in play. We took our stop, which was up here and I took 1284.10, a $290 risk and we had since moved it down here to again 1282.20, a $100 risk left on the trade. We’re looking for this market to make a run down here. Really like to see this thing come down and I think if we get down this early in the session, if we make a rundown towards 1278.20 right here, I’ll take another $300 a contract out of the trade. We’ll call it $800 and that’s a pretty darn good trade. And we’ve been in the trade for a total of maybe about 10 minutes now I’d say.

What we’re looking to see happen here… Okay, see how there’s this area here? See how it really goes in here? Now what we’re looking at… Remember this is volume profile where we take traditional volume down the bottom, we flip it sideways. Okay, and we’re looking at the distribution of volume, so we have a relative comparative of where and what prices the most amount of volume is occurring. So these areas where the lines extend furthest to the right are the areas where there’s the greatest amount of [inaudible 00:08:40] that our offer’s up. In this case, when it’s above resistance, when it’s down below, like you see down here, that’s going to be support. But in between you could see visibly that volume gap. You see how it looks like a little hole. It really dips in there to that kind of left hand side there. Those are the areas that oftentimes would give fast and vertical markets. Okay.

Market’s creeping up here. You can see we’re coming up towards that master point of control right here and then a lot for resistance, okay. That’s what you’re seeing. Market’s having a tough time breaking above that yellow line. We want to see this market retreat off the POC, which we see right there. And then again, get back down below the demand zone. That means it’s in breakout mode barish and we’re below 1280.60. that’s what we would like to see that market do. Make this nice and big here so you can… That area. So I like to say when you could see that void or see to the back of your charts like that, it’s a little volume gap. Those are the areas we’re looking for to position ourself to see that market penetrate through. In this case, of course, the downside. This is that part of the trade where your job as a trader is to occupy your brain to not make a premature decision just out of boredom.

“Successful trading should be boring”, good friend of mine in the trading business once said, and I tend to agree. It’s good to see that close down below. Remember, closes, we always want to see outside the levels. In the case of a short position, we want to see closes down below that bottom demand zone line, that green line. Okay, close down there is a big deal versus it closing up here. Even a difference of $0.50 makes big difference because now this thing has a higher probability of continuing that journey in the bear camp. Okay. It’s staying in the bearish camp. Here we go. Market’s breaking. 1279.30, looking good in the neighborhood. Up $200 on that last unit.

Just to reiterate here, a zone that I’m looking for, if we can get down there, it’d be 1278.20 which is right about there where I drew that line. 1278.20. I remember our short entries from right here. Initial stop was up here. I’m just recapping the trade here for those of you that might just be logging in. Here we go. When you initially got the break we were looking for, so we took five out of six units. There logged $500 on the trade, still got our runner in play. Here it comes, I got my order sitting at 1278.20. If we get there, I’m going to grab $300 more dollars. Okay. If we get right down there is where we want to get, 1278.20. And you do got that [inaudible 00:12:10] and now we’re going to put $300 extra on top of the $500 for $800 bucks here in the gold.

By the way, that said, she brings up a good point here as well. I’m having some dialogue as you can see with Michael. Yeah. Over the simulation trading platform, you’ll find over on my site dolltrade.com… That’s where we distribute the platform. It’s not a Warrior trading product. Yes, it’s a fee based platform because I have fees associated with it per user as well, but that’ll allow you to do a whole bunch of things. Practice trading, of course, placing orders. Very lifelike realtime environment there, charging fees, margin, the whole thing, so you really get comfortable with trading futures and then you can link it to a live brokerage account and you’ll get the deeply discounted $21 a month continuation every month for realtime data, which is a bargain. Again, the alternative is don’t link it to a live $250 minimum account and then it’s like $360 a month.

So it’s like after two weeks, it pretty much pays for itself. And remember it’s still your money. It’s a deposit that you have to whatever add to later when you want to live trade or what have you. It’s kind of waiting there for you when you’re ready. Yeah. It does look like it’s having a tough time here. And I actually tend to agree with you here on this one, Brian. I think it’s having a tough time. Not to mention, remember, the 50% zone of the alligator’s open mouth, which is right where it bounced off of, tends to be an area where the market will bounce at least one time. And for that reason, I’m coming up here to 1279.20 I’m gonna exit the trade at $200 profit. So I’m out of the gold here now. $700, we did on that one.

And what about… I don’t know, 20… little over 20 minutes? So that’s not bad, okay. So I’m out of the gold here now. I did just cover that moments ago, 1279.20 for $2 on that last unit. Don’t forget to cancel your stop that we had risking $1 on that trade as well. Okay, so good job on that one. I think it brings to light. Maybe, one of the most common questions are that a lot of people have is, “How do you assess the risk reward factor?” Well this one started with a $290 risk, but early on in the trade, we had an opportunity to scale out some profits. I mean, it was just a few minutes into the trade and we were able to substantially improve the risk reward early on in the trade. That’s something I think statistically doesn’t work for simple statistics. “Hey that’s, that’s horrible math.”

You know, your risk $290 to make $100 a contract. Well, actually I took $500 out of the trade on that six unit, which allowed me then to trail my stop down and then instantly, I have, at that moment… I was already at a two to one risk reward. My initial target was a three to one risk reward on the remaining unit. Remember with markets you don’t want to stay static and kind of fall in love with your levels too much because you have new information that’s constantly coming into the markets with that new information. It’s your job as a trader to adapt to it, digest it, make changes to the strategy, okay. And I think a lot of people that maybe just are running simple math on risk reward or trying to size up my strategy, which does hit a very high degree of accuracy where 76% winners is about where I fall on the probability side win/loss.

So it has plenty of buffer for you to take on, at least initially here, what may at first glance appear to be skewed risk reward but the name of the game is, my risk is really kind of what I call my apocalypse prevention plan. The worst case scenario that can happen to me, my line in the sand where I’m going live to trade another day if we get there. But very quickly in these markets, if you’re trading breakouts, remember, you’re waiting for the breakout to happen. So if the breakout does happen, you’re at a position and since we’re trading around market profile levels, we could trail the stop down and we’re able to trail the stop down and mitigate the risk and vastly improve, instantly, when we do that, which may go from what appears to be a lopsided risk reward to instantly very attractive risk reward in an instant. And that’s the name of the game and it is kind of difficult, I realize, to maybe quantify that scenario but that’s where coming in here and continuing to join me in the Futures Trading chat room here will benefit you, okay.

Nice job today. Early bird gets the worm and hey, we are starting a little mini new streak, right? We ran 14 in a row, green days. We had that one losing day and then we’re coming back with two consecutive green trading days. All right, guys, my life stop is kicking in. I’m going to have the charts up here for you. I’m going to bring up a couple of other markets for you to be watching and let’s see if we can find some opportunities together. You guys are doing a great job of sharing ideas, talking about markets that are moving and I love that you’re sharing the reason why because, remember, this is not called the Steve Room. It’s the Futures Trading room. So it’s not just about me, it’s about you. In fact, it’s mostly about you. I’m just one little itsy bitsy small part of this process. So keep up the good job everybody.

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