Warrior Trading Blog

Oops I Did It Again -$5977 | Steve’s Futures Pulse 167


Hey, what’s up fellow Futures Warriors. Happy Tuesday to you. Oops, I did it again. That’s right, back to back losing days. And I’m not happy about it. The sky must be falling. It must be the end of the world as we know it. Nah, none of that’s true. This is all part of trading. Winning days, losing days, sometimes losing streaks. Well, it doesn’t happen that often but you got to face the music.

The reality is three trades today, we had a small winner in the week, and then two losers in light sweet crude as well as gold. As you’ll soon see when I go over the chart patterns in today’s futures polls, we missed a nice little winner in the gold by that much but the fact remains, we can’t woulda, coulda, shoulda when it comes to trading, so we may as well learn something. After all, we’ve paid the tuition. Look over my shoulder for today’s futures post.

All right the first chart, which you’ll see in play here on my screen is the gold chart and this is the one that was especially frustrating. This was the third of three trades that we made today and I want to talk you through why we put on the trade and why I was disappointed that this one failed to come to life for us, okay. It looked awfully promising at the point of entry. Long story short we start to see the market break down below this key demand zone, which comes in at fourteen thirty four and thirty cents and when the market does this, when you see the market consistently close down below here, this is generally going to be a nice queue that the market eventually is going to break to the downside in due order.

We initiated a short position down around fourteen thirty ten, right about there. We had a little follow through on the trade. We put our stop just back inside the value area because I could not put the stop above the POC and still keep it within the risk tolerance per contract that I wanted but look what happened here. Fourteen thirty four ninety got clipped. Our stop right there. We got stopped out just before, and in fact on the same bar that the fed came out and gave us some verbiage that actually sent the gold market sending south. We were not able to weather that volatility. It was frustrating for me in particular as I was telling members in the live futures room because initially I wanted to get into the trade a little bit higher price up here in that fourteen thirty two half zone, which is right here, and that was going to afford me a chance to put the stop above the POC. That’s that aqua line in the middle or we call it a point of control.

You can see that level if we were able to put the stop up where I have that yellow line now we would have been able to weather that volatility. Hey, this is what trading is. Sometimes you get a bounce your way and you stay in a trade by a tick or two and that’s great and sometimes you get a bad bounce, stopped out, market moves. I am not immune to that as well. Turns out, my Superman, should I say Super Steve cape has to come off and I’m a mortal just like everybody else.

Anyway, so that was the frustrating trade on that one. The gold, I had a six unit on that one. We ended up losing twenty-nine forty on that trade. Now let’s talk about the light sweet crude before we finish off on a high note with the consolation prize we got out of the week. Here’s the light sweet crude. And this one was a breakdown trade that we looked to leverage this morning. You can see on this bar right here we started to see that market move down below our demand zone at fifty-seven seventy five. Now what you can’t see on the chart here at the end of the day during recap time is that there was some good volume congestion up above, which typically will actually provide a nice resistance point for the market to head further south.

This trade did move eleven cents in our favor after we got into it. We entered in at fifty seven fifty six, which is, let me do my best to draw about where that is right about here. We did get a little bit of price push down lower to fifty five. We’re up over a thousand dollars on that. It was a 12 unit trade so kind of a mid-tier size one for me and it just was not meant to be so we headed for the exit as we pushed through that technical high right here. This was one where I did not put the stop nor did I want to push the stop and give that double the risk so we cut bait at fifty eight oh three as we started to push right a bit higher here.

Anyways, again it was 12 units. It had a larger loss factor. Forty four hundred dollars on that one. One thing that’s important to keep in mind as you’re hearing these numbers, these maybe small numbers for some, big for others, it really depends on your financial situation and your risk tolerance. When we’re in the room live and we’re talking through a trading opportunity, I post it live, I talk through it before we enter it. I give different options for managing risk. One of those ones on a trade like this is trading the mini crude oil contract which trims the risk in half just by selecting the QM contract instead of the big CL contract.

Other ways that we can trim risk is of course picking a different stop loss location, working a tighter stop, and many times we’ll reference multiple areas. And then last but not least of course it’s common sense that if you trade fewer lots, you’re putting on less risk. As you watch this obviously humbling red day for me here in back to back fashion it’s important to realize that this is not like the results of everybody on a day like today. Some people actually, in fact it was actually, for me it actually made me feel good. Some folks were very aggressive on the profit taking on some of these trades that moved initially in our favor like the crude oil as well as the gold and they were able to do more of a [inaudible 00:05:38] style trading before the trade ended up getting stopped out in both the case of the gold and the crude oil.

This is how on an individual trade basis inside a community environment that we cultivate. Outcomes of course are going to vary depending on lot sizing, how quickly you get out of the ride and so forth. But it is what it is. At the end of the day I’m here to show you how it went down, how I got out and why I got out with a little calm after the storm if you will. That was our oh for two.

Here is the wheat … This our one bright spot here. Similar pattern, breakdown pattern of course we were looking for out of the crude oil and the gold. But we did get the follow through this go around on the Chicago wheat and that’s where we saw the market give us the breakdown here below that key five forty five and a quarter zone. We entered at a price of five forty five. That’s $5.45 a bushel. This one we worked a wide stop and the risk was, the initial risk was $312 on this one. Remember my apocalypse prevention stop is really designed for the worst case scenario and that is we put that thing up at five fifty one and a quarter to six and a quarter cents initially on the risk with intent to aggressively move and we were able to do that.

We got the push lower, boom, boom, boom, boom. Scaled out of five to six units at five thirty nine and three quarters, which was a nice little exit with the benefit of hindsight here. From here was hour short. We rode it all the way down near the bottoming out on the fall off and then we moved the stop aggressively lower to what ended up being five forty four, which was one cent better than our entry. And then we did get stopped out adding $50 to the trade. Our consolation prize on the wheat was thirteen sixty two.

Net for the day, one of my worst days here in recent memory anyway and that is fifty nine seventy seven. In the red okay. Don’t let that scare you. Remember most traders in the room are trading a fraction of the lots that I am and they’re learning strategy based on market profile.

There you have it. A humbling fact that there is no such thing as a perfect trading strategy and perfectly cooperative markets but look to get back to the markets tomorrow on hump day and look to hopefully finish strong this week and this month. Look froward to meeting you back. Until then trade well and be well. Bye bye.

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