Warrior Trading Blog

Steve “Just Did It” | Steve’s Futures Pulse 175


Hey, what’s up, fellow traders? Happy Tuesday to you, trader Steve here. We’re all done trading in the futures trading chat room, and I want to get you up to speed as to what has happened over the last about 24 hours in our trading activities. First and foremost, yesterday Monday session, was what I like to call directionless volatility. It means the market’s going up and down like crazy, but it’s kind of stuck in a band or range of prices, so very difficult to trade. Because of that, we ended up carrying two positions that we had yesterday into the overnight. Now this is something you do only if you have an additional amount of capital in your account to handle what’s called overnight margin, which is larger than your typical day trade margin. So anyways, the two positions, Australian dollar, super low risk trade. We risked just 14 points at $10 a point in the Australian dollar.

We ended up getting stopped out overnight for $140 a contract. Oh, hum. Wasn’t thrilled about that but again, given the risk being just a smidge, quite all right. Guess what? The good news was, we also survived volatility in the short position that we took in the live cattle. Now this market actually, we almost got stopped out, came within 10 points, which would’ve been four ticks in the cattle, but we survived. The market broke back down, and we were just thrilled to get to a little bit better than break even. Took $40 a contract. I had nine units, so we grabbed 367 dollars. So anyway, so that’s what I walked into this morning before we got started in the chat room.

So today’s session, as you’ll see in the chart recap here in just a moment, we found two opportunities. The first was in the E-mini S&P. And this ends up being our MVP trade of the day. We scored 4337. That’s right, over $4000 on a multi-entry opportunity where we scaled out on the big breakdown in the S&P today. The other, we gave a little back in the soybeans, about 2500 bucks. All told, we ended up making about, little over $2100 over the last 24 hours. So guess what? We’re back in the green. We’ve got the rest of the week. I’m feeling good. Anyways check it out. Watch today’s futures polls, come on.

Hey, what’s up traders? Let’s get right into these charts, so I can get you up to speed. I wanted to show you first the cattle chart here. Okay. So I’m going go back in time and if you follow where I’m circling here, this is yesterdays session. The reason we initiated the short position yesterday in the cattle, which our entry by the way was 108 O2.5 right here, right up in here. It was because we started to see US market going to breakdown mode. Okay. See how the market starts closing down below that demand zone at 108.18. When it does that probabilities favor in due time that the bear is going to take over the market. Well look what happens. Remember I said directionless volatility. Look at markets bouncing all over the place. We put our stock prudently above our supply area, which is right up here, 108.75, a little bit above that red horizontal line, which represents the upper band in the balance area or what we call value area.

It’s nice to put your stop above that because you’ve got all these levels of resistance up above keeping the market away from your stop. But anyways, look into where the market topped out over here. Got as high as 1. at 108.65 within four ticks or 10 points of our stop. But then the market started to break down. So this is the one that we ended up moving … Market ended up breaking down below the 108 level. So 107.92 in recovering, 10 points per contract gives you 40 bucks a contract. That’s more like a consolation prize to have survived volatility, putting the stop in a nice prudent place, market breaks down and as you could see a lot of carry over on the directionless volatility on the cattle. So anyways, consolation prize on the cattle. Helped us lick our … make the wounds from the small risk Australian dollar feel a little bit better.

Okay, so let’s get into the two fresh trades from today. All right, let’s see what we looked at. So first let’s look at the, I want to show you the soybeans. Because this one actually was a little disappointing to me because at one point it actually looked like it was going to be setting up for a nice little breakout mode trade to the upside. So draw your attention to the middle chart right here. Okay, now see this big volume gap behind here. See how you can see right to the back of the chart. You can see the black background there and all our congestion is either higher or down below. This is what I call alligator jaws set-up. Typically, it’s a very high probability pattern. But it wasn’t meant to be. We entered long over here, 911 and a quarter on the break.

It started moving above that 911 and almost hit 912 actually. But anyways, we get long on this bar right here. I worked a nice wide stop on this coming down below the technical low right here, 8.25 cents at 902 and three cores. And you could see just early on in the trade, it just started to grind lower and lower. This is where it called it quits. So ended up taking that. 2550 is what I lost on that one because I had six units, little over $400 per contract loss. So, I’m starting today, and I’m like, “Oh, shucks.” Directionless volatility yesterday get stopped out of a small loser in the Australian dollar. Oh ho home, I make a little bit on the cattle and get stopped out of the, the soy beans. But what it didn’t tell you little earlier on in the session, I also initiated a short position in the E-mini S&P.

Now, this is where it gets fun. Okay. Here we go. This is a nice little lesson in that. The way trading works, it’s not like signing up for an annuity or a CD at the bank, where it’s like, “Okay, I’m going to sign up and get my 1.25% lose to inflation, but at least I know I got my 1.25%.” It’s not how it works in trading. Sometimes when it rains, it pours on the profitability side. Sometimes markets are not very cooperative, and you just are trying to survive volatility in a drawdown until things turn back around, and your strategy starts kicking in and giving you some positive outcomes.

So let’s talk about E-mini S&P. Let’s focus our attention this time on this 30 minute timeframe. Because this was really the chart that evoked the trade for us in today’s session. So let me go back in here. First thing I saw on the 30 minute time frame, look at early this morning. This bar, this first red bar, right there. At about two o’clock this morning the market starts dipping its toe into that bear camp. When we start closing down below that green line demand zone, the market is trying to get comfortable with the bear side of the pool. Then it goes sideways. Now we expect this number of markets move laterally inside these balance areas between the red and the green line. It happens time and time again. This is where tasks thrives. It identifies the balance zone, so you’re not surprised when markets go sideways inside there.

So here’s what happens this morning. Early this morning, 5:30 AM bar, it does it again. It closes down below. Then guess what happens? Market this morning here had a little uptick here, intro bar, it came up just on this one bar here for a little bit of a small period of time around 7:00 but then this is what drew my attention. Markets starts consistently closing down below that demand zone. Again, that Green Line by the way is 3017.32 which is not a tradable price but just say 3017 and a quarter. But I saw consistent closes here on the ATM bar, 8:30 AM bar, 9:00 AM Chicago bar. This is when I knew we were going to be gearing up for a short side position. So our first short side entry came in on this one here. I did this on 12 units, 3015 and a quarter, which is right there where I drew that yellow line.

Initially. I talked about two areas that we were going to watch in terms of risk, the wide apocalypse prevention plan, the worst case scenario, the where if we get there, I want to definitely get out and be glad I have a hard stop. It is going to be 22 and a quarter, which is up here above that technical high. Now when we did that, I in advanced talked about the next place we’re going to move the stop, is 19 and a quarter. Where I move that right there and I was like having knowing where my next pit stop on mitigating risk is. It’s important to know because those in the futures trading chat room know this. Sometimes that initial stop is really, again, I call it apocalypse prevention plan because I don’t expect we’re going to get there, but if we do, I’m going to be glad I’m out.

Oftentimes there’s another level that actually puts that risk reward in a more handsome place. So anyways, long story short, we’re short at 15 and a quarter. Market pulls back up here on these bars up towards the demand zone green line, but fails to close back inside the value areas. So we added at 16 and a half, which was nice because it brings my 15 and a quarter short position. That’s 3015 and a quarter. Brings it up to almost 3016. So again, you get that cost averaging up, which means on a per contract base, my risk is lower. And at that exact same time, that’s when I make, took action to take my risk and put it right there at 3019. Am I right? 3019 with chicken scratches there and a quarter. And that’s this level you see right here.

It was important to realize why I did that. I had seen this technical high right here. That came in at 18 and three quarters and I wanted to be two ticks outside that level. And look at what happened here. This high tested that to perfection. Right to that 18 and three quarters. So when we’re placing stops, we want to place them around levels. We want to place them around technical highs because you never know what technical high is going to be the reference point for say other traders to sell into the market at that time. We felt good that that happened. Because guess what? Look at the market goes back into breakdown mode. Here’s what we did. Again remember, we’ve got our short position equivalent of about 3016 just shy of that actually .88 or something like that.

Market starts breaking down. We start scaling out a portion right here, took 12 off at 14, took another nine off at 11, which is right here. So I’m going to write, we took 12 units off there, another nine right here, two at eight and a half right there. That left us with our final unit. And then what we did on that final unit is we just really started mitigating the risk by trailing to stop. We had it drilled all the way down to a three minute chart to do this. But we took pit stops at 16 and a quarter. So remember that stop at 19 and a quarter. As we’re taking profits and realizing that the market can’t take away closed out profits. Remember we’re also moving stops down. Ended up moving the stop down to a 3010 and a quarter, which I’ll draw a line, is right there. And then on that, see how the market came back up for that period of time.

End up get stopped out of that very last unit at 10 and a quarter. So, hey, we’re feeling pretty good about that. Pretty good. Basically we added to the position, scaled out of profits on the way, mitigating risk, trailing stops. There was a lot going on in this trade, but it ended up when it’s all said and done 4337, which is essentially what made the E-mini S&P the MVP of the day. What’s going to be the MVP market tomorrow? Oh, you got to be in the futures trading chatroom to find out.

So if you haven’t yet joined, you know where to go. Get on over to Warrior Trading, sign up for the chat room membership, or better yet, the Warrior Pro because you get all the courses too. I’ll see you at the markets next time. Until then trade well. Hey, I see you there. If you enjoyed that video, give me a thumbs up and leave a comment down below and be sure to subscribe for more great videos just like this for more of your trading.