Warrior Trading Blog

Turnaround Tuesday | Steve’s Futures Pulse 193

Steve_8.13

Hey, what’s up fellow traders. This video is going to be a two for one special, because yesterday I had to head off to the football field to get my youngster started in his practice season. Well, let’s talk about yesterday. First and foremost, it was a dismal start to the week. Last week, remember, I had five green days. We had a perfect green week. So I went into the weekend feeling good, only to be met with challenging markets in the EBN S&P, and a small loser in the light sweep crude to kick off Monday. How much did I lose on the trade? $59.40. Now, before you get too spooked, remember, that’s within my risk tolerance, and those in the Futures Trading chatroom are often trading Micro E-minis, which is 1/10th the size. But, it is what it is. I started by giving back a couple days worth of profit from last week on Monday.

So let’s fast forward to today, because it’s my redemption song after all. Today, I got over $5200 back from my Monday. That’s awesome. We found a variety of opportunities in a host of markets. I’m looking at them right here, gold, euro currency, copper, and we did give a little back in wheat. But, watch today’s Future’s Pause recap, where I’m going to recap Monday’s challenging markets in the S&P, why I called it quits when I did. But, also, the opportunities I found today to come back and get a fresh bill of health, going into Wednesday looking for a strong finish to the week. Enjoy the video and today’s Future’s Pause. Come on.

Okay, let’s first start by diving into that challenging E-mini S&P trade from Monday. I want you to really kind of understand the reason why I was looking for an opportunity, technically, for a recovery trade, which actually ended up happening today, on Tuesday. But, I was looking for it to happen Monday. I want you to understand why I put on the trade, why I actually added to it, and then why I eventually called it quits, because yesterday’s session was challenging for anybody looking for a long opportunity in the S&P.

First, we came into the day, this is actually, if you take a peek here at this, this is early in the morning. This is 3:00 AM Chicago time, market was down big. Then, what captured my attention in the session was these exhaustion warning bars. Now, this is generally going to be a good cue, technically, for market profile traders, for a market that either is going to start to turn around or go laterally sideways. Now, it did just that. So the trade initiated itself right here. We entered the first three units into the trade at 2906 1/4 right here on this bar right here. We put a nice wide stop on this, which I, at the time, I didn’t think I was going to need it, but we did put it down at 92 1/2, which is right what you see right there. Market failed to follow through.

I was looking for the market to give us a fill through to the upside here. You’ll see as I get into today’s trades on Tuesday, how we got, again, a real nice follow through, and that’s why this is my redemption song here, to show you how the chart patterns. You can’t give up on your chart patterns just because it doesn’t follow through every time. Remember, I hit a very high win percentage, over 70% of the trades are going to end up being in the W column, and that affords us the ability to, again, work these wider apocalypse prevention plan stops.

But, anyways, let me get back to the trade here. We’re along for 2906 right here, we put our worst case apocalypse prevention plan wide stop. At this time I was suggesting Micro E-minis for many traders, because if it was a higher risk trade for them they couldn’t sustain, it was a good idea to think about that 1/10th size, 1/10th risk contract to keep within their risk tolerance. Market pulls down and I added three units at 2904, actually 2904 1/4, so it was right there. Still liked the trade at that time, obviously, I wouldn’t add to it if I didn’t. Then, the market came down a little bit earlier, and the market was going laterally right around 2900 right here. I added a third time, so a total of 3333, nine units at that time. So I amassed a position that actually, again, was moving the cost average down. My stop was still staying wide at 2892 1/2, right where I see … Let me draw a big line right there.

The market, at that point, I was still expecting the market to actually gather up some support around that 2900 area and give us the break back to the upside, which would’ve made it, of course, three times as fruitful if, of course, the market was cooperative. It wasn’t meant to be. Look at how the market comes grinding lower, we get stopped out right here, and that kind of stunk, because why? Well, because it got stopped out on a position that I added two occasions to, which I don’t do that often. But, I did believe in the trade, technically, at that time, especially at what I saw here on Navigator. It looked like we were going to get some nice turnaround follow through, and instead, we got actually, the supply area resisting the trade.

I actually entered the S&P, believe it or not, a fourth time. Now, I can probably count on one hand over the course of a year, how many days I get into the same market four times, but this is one of it. It was entering a long position as the market started to rally up here, pardon me, 2897 1/2 right here. I actually worked that same stop at 92 1/2 right here. I set my first tier target, get this, at 2903, and guess what? Right there, the top of that bar, 2902 3/4. So I fell short by a tick, literally a tick. As you can see, the supply area up here resisted the trade. We didn’t get the follow through break, and again, a fourth time the market breaks down below and I get taken out at the same place at that 92 1/2. That put me down $5700 on that E-mini S&P, which was within my risk tolerance.

Again, caution to those of you at home, remember, the goal is not that you mirror trade and you trade the lot sizing that I am, or even that you mirror trade at all. I’m trying to teach you chart patterns here, and this is obviously one that I was just glad to get out of, because look at what the market ended up doing. It ends up going down later in the day. You can see in the afternoon we end up going way, way down, even as low as 2872 at this part of the chart down here. That would’ve been adding another $1000 worth of risk per contract to the trade. Obviously, I’m glad at the 92 1/2, so I’m way up here. I didn’t have to take this on the chin. So sometimes you’re just glad to kind of have lost what you lost. That was the case.

The only other trade we had yesterday was the crude oil, which I’m going to bring up for you here. Bing, bing, bing, here we go. All right. Let me go back in time just a smidge here, and then we’re going to get to today’s exciting comeback trades. All right, here we go. All right, bingo. There we go. Okay, so cool.

The trade that we’re looking at yesterday was actually a short side trade, and it was as that market started to work its way down this 5464 level, right in here. We started breaking down below the POC level right there. Then, we got some volatility to the upside here. So as the market came up on this one here, I was worried about our stop, which initially started at 5504. We did move it down a little bit here at one point, but we started kind of making a run back towards that level. So as the market came back down, I was just thrilled to get out at 5468. Lost four cents, $40 a contract times six, so another $240 loss. So basically, yesterday’s day, I started my Monday and it was a rainy, drizzly day here in Chicago. I should’ve known better. 5940.

Now, to draw perspective, last week was a five green day perfect week. So it was really just kind of cutting into profit earned from last week. So that helped, mentally anyway. So long story short, we get to today and obviously I’m still in opportunity seeking mode. They don’t call it winning for a reason, because this is trading. You got to be okay with losing, winning, breaking even, managing risk, and staying within your risk tolerance is so important. So a day like Monday, if you’re going, “Oh my gosh, that’s crazy.” Well, hopefully, if that’s out of your risk tolerance, you shouldn’t be trading that size. You’ll be trading smaller contracts. All the things you need to do to stay to your game plan, which is different from trader to trader. Super important lesson for you on that one.

Okay, so let’s talk about today, because today we kicked off the trading in gold, and right out of the gates … Let me bring up the gold. There we go. Where are you, gold? There you are, okay. We kicked off a real nice single early this morning on the gold. Okay, I’m going to tell you how this thing came to life. 153230, which is right there where I drew the line. Look at my arrow right there. We initiated short position on this trade, and relatively quickly in the trade, again, just a few minutes, maybe it was like 10, 15 minutes, we started to see the market give us the grind down lower, and we covered $4 lower right down here. So basically, from here at 2730, from 3230 right here, we grab the … We grab that $4, I’m sorry, 2830, not 2730. I initially was targeting the 2830 area. But, we ended up coming up a dollar because the market was kind of retreating at that moment in time, so we got $4 out of the trade. Again, I stand corrected on that one. 153230, the cover was at 2830, $4 lower, not $5. That’s what we initially were targeting.

It did have 12 units on that one, so we were able to grab $4800 back, so it was great. That was our first trade of the day. Down 5940, $4800 first trade of the day. We weren’t done, we moved over to the euro currency, which I’m going to bring up now. I’m going to show you a nice little breakdown trade that we saw here in the euro currency, which was kind of just a nice little opportunity that came to life. It was kind of an effortless trade. We didn’t have to really overthink it a ton. Let me bring up euro, here we go. So euro currency trade. We initiated short side position on this one at a price of, it was 11244, so it was actually up here as we were breaking down below the congestion. This is a common pattern I look for for a short term scalp. The Navigator kind of gets way up here overextended, overbought, we’re near that plus 40, which you see here. That means the markets overbought on Navigator.

Then, what I was seeing happen, as the volume aggregated here, we’ve got that big master point of control, yellow horizontal line in the background, that’s the highest volume traded price. Then, as the market started to breakdown below the POC aqua color line right here, that’s where we entered short, 1244. Real low risk trade on this one here, we just put a stop up here at 11261. So it wasn’t risking a whole heck of a lot on the trade. Then, you can see we did end up getting the breakdown. It’s a relatively short order, we were able to take that initial price of 11244 and the market broke all the way down. I ended up covering that at 32 1/2, so let me show you where that is, right about there. This is what we made. So it was a move play between the POC and the demand zone. It ended up going a little bit further, and actually it ended up breaking shortly after I covered the trade, on my six unit trade that I had on that one. I’m not going to regret $862.50. So again, we’re creeping up there in terms of full recovery on the trade.

Our next trade was the wheat. Now, this is the one that actually we gave a little bit back, not a lot. Let me bring up the wheat here to show you what I was looking at here on this one. Bingo. Okay, cool, so let me zoom in. There we go. On the wheat, again, this is September contract that we looked at this opportunity in the wheat. What we looked at doing is playing the break above the 470, no actually let me bring up the 30. It was 30 minute chart that we liked on the wheat here. Bring this up. There we go. So here’s the 30 minute chart on the wheat. We were looking to get long, and we did, 477 3/4 right here as the market started to emerge above that supply area. That’s that red line.

Now, remember what that means. That’s the top end of the balance area. Oftentimes, when we see a lot of space, this trade could still end up being a fruitful trade for somebody, just not me, because I’m going to show you how I got stopped out. I did not, at this time, want to work the risk all the way down here. I had been having a good day already, I didn’t want to put a $450 per contract risk out there. So I did put the stop 474 1/2 right here, and of course, that’s right basically where it bottomed out right there. The market pulled back, stopped me out of the trade for 1050. So I gave back a little over a $1000 on that trade.

Then, of course … Now, at the time of this recording, the markets reemerging back above the supply area. By the way, if you’re watching this chart, keep an eye on this. This is called slip and slide bar, it’s a long range bar, and there’s space between our value areas. Those taz boxes, those three lines. See how there’s all that space, all the way up until you can see it comes all the way up until about the 493 zone. Lot of room for that market to navigate 14, 15 cents still. So from a technical standpoint, although I got stopped out working a tighter stop, which I wouldn’t have been stopped out if I worked my typical wider stop. There still could be some opportunity there, so I’d be kind of curious to continue to watch this market here into the afternoon, and we’ll see what emerges.

So anyways that was that one. The last one here was the copper, and this one was, again, just kind of a little scalp trade in the market on copper, breakdown trade, which I’m going to show you right here, right now. Why I took the trade, why I liked it. This one was on the 10 minute chart pattern, so let’s make the 10 minute chart a little bit bigger here. There we go. Okay. Okay, so this one, again, it was a busy day today, as you can see. So the copper trade we took on this one, short at 26225, which is right where the market is back now. But, it was on the breakdown down below here, similar reason that we initiated the earlier trade, which is we saw the volume congestion mount up above, master point of control, the highest volume traded price, that yellow horizontal line you see up there up above. Volume fall off down below, in the wake of a huge run up, overextension. Remember, exhaustion warnings, when you see these magenta color warning bars. If I draw a line up here, it’s right as the market’s peaking out. It’s a good time to start thinking about an opportunity going back the other way.

So 262 1/4 is where we initiated the short position. This one we didn’t put a lot of risk on the table. We put the stop just at 26315 right here. Again, we found a place to mitigate risk by not having to put it all the way across what I call the highway, across all three levels. Instead, we’re putting it just above some of these technical highs right up here. 26315, again, our short entry. 16225, which is right … That’s the world’s most not straight line. There we go. This one did break for us. It broke very quickly on the trade, and we were able to cover at 26185, which I’m going to show you where the market bottomed out here. It wasn’t too much lower than that. That was 260 [inaudible 00:15:11]. We covered right here, again, taking a little snippet, similar trend here to what we’re saying, between the POC breakdown, where we got congestion above. But, we’re not asking the market to give us this kind of massive breakout here. There’s no doubt there’s big wins down here, but we’re just kind of taking what the market was willing to give us today, to go on to basically have a nice day when it was all said done.

When that was all said and done we got over $5200 bucks back of our challenging day on Monday, and this is what it ends up looking like today. So not too bad. That’s trading for you. It’s not called winning, it’s called trading, which means you take your winners, you take your losers, sometimes you get a few losers, and you got to stick to your trading plan. Just because you have a bum day or the markets not cooperative, it doesn’t mean you throw the baby out with the bath water. You shouldn’t do that anyway, by the way. You got to stick to your trading plan, okay? If you’ve been doing this awhile, you probably know this already. Every time you have a less than perfect day, you don’t just start creating a new trading plan altogether. It’s not necessarily broken. Markets sometimes are just darn challenging, and it’s your job to mitigate risk, cut your losses, call it a day. Yesterday, I had to go out to the football field, it’s football season for my youngsters. So it was nice to kind of just get outside in the rain. That’s how I felt after yesterday. Get back at it today, again, we’ve fought our way almost all the way back. So I’m feeling pretty good going into the middle of the week to see what the market has for us, and see if we can’t have a strong second half of the week.

All right, guys, hope you learned something here today. If you got a comment, by all means, leave it down below. I look forward to meeting back at the markets again soon. Until then, trade well.

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