back start next
[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [ 25 ] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57]
25 I wtJI buy a breakout of Ihc high of tfie 1 wfiose low macie the ifiird segment. This technique will work, in any market, in any tinu! frame, sn k-}ng as you are seeing sometfnny tiiai has we!l forriied nattems. 1 interrupt the corn trading for now to give idett of the type of ctiart that dtjes noi make well formed tradable [latterns for the methods f use. All of the following ofiarts have fornuuions that are toe* FLAT, too BOXY, or too SKFTCHV. llll I.Ill Mil l.ur f lltL M I I, , I I f,li t I 1 fUnlh JGIO •Jbll 9 7.2 553H JS12 Jj J 0 y!jOII i:4U2 2-liro 21V4 Z-IGO 24SG Z1SO Zllf* 2140 Z4Jb 213i z4:io ZZG Z1Z1 niMUTt; -I I j.i[ IM lil l.iUi Ll I,.. .11 kpt .l-..L.Iltrll.l1 1 J lO lllZl "J lO 111 1 G 10 11 IZ j,..ll.l L I.I..II lU ID .... I I .. t...1.1 ll 11 IZ 1 11 , Ml Ml I , I i . . I I I I . . r , . . ......i I 4 III) i\ III...... I 11 Jl loi... il, i Ll .Kl 1. 111. 11 ... 11.11 I.....1. 11JI. i,......I ] 1 IZ lU 1ZS10 1 ZilZO IZJOO IZiUO lZ4f0 IZ-llO 12 IZO IZIUO 12 1 i;ar.u izaio izazQ IZZDO 1 ZZf .o izzio IZZZO IZZOO IZIUO iZlOO IZilO 12 LZO 2100 izeuo i;;of.o IZOIO evzj U7Z0 1 / 1 itvyi. tt/oo U6J3 OCJO (ineo efi?o tUif, nfjfiO nfj45 ne-to UiillO ttfj2;j UtiZO Utilli tUilO (,00
IMUTK lJ 1 -.ll I < . < .4 > .. I. I.....I L I I. p bi .1.1 .n.i I ill.U. .1-......[ 1, J 11, ll ! I III li.M..........lilt nJHUTK U J.. J I L 11 II I m 11111 ilI if ll i! •i lOilllJ 11 .ll. ]IimI 12 IJ lO II IZ 10 10 I 11 l.ii l!il h ( IPI INI ll IJI I Ir il 12 IJio iiii; 1 11 Now 1 can continue wilh the corn trading. Most of tfie grain.; need thirty minuie or greater chnr[s to see iredabfe formations. Tlic some is true of the foO(Jstuffs. The ujieres* rate contracts need 60-120 mfoules rr> give decent formations. 9iJnii \}0V0 •joio 7 10 9735 9720 9 90 060 9G30 5000 9005 9570 9555 1390 lazi IJZO 13H la IO i:joo 1294 120 iriH 12 0 1274 1Z70 tZfiO 1254 1250 14-1 IZIO iz:ii izaa 1221 1211 1210 The tiriie frame to choose is the one in which you cari see well formed tradable patterns. When a market becomes fast or volatile, a shorter time frame can generally he used. When a market is slov/ and non-voiatile, a longer limn frame sliould be used. I wanted to get Jong a ten lot in corn based ufion a breakout of the high of the price bar whose low completed tfie third segriient I had drawn on the chart. I computed tho average volatility while I waited for my opportunity. The figure came out to .G1, vhich is closer to ,50 than it is to ,7b. That meant in order lo cover costs, I would have to liquidate all of rny contracts as soon as I saw .50 of movemerU io niy direction. I had a real dilemma on my hands. I would need iwice the average volatility in order to cover costs with five contracts. This was a problem I usually dont have to face. But with commissions and costs of $25, it was very real. The only thing I could see that might convince me to go ahead anti try was that prices had made a breakout of an intraday irading range. They had taken out a minor triple top, and if they would take out the high it would constitute a take out of the double high of the last two bars. It they did tfiai, the move migfit be explosive and give me the amount needed to make my goal, Heies what 1 was looking at when I iad to make my decision. □0 riMUTK 1111 hn 11 111 21 I 11 1.11 f decided to go ahead and give it a try. Be aware that Im doing here what I said might have to be done wfien reviewing the various cost structures I showed in relation to bean oil. Im entering a trade, not based upon the segment count alone, but because of die other things that corn prices are doing in conjunction vith the count. This is where judgment enters into trading. Otherwi.se, 1 would ho a rotiot trading a mccfjanical system. ZSIO 2534 2530 25Z4 2520 Z514 Z510 2504 2500 2491 Z490 Z4S1 2400 Z474 2470 2464 ZifeO 2454 2450 Z441 Z440 2134 Z130 Z4Z4 2420 2414
As prices broke out, I went fong a ten lot. My entry price was 248.50, placed my stop at 247.50. Average volatility was .61, so I couid count onJy on .50 to cover costs. That meant liqLiidating onehaJf my position at 249.50 in order to cover costs. 30 firHtJTE illidl r.N.fll Jl It r I r Irhr 4 P I > I Once m the trade, ( began to be sorry I hfd taken the cfiance. The close o( my entry bar turned out to be reversal bar. It was 1 P.M., there would be onJy one more bar. f was visualizing a losing day In corn. Boy was I ever wrong. The last fifteen minutes were the most exciting of the entire day. I dont know what fiappened, but someone put a racketunter corn and it took off. Since prices coincidentaEly had taken out the highest high of the JasT three days. I decided to ho!d overnight, I covered costs with a five lot at 249.50. By the close, J was protecting 50% of my profits in the trade. Tho next ilay when prices rnarlc ;i revcrs;il l)ar, I [nov<;d niy stoji to just below the low of that bar. The next bar was encouraging, and the following bar prices went even higher. Ttiat turned out to be the high. The next bar was a reversal bar and I pulled afl stops to 251.00. I was stopped out there two bars later. The resuhs oJ the trade looked like this: Five contracts had been used to cover costs. Five contracts were liquidated at a profit at 251.00 for a gain of 51 25 each. Total profits were $625.00. Two other points concerning this chart need explanation: Wtiy didnt I start my count at point "a," and why did 1 not enter the market at a breakout of the doji bar that formed point "b?" Actually, I did start counting at point "a," but the market went into congestion by definition of reversing bars that made tfte double low at "a," followed by a doji, a reversing bar, and then two dojis. 2540 2534 2530 2524 2520 2514 2510 2504 2500 24 44 24 0 24 4 2470 2464 24f.O 2454 24iG 2444 2440 24 34 2430 2424 2420 2414 A trade was not entered at point "b," because I felt it was more imf)ortant to enter when I saw prices clear the congestion area tfian to simply trade the cuuru by rote. Mow, it was time to go to work again. As prices retreated from the higfi of the day, I began to count and connect tfie diminishing highs. I also tried to buy breakouts of tfie fiigfis as :)rices were correcting, but no new lughs were made. 30 MlHtJTE r n h 1 llllll I I I I Hi ! d 1 i I I I was lillcd (S) on a ten lot as shown at 250, on the last bar of the day. Avr.rage voUiiility was 3/4 oi a point. I was willing to turn tliis tr;idu into i overnight position if necessary. My goal for every dayiratJc is tu turi-i it irito a position trade wf;en I can. Til go into more of that later in ifus chapter. However, since the trade did not meet rny criteria for conversion tn a position trade, I decided to get out on a fvtlT if prices reached riiy cost covering tiquidation point. I placed an order to liguidaie tfie entije position at 249 1/4 MIT. I watched the trade closely because if prices wore to fad to reach 24 1/4, I would make sure to be out by the close. I got out of fjve ccmtracts at 249. and tlie remainder at 249 1/4. The dealin was done, now it was lime to count my rnonay for tfir? trades entered tfiis day, I cashed five contracts at 249 for a gain of 5500, anci xan ct}ntriicts at 24 1/4 for a gain of $375 dollars. Total gross gain was &375. t fiad costs of S250, leaving rne with a net profit of $625. Now, it was time for me to plan my trades for tfic following day. 2530 2524 2514 2510 2504 ZV>QO 24J4 24JO 24fl4 24 0 2474 2470 241-1 24fi0 24 4 2450 2441 2440 2431 2430 2424 Z420 24 14
[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [ 25 ] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57]
|