May Day May Day Trading Thoughts on May Day

May Day May Day Trading Thoughts on May Day

Friday: May 1st, 2015 … May Day May Day Trading Thoughts on May Day …

FYI: Next Friday will be the big employment report not this Friday.

CLPORT: Trade Entry at 5929 at 8:11AM CST. Stop Loss Hit at 5918 (11 tick) loss on trading day. The Pivot Point came into play on this long entry although the system trade was to take it anyway.

Here lies the rub … three losers in a row right now can bring you down past your max daily loss when you add slippage into the equation. The TST $10K Trading Combine has a Max Daily Loss of $300.

What this means in the Crude OIl Market is 30 ticks equals $300 … but if you HIT or surpass it you fail your combine. Today, I failed the combine even though at one point I was up over $10,600 and within $400 of the $1000 gain.

But …

Like today … 1/2R was 11 ticks … so a quick set of math application gets you to understand three losing trades in a row equals 33 ticks … so with the r/t commission cost of $3.68, then you are way past $300 … no rocket scientist needed!

One of my earliest trading rules of my trading career was a simple understanding that you need to have ENOUGH ROOM FOR PROFIT on any trade undertaken.

So …

Let’s take today’s first trade in question …

Pivot Point was 5933 and the market Long Entry was 5929 … it doesn’t take a rocket scientist once again to figure out this is only 4 ticks away from the Pivot Point.

Now …

The question is do I have enough room for profit on this trade? I would argue, NO.

Why?

My 1P profit target on today’s trade was 24 ticks rounded up to 25 ticks. But I had 4 ticks to the Pivot Point in front of me … and it was the first time of the session that it was trading back towards it …

So …

The question then becomes how far do I need to be away from the Pivot Point or a Major Support/Resistance area to take on a trade?

Right …

I need to be 24 to 25 ticks from it to take on the profitable risk vs reward part of this trade.

So …

The best thing to do on the CLPORT opportunity this morning would have been to either stand aside or wait for a better opportunity to get into the trade.

Today’s Best Opportunity to take a Trade Came on this Chart Below:

This trade becomes what I like to call a BRACKETED Trading Opportunity where you determine value based off the HVS 700 Bar, in this case it was a RVB (Red Volume Bar). This move at this point in time could do one of three things.

  1. Go Up
  2. Go Down
  3. Do Nothing

The green line is a support line on the chart … and you will have enough room for profit to either take a short under it or a long above it. This is also number 2 of my trading rules after the CLPORT opportunity. I call it the LVLTW HVS 700.

What … come again?

LVLTW HVS 700 means Let Volume Lead The Way with a High Volume Spike above 700 in Volume and it can be either Red or Blue in color … you want to bracket the market and look to either go long or short on the trade.

What this gives you is an opportunity to either go long or short … and if one side fails then there is a very good chance the other side of the trade will work out for at least a 1P target and in a lot of cases more.

Today, I went Long first, then covered because no breakout long and went short and it looked like it wanted to take … but then it put on the brakes.

Here was my bracket entry at time of trade … to go Long at 5900 or go Short at 5875. The Long was filled and we didn’t breakout so the best thing to do is to cover.

The short was actually taken above the 5875 area … and you would have to be in the full course to understand where VALUE is located on the Long Failure (RVB). With all this being said, I had to go back to the drawing board today for my TST Trading Combine.

And …

I am still working inside my drawing board to determine the optimal way to not only pass the TST $10K Trading Combine, but to make it work while only trading one contract. I have consistently proven to myself the TST $50K Trading Combine is the Optimal One to take on … but I enjoy a challenge.

So …

I want to do it with the Minimum (safe auto) trading combine to prove this one can be won and you can grow your trading account from this point. After all, I was able to take a $2K trading account and grow it.

So …

I know the $10K TST Trading Combine can be won, but I will have to take into account the very small daily max loss of $300 into account to pass it.

What …

I am thinking is two fold …

One …

Only take one trade a day win or lose.

or …

Only take on trades that have the opportunity to have enough room for profit before you initiate the trade. This is what I will be working on over the weekend until I restart my trading combine on Tuesday of next week.

 

Kind Regards, Good Trading and God Bless,

TradeCraze

 

About The Author

David M. Knight

I am a 30 Year Futures and Commodities Trading Veteran. In addition, I enjoy games of skill and chance like: poker, craps, blackjack and roulette. During my professional career, I have developed and implemented successful trading strategies and methods; along with winning systems in games of skill and chance. Join with me on our mutual journey together.