Tuesday, June 4, 2013
LB_F
Profit Targets and Stops
I feel this is the hardest and maybe least talked about topic of trading, which is when to sell. You always hear the adage or ride your winners and cut your losers...well how long do you ride you winners for? For portions of my positions, I like to use a margin profit percentage. Say for example I have 2 contacts on Orange Juice. I would like to scale around anywhere from 50%-100% or profit on the first contact, normally around 75% or so. The other would be held until the trend changed or I had a profit of 300%-600% or margin profits. This is based on experiences and feel, but how I determine when to sell for a profit. I use wide stops for my longer term holds, and tighter ones for the contracts I want to scale out of or trim and trail. The idea is to always be holding long if the trend is up, and position size accordingly to where your stop will need to be. I will go into much broader detail later, just wanted to give an intro into this concept.
6/4/13 Market Update
Guys and Gals,
I feel this is the best way for me to track, blog, create a journey, teach, etc. for my strategy and for you to learn.
Uptrending Markets
/ES, /NQ, /ZS, /NKD,
Downtrending Markets
/GC, /SI, /ZC, /6A, /6B, /6C, /6N, /6J, /6S, /RB, /HO, /ZB, /ZN, /SB, /CT, /KC, /LBS, /LE
Nontrending Markets
/PA, /PL, /HG, /ZW, /CL, /CC, /NG
In defense, some of these markets are trending more than others, and the "nontrending markets" could have arguments for others also...this is just how I see the market and the current slope of the 50SMA. One exercise I have learned to do is to look back 50 days or so and see what bars will be taken off or replaced...this will give you a good example of if a possible trend change could be coming or if the trend should stay up or down for the foreseeable future.
In terms of diversification, I like to keep position sizes small and try not to have too many open positions with markets that tend to correlate strongly. Once again, this is all person preference, but do not have 80% of your open positions in currencies.
Long
/NQ - This looks like a decent place to enter as the fast line is oversold and it would take a great sell of to change the trend, would not even opposed to adding another contract and selling out of that one on a rally.
/OJ - Probably a little late to the party but still think entry here is fine, trend is solid at moment. Breakout was weak in nature which is not good to see but is bull flagging on top of base, see nothing wrong yet...also fast line is going lower at a slow rate, should start to turn up on any strength.
/ZS - Probably a little late on this entry but just broke out and trend will be going up for a while unless steep selloff.
/NKD - Scary to buy into these steep corrections especially after losing the 50SMA but I think is clearly a buy here for a bounce play. Please position size accordingly though as stop would need to be much wider for this contract. Trend would start to turn down around 600 points from here so keep that in the back of your head for a stop.
Short
/YG - Trend is solidly down and has been for quite some time, I see no reason though to why initiating a position would be a bad thing.
/6A - All curencies are mostly in downtrends against the dollar, but the dollar is fairly indecisive right now. The fast line for most of these is around 0 and look fine for new short entries.
/6N
/J7
/6S
/SB - Very long trend down here but very strong...clearly late to short but nothing wrong taking a token position and scaling in more on strength and or the fast line moving up near 0.
/LBS - My favorite short here, super strong trend down and then sharp and quick counter trend move following by a reversal today. I would have been shorting more around the core yesterday and this AM, but now 1 contract seems fine.
/KC - Downtrend, resistance at 10SMA, fast line near 0, textbook short in my book.
/ZN - Probably late but trend seems to just be getting started...would like a token position here and adding on strength.
I am getting long winded here but if you follow daily it should be easier to keep up with. I will type up how I use stops and profit targets in the next couple of days. Good luck!!
I feel this is the best way for me to track, blog, create a journey, teach, etc. for my strategy and for you to learn.
Uptrending Markets
/ES, /NQ, /ZS, /NKD,
Downtrending Markets
/GC, /SI, /ZC, /6A, /6B, /6C, /6N, /6J, /6S, /RB, /HO, /ZB, /ZN, /SB, /CT, /KC, /LBS, /LE
Nontrending Markets
/PA, /PL, /HG, /ZW, /CL, /CC, /NG
In defense, some of these markets are trending more than others, and the "nontrending markets" could have arguments for others also...this is just how I see the market and the current slope of the 50SMA. One exercise I have learned to do is to look back 50 days or so and see what bars will be taken off or replaced...this will give you a good example of if a possible trend change could be coming or if the trend should stay up or down for the foreseeable future.
In terms of diversification, I like to keep position sizes small and try not to have too many open positions with markets that tend to correlate strongly. Once again, this is all person preference, but do not have 80% of your open positions in currencies.
Long
/NQ - This looks like a decent place to enter as the fast line is oversold and it would take a great sell of to change the trend, would not even opposed to adding another contract and selling out of that one on a rally.
/OJ - Probably a little late to the party but still think entry here is fine, trend is solid at moment. Breakout was weak in nature which is not good to see but is bull flagging on top of base, see nothing wrong yet...also fast line is going lower at a slow rate, should start to turn up on any strength.
/ZS - Probably a little late on this entry but just broke out and trend will be going up for a while unless steep selloff.
/NKD - Scary to buy into these steep corrections especially after losing the 50SMA but I think is clearly a buy here for a bounce play. Please position size accordingly though as stop would need to be much wider for this contract. Trend would start to turn down around 600 points from here so keep that in the back of your head for a stop.
Short
/YG - Trend is solidly down and has been for quite some time, I see no reason though to why initiating a position would be a bad thing.
/6A - All curencies are mostly in downtrends against the dollar, but the dollar is fairly indecisive right now. The fast line for most of these is around 0 and look fine for new short entries.
/6N
/J7
/6S
/SB - Very long trend down here but very strong...clearly late to short but nothing wrong taking a token position and scaling in more on strength and or the fast line moving up near 0.
/LBS - My favorite short here, super strong trend down and then sharp and quick counter trend move following by a reversal today. I would have been shorting more around the core yesterday and this AM, but now 1 contract seems fine.
/KC - Downtrend, resistance at 10SMA, fast line near 0, textbook short in my book.
/ZN - Probably late but trend seems to just be getting started...would like a token position here and adding on strength.
I am getting long winded here but if you follow daily it should be easier to keep up with. I will type up how I use stops and profit targets in the next couple of days. Good luck!!
Introduction and Strategy
Hi! Just wanted to say welcome and thanks for visiting this blog. I wanted to share my market view of the roughly 30 liquid futures markets most everyday to help educate those trying to learn or looking for information and also put my thoughts onto paper. I feel this exercise will serve as my "trading journal", which I feel is a very good tool to use and a must if serious about your trading.
My style for trading is simple. I use a discretionary trend following approach to hold "core" positions in the markets and trade around these positions when I see a favorable risk reward scenario. My basis premise with this is you should be buying dips in strong up trending markets and selling rips in strong down trending markets. The stronger the trend of the market, the better your risk reward is.
So how do I determine the trend first off? I keep it as simple as you can, and use the 50SMA. This seems to work very well for me but some others will probably work if you need be. The only other indicators I have on my chart set up is the 10SMA and a 3,10,16 MACD. The 10SMA is a good guide to use for strongly trending markets, as it tends to follow this very well. The MACD I use is roughly the indicator used in SMR charts and their charting service. I started using this set up after I read Chick Goslin's books Trading Day by Day. It is truly the book that changed my trading and my approach...I would strongly recommend reading it. How this MACD indicator works is you have a fast line and a slow line. The fast line is the one I tend to look at more, as I use this as my overbought/oversold indicator. The slow line is a secondary trend indicator, or roughly a 3 week moving average of the fast line. During my posts, you will understand how I use this set up more in detail.
So how do I plan to use and set up this blog?? My intention in starting the blog is to have a "model" portfolio to showcase how I would trade my plan, but no actual trades or positions. One thing I have learned on my trading journey is you have to think for yourself. You have to own your own trades and position size according to your own risk tolerance. This is the single piece of advice I would give to new traders who want to become a great trader. Everyone gets what they want out of the market. If you truly do want to be successful you need to stick to this.
More to come, but thank you for the views and follows, and I hope you and I both grow together on this trading journey!
My style for trading is simple. I use a discretionary trend following approach to hold "core" positions in the markets and trade around these positions when I see a favorable risk reward scenario. My basis premise with this is you should be buying dips in strong up trending markets and selling rips in strong down trending markets. The stronger the trend of the market, the better your risk reward is.
So how do I determine the trend first off? I keep it as simple as you can, and use the 50SMA. This seems to work very well for me but some others will probably work if you need be. The only other indicators I have on my chart set up is the 10SMA and a 3,10,16 MACD. The 10SMA is a good guide to use for strongly trending markets, as it tends to follow this very well. The MACD I use is roughly the indicator used in SMR charts and their charting service. I started using this set up after I read Chick Goslin's books Trading Day by Day. It is truly the book that changed my trading and my approach...I would strongly recommend reading it. How this MACD indicator works is you have a fast line and a slow line. The fast line is the one I tend to look at more, as I use this as my overbought/oversold indicator. The slow line is a secondary trend indicator, or roughly a 3 week moving average of the fast line. During my posts, you will understand how I use this set up more in detail.
So how do I plan to use and set up this blog?? My intention in starting the blog is to have a "model" portfolio to showcase how I would trade my plan, but no actual trades or positions. One thing I have learned on my trading journey is you have to think for yourself. You have to own your own trades and position size according to your own risk tolerance. This is the single piece of advice I would give to new traders who want to become a great trader. Everyone gets what they want out of the market. If you truly do want to be successful you need to stick to this.
More to come, but thank you for the views and follows, and I hope you and I both grow together on this trading journey!
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