The Daily Market Forecast... Lesson Day

Today’s Lesson: How to exit with a profit. I’ve interviewed dozens of superb traders on this topic and the answers often conflicted. Understood. Everyone has their own style. Finding your style will take time, trial, and error.

If you prefer to have a few big winners and plenty of smaller losers then this trade was likely a loser, maybe a trail-stop breakeven or small winner at best.

If you prefer more winners, you likely took some money out of this trade and had a modest winner. But where?

One approach our team uses is based on hard evidence. We’ve documented thousands of trades and know with near certainty the probabilities of movement. For the S&P futures, we know that 2 points will be achieved 60% of the time and 4 points 40% of the time.

Given a 7.75-point run, two targets banked 6 points and any remaining contracts gave a little back or exited at breakeven, depending on your stop movement philosophy.

When applying this approach you obviously must adjust the targets for the asset you’re trading. You couldn’t use the same moves for Gold or Oil, for example.

For Wed 210922 (Plenty can change by the open, be aware.)

Globex Review: Only two takeable trades, both small winners. Price moved above both the CPL and Equilibrium levels.

Day Session Analysis: Sentiment remains bullish. STATS are mixed, trade either direction. Mindful that the morning before FOMC can be dull and avoiding the immediate reaction to the announcement (and more importantly the press conference) is sensible. Wednesday (both sessions combined) garnered 24% of all the gains over the past 5 years in dollars. Reversals (74%) crush Breakouts (26%).  Trading ES/CL/GC using BB Rev with new filters. Standing back on credit spreads.

S&P 500 Futures CPL: 4351.25/4359. We’re trading ABOVE the CPL (short edge below, long edge above) and ABOVE the equilibrium 4350.25/4353.75 (open below = short edge, open above = long edge).

The World Index: (+100/-100) EASES from +57 to +36 in a bullish-leaning mixed world (short edge).

Catalysts: EIA Petroleum Status @ 10:30. FOMC announcement and press conference @ 14:00/14:30. Evergrande default fears east.

Trends: 60 min UP starting to range, daily DOWN (short edge).

Low outside day: Win/Stop% about the same, longs CRUSH shorts earning 10X the profit.  Opening +0.70% (short edge). $TRIN XMA stable at 1.12 leaning oversold now which means long term buyers are stepping in (long term outlook: stay long).

Globex: The range of 51.75 (possibly wider by the open) suggests a day session range around 65 points on a LEVELING ATR of 53.05. Prior forecast around 66 points, actual 53.25. FOMC can change this.

Trade Well,

Mike Siewruk

P.S. For a free “mini-course” packed full of lessons on HOW to trade the Blog… Watch this video.