The Daily Market Forecast... Lesson Day

Today’s Lesson: Move Stop or Not?

Blindly saying “never move your stop” is saying market conditions don’t change, which makes no sense at all.

In our trading room we find that aggressive stop movement is warranted in certain market conditions. Slow stop movement is warranted in other conditions. NOT moving the stop is flat-out WORSE (both mathematically AND psychologically).

Let’s define the difference between “aggressive” and “slow” stop movement. Using our strategy rules the aggressive rules move the stop to breakeven for the trade itself after target 1 is filled, and to breakeven for remaining contracts after target 2 is filled.

Our slow rules move the stop to a trailing pivot after target 2 is filled.

Choice depends on market conditions. A trending market deserves time and patience. Use the slow method. A choppy market requires fast reaction. Use the aggressive method.

Using Friday’s suggested levels (chart above) the difference in the three methods is huge. Trading 3 contracts:

  1. No stop movement loses 22.50 points
  2. Slow stop movement loses 1.50 points
  3. Aggressive stop movement gains 6 points.

Was Friday a trending or choppy day? We opened at 4536.00 and closed at 4536.50 (Doji). That’s hindsight, though. How can you forecast the day price action? Globex range, which suggested a choppy day with Day range less than average. Nothing works all the time but a reliable indicator for Day Session action is Globex range.

OK, this is one example. I chose it because the outcome is crystal clear. In reality you would never depend on small sample size to make decisions about probabilities. Our database of trades is nearing 10,000, so we’re confident.

For Mon 211025 (Plenty can change by the open, be aware.)

Globex Review: Two small winners, although one is still open and has the SKY as its target. 😊

Day Session Analysis: Sentiment is mixed. Stats are mixed as well. Willing to trade either direction under Alt1 stop movement. Monday (both sessions combined) garnered 27% of all the gains over the past 5 years in dollars. Reversals and Breakouts are about even. Trading ES/CL/GC using BB Rev with filters (download the new Edge). Looking at both ends of the credit spread. 

S&P 500 Futures CPL: 4534/4537.25. We’re trading ABOVE the CPL (short edge below, long edge above) and ABOVE the equilibrium 4532/4534.325 (open below = short edge, open above = long edge).

The World Index: (+100/-100) DUMPS from +57 to +14 in a world of low volatility mixed sentiment (shorts should modestly outperform longs).

Catalysts: Maybe Chicago Fed National Activity Index @ 8:30 or Dallas Fed MFG @ 10:30. All eyes on big tech earnings this week. 

Trends: 60 min RANGE, daily UP starting to range (shorts should outperform longs).

Inside day: Win/Stop% about the same, longs delivered 40% more profit. Opening +0.10%. $TRIN XMA steady at 1.03. Long term outlook stays long.

Globex: The range of 23.75 suggests a day session range around 40 points on a FALLING ATR of 43.90. Prior forecast around 36 points, actual 36.25.

Trade Well,

Mike Siewruk

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


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