Trade Aptitude
Results of Monday’s Best S&P Futures Turning Points: Shorting 5236.75 picked the top of the session and ran for 26.50 points before closing the session +22.50.
Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets):
Buy 5184.25 stop 5179.00. Short 5221.50 stop 2527.25.
The World Index: (+100/-100) plummets from +57 to -7 with major world markets mixed on lower volatility.
Catalysts: Building Permits & Housing Starts @ 8:30. Waiting on FOMC tomorrow.
Quick Tip: Exit On Close
If you traded yesterday’s short suggestion (see chart) and let it ride to the close you had an awesome start to your trading week.
However, watching that open trade all day would have been difficult given the swings and spikiness of the price action. Just about any trailing stop rule set would have limited your potential.
There is one great trader I know of who uses the Exit On Close for many of his intraday trades. Larry Williams. In his book Long Term Secrets to Short Term Trading, he writes that after extensive research he nets out better by not watching the trade and simply leaving his stop active and returning near the close to exit.
This is not a suggestion to blindly do the same. You should research your own strategies and determine if that is an applicable exit. Clearly it works for Larry but verifying using your own data makes sense.
An alternative that might get the best of both worlds is to use a trailing stop that is very wide. Again, you won’t have the confidence unless you perform the research on prior trades. Invest the time.
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Trade Fearlessly,
Mike Siewruk
P.S. If you have any questions about our futures/options trading room, email me for a private Zoom session. We'll discuss whether we're a good fit or not.