This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Coulda, woulda, still glad I didn’t. This is a solid trade setup, but it doesn’t meet my current risk parameters. I’ve got to see more of these, and think about how I can minimize my risk.
One of the drawbacks of trading futures is the inability to use proper position sizing to keep your risk within certain levels. Big traders like Zoomie and Richard can get away with it, but small timers like me can’t trade any smaller.
Anyway, here is the trade. I saw it in real-time, but didn’t pull the trigger. At 11:00 am, crude filled the gap, and stochastics was not confirming the highs. That was the first warning signal. It sold off for a bit, and was forming a base that was bumping against the trend line from the morning lows. The TL is highlighted in blue. Look at the PnF chart. At the same point (blue line), the PnF chart was giving a double bottom sell signal. An initial target would be the previous swing low (yellow lines on both charts.)
Although it was a solid trade, it paid out slightly over 1:1 depending on where you took profits. Its just another example of how point and figure charts can help identify support and resistance levels to enhance your trades. Or possibly how candlestick charts can improve your PnF performance.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
June 5th, 2007 at 4:28 pm
In a few weeks, when we have a clearer picture of what works and what doesn’t, I’ll collect a subset of these posts in a PnF section on the “best of” page.
June 5th, 2007 at 6:16 pm
i’m thinking it may take longer than that, but i’m looking forward to it…in the past, i’ve run across stuff that i thought worked, but it turned out it was only temporary