This originally appeared as a blog post in Scott Hoffman’s Futures Insight Blog on Tuesday, July 08, 2014.
Of the three days in the Taylor Trading Technique cycle, I often don’t look to trade markets that are on the Sell day, as Sell days don’t have the clear directional bias of a Buy or a Sell Short day. However, there are some setups that can yield good trades on Sell days.
There was such a trade today in the crude oil futures. On a TTT Sell day we often look for a market to rally back up to a previous day high so if a Buy closes well below its session high, we can look for a decent sized rally in the following (Sell day) session.
Crude oil futures had such a setup today. August crude oil futures had a session high of 104.09 and closed at 103.53 on Monday. This gave a potential move of 56 cents / barrel for a Sell day rally on Tuesday.
Crude traded weak overnight, spending most of the session slightly below the unchanged level. It began to rally as we moved toward the US open and I pointed out the buying opportunity in the morning STI watch list.
Around 8 AM CT crude rallied above Monday’s close, triggering the long entry I suggested around 103.53. The initial stop loss could go either below the previous overnight low of 103.31 or the session low of 103.21.
Moving above unchanged accelerated the rally, and it reached our objective of Monday’s high (104.09) around 8:30 AM. I would be content with this profit as the daily trend is down and the market couldn’t maintain itself above Monday’s high.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.