This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Futures, published on Tuesday, July 25, 2017.
There is a trade opportunity based on potential breakout in the Soybean futures market. There was a 1-2-3 Top Formation in place until today’s volatile market surpassed the number two point. However, the breakout to the downside in still in play. The Stochastic indicator is showing strong Momentum to the downside. The Trend Seeker is up, but with a weak ranking. The MACD indictor is shifting to a bearish trend.
Sell the November 2017 Soybean futures contract on 991’0 on a stop order, GTC.
Entry is a break today’s low (992’0). Initial Margin = $2,310 Maintenance Margin = $2,100
Stop loss: Place buy stop on 1014’0, above recent highs and halfway of today’s trading range, GTC ($1,150)
Target: Place buy limit on 960’0, above the gap on the chart, GTC. ($1,550)
You may trade the mini Soybean futures contract with an Initial Margin of $462 and Maintenance Margin of $420. The risk would be $230 and the profit would be $310 based on the same prices above.
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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.
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