This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Futures, published on Tuesday, September 5, 2017.
There is a trade opportunity based on a potential breakout in the Chicago Wheat futures market. The market appears to have bottomed out setting up a twelve-month contract low at 422’4 (8/29/17) moving into the harvest and fall season. The MACD and Stochastic indicators have both shifted bullish even if Trend Seeker is still down, albeit with a weak ranking. Anticipating a change in Trend Seeker on the breakout.
Buy the December 2017 Chicago Wheat on 447’0 using a stop order, GTC.
Initial Margin = $1,320 Maintenance Margin = $1,200
Stop loss: Place sell stop at 426’0 below recent contract lows, GTC. (Initial risk: $1,050)
Target: Place sell limit at 510’0, near the 50% Fibonacci Retracement of the last sell-off, GTC. ($3,150)
December 2017 Chicago Wheat chart from BarChart
You can trade the mini Wheat futures contract with an Initial Margin of $264 and Maintenance Margin of $240. The risk is $210 and the profit is $630 based on the same price points 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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