Funded Trader Trade of the Week

[TopstepTrader 10]

FUNDED TRADER TRADE OF THE WEEK

 

This week’s trade of the week is again in Gold. After opening lower, short term buyers moved the market back to settlement, searching for balance and looking to bring new buying into the market. A narrowing series of lower highs and higher lows alerted our trader to a potential energy build in the market. Watching for increasing volume and price action on highs revealed a lack of new buying. Suspecting the short term buyers and not seeing follow through, our trader began to get nervous and liquidated accumulated long inventories. At 10:11 AM CST, our trader entered a short position at $1434.90 with a stop loss just 10 ticks higher. Within a few minutes, price action began to confirm his thoughts and at 10:42 AM CST, he was able to cover his position at $1428.60 for a profit of $630. This showed great prediction of participation of the short time frame trading herd.

 

JOHN HOAGLAND'S SCOUTING TIP OF THE WEEK

 

As day traders, we need to constantly account for market state. Studying charts from longer term to shorter term and being aware of what traders of all time frames MIGHT be thinking can lead you to be positioned with the longer time frame traders (where you want to be) as they are the ones who really make markets move, even for your short time frame trades. Understanding how the masses of shorter time frame traders make mistakes collectively will help you avoid the short term "herd" mentality trades that get stopped out or just don't work. Remember - 90% of traders fail - do what they do and you can expect the same results. Avoid the herd!

[-TopstepTrader- 10]

Funded Trader Trade of the Week

 

James Dalton had it right when he said, "The best trades often fly in the face of the most recent market activity." Our trade of the week is a great example of this Dalton quote. One of our ES traders truly acted as an innovator with his impressive trade. After a convincing short term bear trend, sensing falling volume in the direction of the trend, he entered a long position at $1598.25 with a 10 tick stop. Waiting patiently and giving the market the chance to retest the level, a reversal in the trend yielded him $362.50, a profit almost three times the risk. In a longer time frame, this turned out to be the low of the day and by the close could have been worth over two thousand dollars per contract.

 

John Hoagland’s Scouting Tip of the Week

When I was a beginning trader, situations similar to this Trade of the Week had me selling lows, buying highs, and scrambling to get out when the market turned against me. With coaching and experience, I learned to recognize this urge in a different way and change my response. It wasn’t easy and this was pit trading, but it still comes down to reading the volume and recognizing the change in participation. Sensing the rejection of price levels early, as well as creating correct intuitive response to your emotions can help you see these situations and respond accordingly. A BIG word of caution: I am in no way suggesting it is good trading practice to try to pick bottoms and tops. Vast experience is the only way to learn to trust TRUE intuition where these locations might be. These are not only some of the most difficult trades to identify and execute, but they can be risky. In fact, old school traders used to call it "standing in front of a freight train."