Crude's 2-month Old Downtrend is Still Alive and Kicking

[MichelGJulien 10]

As it is often the case after two consecutive days of definite trend direction, today was very choppy and directionless. Needless to say that the downtrend that's been prevailing for the last 2 months is far from over. In my book the ultimate destination is still the $91 level. Bulls have had absolutely no resilience lately and it shows clearly that they have thrown in the towel in my opinion. On our 4th day in the trading room, we were presented with only one valid opportunity to enter long. It came just before lunch and turned out to be only a small winner. It would have been a more profitable trade if I wouldn't have screwed up my entry. Instead of getting in long at 94.23 as my signal dictated, I entered a bit late at 94.25, a small 2 ticks difference. Nothing to be concerned about, right? Well, not so fast. In fact it made a big difference in the trade management later on.

 

Here's why. When I'm up in profit by a certain number of ticks, I first move my stop loss to break-even. A little more profit and I move my stop loss into profit territory. And that's exactly when that 2 ticks difference is important. This can be the difference between being stopped out of your trade prematurely or reaching your profit target. Well, you guessed right. In our case today, those little 2 ticks transformed a +19 ticks "sure" profit into a +4 ticks gain only. In reality we are talking about a +15 ticks difference. Not so insignificant after all. Two things are crucial when you are day trading: 1) your entry timing and 2) your trade management afterwards. Mistakes on one or the other are not forgiven by the market.

 

I still haven't changed my mind: $96 is in the cards

 

Talking about the market, it opened at 94.26, i.e. within yesterday's range but outside of the value area. The 2 unfilled gaps in the vicinity (one above and one below) were never seriously challenged. The Initial balance at 49 ticks was a good 20% below its 10-day average that, incidentally, was down for a 12th consecutive day. Volume as well as volatility is slowly vanishing it seems. Tomorrow, it is NFP day and a Friday. This could be another day full of challenge. We'll find out soon enough.

 

We took 1 trade today:

 

1. Long 94.25 at 11:36am, exit 94.29 at 12:03pm for a +4 ticks profit. Result: +4 ticks today

[MightyMouse 12]

  MichelGJulien said:

It would have been a more profitable trade if I wouldn't have screwed up my entry. Instead of getting in long at 94.23 as my signal dictated, I entered a bit late at 94.25, a small 2 ticks difference. Nothing to be concerned about, right? Well, not so fast. In fact it made a big difference in the trade management later on.

 

Here's why. When I'm up in profit by a certain number of ticks, I first move my stop loss to break-even. A little more profit and I move my stop loss into profit territory. And that's exactly when that 2 ticks difference is important. This can be the difference between being stopped out of your trade prematurely or reaching your profit target. Well, you guessed right. In our case today, those little 2 ticks transformed a +19 ticks "sure" profit into a +4 ticks gain only. In reality we are talking about a +15 ticks difference. Not so insignificant after all. Two things are crucial when you are day trading: 1) your entry timing and 2) your trade management afterwards. Mistakes on one or the other are not forgiven by the market.

 

 

 

You could have set your stop loss where you should have originally entered if exactness is important to you. If you got stopped out, you would have lost only 2 ticks plus commissions instead of just the commissions. If you held the trade, you could have made 17 instead of 19 ticks.

 

Mistakes happen. Sometimes you benefit from them too.