Trade Aptitude

Results of Thursday’s Best S&P Futures Turning Points: Neither level triggered.

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4336.25 stop 4332.50. Short 4397.50 stop 4402.25.

The World Index: (+100/-100) plummets from +29 to -71 with all major world markets very Bearish. 

Catalysts: UofM Consumer Sentiment @ 10:00. Hangover from Powell’s comments.   

Quick Tip: Stops

To survive and thrive in trading managing risk is critical. The basic component in your risk management plan is the stop loss (how much you are willing to lose on each trade). 

There are many types of stop loss methods including:

1. Dollar

2. Maximum Adverse Excursion 

3. Volatility

4. Moving Average

5. Time

6. Opposing signal 

7. Percent Retracement

Like your choice in style of trading, your stop loss method needs to resonate with your personality. You must trust, even like it. 

Given that markets change in volatility constantly the volatility stop is an excellent choice. One simple formula is using a multiple of the Average True Range. This method will tighten the stop when the market is calmer and widen the stop when the market is volatile. Adjusting your position size based on this stop allows you to manage your risk fairly for all market conditions. 

Hint: If this method resonates with you, consider adjusting your profit targets based on volatility as well. It doesn’t make sense to expect a big move to a faraway profit target when price is moving in a tight range, does it? 

You can also combine stop methods. For example, as price is moving rapidly in your direction switching to a tighter stop, maybe a percentage retracement, could capture more of the gain when the move ends. 

How do you know which to use? Research, testing, and experience.

Join our team. You can learn multiple strategies tuned for different market conditions and trade live with us for 30 days. New reduced price offer. Money back if you’re not blown away!

Trade Fearlessly,

Mike Siewruk

P.S. Feel free to share this newsletter with your trading buddies.