Trade Aptitude

Yesterday’s results: Buying 5781.50 picked the bottom of the session and ran for 26.75 points just before the close. 

Today’s Best S&P Futures Turning Points: No high-probability levels today. 

The World Index: (+100/-100) dips from +86 to +57 with all major world markets Bullish except the S&P futures. 

Catalysts: PCE Price Index @ 8:30. UofM Consumer Sentiment (revised) @ 10:00. Fed’s Bowman @ 13:15. 

Quick Tip: Trailing Stops

The technique of adjusting your stop loss so it follows or “trails” price while moving in your direction is attractive. There are several ways to place a trailing stop. The first decision you must make is whether you want your platform to automatically adjust it or you to manually adjust it. 

For automatic trailing stops any decent trading platform will allow you to enter the trailing stop by points, dollars or percentage. If your initial stop was 4 points away, let that be the trailing stop. Simple, but that doesn’t adjust for volatility changes. 

If you’re willing to manually move the stop there are chart patterns and indicators that can smooth out the noise of the price move. Price pivots and moving averages are common. 

One less common indicator you can use is the Parabolic SAR. This was developed by the late Wells Wilder (along with RSI & ATR). It has a built-in acceleration formula so that it starts far enough away and the longer timewise price moves in your direction the tighter the stop becomes. Your trading platform will likely have this built in. 

Looking at yesterday’s trade you’ll see how the Parabolic SAR gets progressively closer as price extends in your direction. 

Caution: You may be seduced into thinking this is also a great entry technique. The visual presentation can fool you. There will be too many periods where you are whipsawed out of your trades with too many stops in a row. Better to use it for trailing stops and possibly confluence of a trend change. 

Our trading teams focus on day trading futures and swing trading options. Maybe you'll fit right in. You can try either or both risk-free. 

Trade Fearlessly,

Mike Siewruk

P.S.  Feel free to pass this along to your trading buddies. Share in the wealth!