Trade Aptitude

Yesterday’s results: Neither trade idea triggered. 

Today’s Best S&P Futures Turning Points: Buy 5422.25 stop 5416.50. Short 5581.25 stop 5584.75.

The World Index: (+100/-100) remains at -7 with sentiment mixed and volatility low. 

Catalysts: Fed’s Barr @ 10:00, Bowman @ 12:15. Waiting for CPI tomorrow.  

Quick Tip: Moving Stops

The stop loss placement decision is made before entry. It’s at a price where your choice of direction is proven wrong. 

You can always tighten the stop while the price is moving in your direction to minimize the risk. No one will tell you to increase your risk by moving the stop farther out if the price is going against you. Another alternative is to not move the stop at all and manage out of the trade from the profit target side. 

I know successful traders that have opposing views on this subject. The correct answer is not simple, though. You need to know their trading style and risk tolerance to truly understand their answer. 

Trader A enters momentum moves and adds to his position as price goes in his direction. He trails his stop based on chart features and volatility. 

Trader B trades a reversal strategy that anticipates a turning point relatively far away. He understands the spiky nature of his asset and chooses to give it room by not adjusting his stop. He is focused on reaching his target.

Who is correct? Both. For their own style. 

What’s correct for you? Now you know it depends on your style and risk tolerance. Which means the answer may vary depending on which strategy you’re trading at the time. Practice in simulated mode to get a better understanding of what you should be doing. 

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!