Don’t make this mistake Day Trading Crude Oil and Gold Futures

845am est

- The dollar index is trading at the highs of the price channel, so we expect the price to drop off these highs
- Look to buy at support on the gold, euro, Russell, crude oil when the dollar is dropping off resistance
- We have slow speed going into the US OPEN @ 930am est
- We have news @ 900am est which will hopefully give us some more action on these charts.
- Crude oil futures are trading sideways from support at 84.81 and overhead resistance at 85.00

o We want to sell below 84.81, but we’ve since identified some key support on the 21 range chart that may hold us up.

900am est

- Home price news came out at 900am lower than expected
- This is the 2nd week in a row with lower than expected home prices
- How does this affect our markets?

o Bad for the USD
o Good for Gold, Crude, Euro
o Now lets see what the consumer confidence comes out at 10am est

 If confidence is lower too, look for gold to test those highs of the wedge at 1400.0

1040am est

- The dollar bounces off the previous HOD
- This tells us that the buyers are still in control, so possibly expect the highs to be tested once again
- If the dollar rises to the highs again, we want to be short on the markets we’re trading.

Day Trading the News Strategy; Crude Oil, Gold, Euro and Russell Futures

- Day Trading the News

o Pros

 We all can easily see the biggest moves come from news releases

o Cons

 Tough to predict what the market reaction will be
 Lack of liquidity around the times when the news is released can be VERY dangerous to trade around.

• Tough to get in and tough to get out

o How do I conquer this obstacle?

 Focus on 1 market and 1 news event at a time, and master it!

• Crude Oil Inventories, Wednesday @ 1030,
• 13-range chart of Crude Oil Futures as my focus.

 Pick one of the most important news events that we see each week/month/quarter

Existing Home Sales
Pending Home Sales
New Home Sales
Housing Starts
EIA Petroleum Status Report (Crude Inventories)
EIA Natural Gas Report
Producer Price Index
Philly Fed Survey
GDP
Durable Goods
Industrial Production
Personal Income / Outlay
Jobless Claims
Consumer Sentiment
FOMC Day
FOMC Meeting Minutes
Retail Sales (mon)

• Crude Oil Inventories on Wednesdays
• Im watching crude oil futures
• I want to be an expert on this news event

o What has the previous announcements done for the market?
o What other news events will have an impact on this event?

 Example: I will use durable goods to predict what the reaction will be to the Crude Oil inventories
 Once I understand this news event, now lets prepare to trade it

• Open your daily chart, look for the most important levels of support and resistance

o I use range charts, so use 144-range as your daily

 Slower timeframes will be used to trade the news

• Look for the BIG Picture on the Daily chart
• Plan ahead of for the news release and what you expect to happen
• Look for entry pattern on the 34/21/13-range charts

- Fast Track Method

o Simple and effective method for new traders to learn:

 Discipline and patience
 How to handle a loss
 How to read tape, volume, speed
 How to wait for the best patterns

o 11_24_10MembersTraining
o Help you learn and EARN at the same time

- When do the other markets rollover?

o Gold every other month
o Crude every month
o Dollar Index rolls over quarterly, just like the e-mini and the currencies, bonds, DAX,
o We rolled gold forward to the 02-11

- Average True Range

o ATR = the range in the market you are trading

o I want to see ATR rising, not falling

- How do we set up the pace of tape indicator (POT)

- Use on a 10-Second chart for the pace of the tape in a very real-time format.

• Can be used on any timeframe and any symbol
• You can use three (3) different colors to make different distinctions in the pace of the tape

o Red: Slow Speed of the Tape, Signals a Higher Risk Trade

o Yellow: Moderate Speed of the Tape, Signals a Lower Risk Trade

 o Green: High Speed of the Tape, Signals the ideal environment to trade

o Use The ‘Pace of Tape’ Chart Template to ensure all the correct parameters!

o The EURO has its own Pace of Tape template, with different setting.

- Please Note:

- We use a different TEMPLATE for the Euro and the Dollar, so when loading your Pace of Tape template, look for templates designed for the Dollar & Euro in the description.

- What type of entries do we use?

o Use limit orders and buy/sell stops
o Trap Entry technique

 Watch the video in the advanced course
 We will train you on this

o Never use market orders, too sloppy

- Is the Russell correlated with the dollar index?

o Everything is dollar-correlated

- Interactive Brokers, stay away!

o Too high fees
o Too high margins
o They use filtered tick data (no!)

 Two connections to power your charts

• Connect to the IB platform
• Then also connect to your NT charts
• That’s 1 too many connections, too many moving parts, tough to keep it stable

o Think or Swim also has very sluggish execution

- Auto-Trader Beta

o More in Wednesday’s members-only training
o More coming soon to incorporate this into our trade room

- Any chance of a Euro reversal?

o BUY THE lows of the price channel above 1.3110
o Take profit at 3150 and 3200 PLOD

Day Trading Morning Prep: Crude Oil, Gold, Euro and E-Mini Russell Futures

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Gold Futures:



click to enlarge



Our 55-range chart shows a well defined bullish price channel, and we are coming off the highs of this channel at 1374.5

The best option when trading a price channel is to buy the lows and sell the highs.

Look to buy the support at 1370 with a wave pattern long, final target at 1380.0

If we don’t retrace all the way back down to the PHOD of 1370.0, look to sell the highs of 1380.6 and cover that short at 1370.0 with a 2-step price reversal pattern.

I can see long term momentum is curling over from the top, this means im expecting gold to drop down to 1370.0 this morning before we see it go back to the highs, so I will plan to buy support as soon as the pattern triggers.

If price breaks below 1370.0 this will signal the market is rejecting higher gold prices, so look for a wave pattern failure short entry below 1367.4 and cover that short at 1361 or the trend line support at the bottom of this price channel.

Be sure to look for a buying opportunity on gold if we get back down to the bottom of the channel, around 1356.2 would be an excellent place to get long at support (the lows of the price channel)

Crude Oil Futures:

click to enlarge

Crude oil futures are trading at the highs of a price channel. The best way to trade a price channel is to sell the highs and buy the lows.

Looking for a 2-step reversal pattern short below 84.88 with a final target of 83.59

Beware of the trend line support on the way down, so scale out of your trade by taking ¼ of your profit at the trend line around 84.00 on the way down with this short trade.

I will also look to buy support at the lows of this price channel, but as you can see we will be waiting to buy the lows of 81.00 until possibly later this week.

Im going to have to wait to break 86.00 to get long so we can avoid the mess of overhead resistance at 85.72

You are going to see a lot of buying pressure above 85.72 as trader try to force a breakout, but remember to stay focused on speed of the tape, momentum, and read the tape to tell if we are indeed breaking out, or if this is just a fake-out.

The highest percentage trade is selling the highs, so look for momentum and price action to confirm the 2-step short below 84.88 and look to ride this price all the way down.

Euro Futures:

click to enlarge

The Euro is trading in a strong down-trending price channel.

The best way to trade a price channel is to sell the highs and buy the lows

We are under the lows of the channel, so we have a few options

o  I can buy the lows of 1.3000 and wait for price to eventually re-enter the price channel

o  Of I can wait for price to move above the PLOD, which confirms the buyers are in control, which gives us a lot more confidence on the trade I will look for entry long today above the PLOD 1.3063 and taking profit on that trade at 1.3137

-     The higher percentage move is to buy the lows, so look for the 2-step reversal pattern off these lows and be patient to wait for price to enter back into the price channel from the bottom

o  The goal is to hold this long trade all the way up to 1.3400 the highs of the price channel

-      If we continue to see the dollar rise today, the euro will keep falling, so im looking for the short entry below 1.2978 or more conservatively below 1.2955

       Remember that the euro likes to tip-toe down on these types of patterns, so be prepared to take some jittery moves on the way down.

I     Would consider the Euro to be oversold right now

o  Below the lows of the price channel

o  Lower lows and lower highs on momentum

o  Momentum is curled up from the lows

o  Considerable down trend lasting multiple weeks

       With that said, this euro can easily keep going, but the higher percentage trade is the buy, so trade with that on your side, and wait for the best pattern to buy at support.

E-mini Russell Futures:

click to enlarge

    The Russell is trading in another price channel

      The best way to trade a price channel is to sell the highs and buy the lows

I     Can see trend line support around 723.5, so look to buy that level as support with the final target of 732.1

       Look for a trend line break selling opportunity below the 723.1 and look to cover the short at the lows of the price channel around 713.3

       If we miss the ability to buy the support then I will look to sell the highs of 732.1, 733.6 and 737.0 on the way up.
 
      We see trend line resistance overhead at 737.0, so look for a price reversal 2-step pattern Short at this level to profit from this resistance at the highs of the price channel.
  
       Take profit from selling the highs ½ at the trend line support, and be patient to cover the final ½ at the lows of the price channel.

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Day Trading Failure Patterns on Crude Oil and Gold Futures with Dollar Index Correlation

We know we have contract rollover, so beware that volume may be a little slower going into the first hour of trading on gold

People are coming back from the holiday, so expect them to stumble onto the same thing we did and have to take the time to roll forward.

Its Monday morning, after a holiday weekend, so expect a sluggish open to the day as people get back to their desks. Good time to plan your trading for the end of the year.

845am est

- We’re looking for the dollar index to give us some clues to the best trading opportunities coming our way this morning

o Strong bullish price channel (dollar is trending up)
o Wide trading range (good)
o Top of the price channel, so look for the DX to drop off the highs

 Look for buying opportunities on the gold, crude, euro, Russell, etc

o Support at the PHOD (trigger line) so look out for the bounce off the PHOD to see new highs being tested.

o Set my price alert indicator for the HOD and the swing low below the trigger line

 High of 80.875
 Low of 80.655

900am est

- We open our 55-range chart for a slightly slower look at the gold futures and we notice that today on contract rollover we have ourselves in the absolute middle of the trading range

o Resting on the trigger line as support
o Flat price action on the faster timeframes
o Looks very concerning right now

915am est

- Gold futures are trading inside the range from last week
- We notice a strong wedge pattern has the price action contained sideways and sluggish

- We tried to test the highs, didn’t work and came back down, then tested the lows, didn’t work, and came back up. Now price sits at the open of the trading day, and we need to wait patiently for the price to test the highs or the lows.

920am est

- The alarm at 915am est went off, everything higher risk until 935am, after the US Open
- The crude oil futures market is showing us at the highs of the price channel on the 55-range chart
- Now im looking for opportunity to sell the highs of 84.70 and take profit on the way back down.

1025am est

- We expect to see 1030am news and the emini reversal in 5 mins

- The crude oil futures are sitting on the support trend line just above 84.00 and trying to decide which direction it wants to move

o If we hold this support, expect us to test the HOD
o If we break this support, expect us to test the 30’s
o It all depends on what happens RIGHT HERE on crude oil.
o The gold market is trading back in the middle of the trading range after testing the lows and giving us 2 opportunities to profit.

We trade the higher volume contract as day traders, so gold indeed had contract rollover. Below are some helpful links for contract rollover.


Look for this on contract rollover

Day Trading, easy way to find patterns

Day trading strategy, contract rollover

Day Trading the News; Trade what you SEE not what you THINK

We have multiple news events at 830am this morning, so it’s going to be more difficult to read the news as well as we usually do.

Jobless Claims and Durable Goods at 830am, we have 2 major events that need to be addressed.

So how do we trade it? We wait for the MARKET to react, and we don’t predict.

More news variables will mean you need to wait longer to see the actual feedback from the market

- Read the tape
- Watch the speed
- Look for your entry patterns, after we see them.

We have crude oil inventories at 1030am est, this is usually on Wednesday, but we usually don’t have the 830am news.

This means the Crude oil futures market is on our watch list today as being a potential disaster waiting to happen.

We know the crude has a different personality before and after the inventories number, so watch closely at crude right now.

Looking at the crude slower timeframe (34 range chart) we can already see the big candlestick WICKS and sideways price action lacking conviction for where it wants to go next.

Remember we have a holiday weekend with Thursday and Friday closed, so expect people to be hitting the exits earlier than normal.

We usually see action into 1230pm EST, today look for that to slow much earlier.

So how do we trade this today?

- Watch the reaction to the news here at 830am
- Sideways markets right now, so buy the lows and sell the highs
- Dollar is flat, so patience will be the key
- And don’t try to force any late-morning trades if the volume dries up
- Get in, get our money, and get out!


830am est

- We’re waiting on the release of 830am jobless claims and durable goods orders

- The dollar index pushed its new highs overnight, and now drops into a sideways trading range off the highs of the price channel

o Sideways dollar = sideways market on everything else so be patient
o Plenty of downside risk on the dollar
 Dollar drops = everything rises
 Looking for buying opportunities at the lows of the price ranges today as the higher % opportunities

- Choppy and low ATR, but slightly bullish

o This means we need to be patient, wait for this price to improve

- Speed of the dollar index is slow ahead of the news, lets wait and see how quickly the dollar moves AFTER the news

News is out

- Jobless Claims better than expected
- Personal Income better than expected
- Durable Goods order drop higher than expected

930am est

- We are seeing some WEAK price action

o Slow speed of the moves

 RED POT everywhere
 We want to see GREEN POT
 Pace of Tape Indicator measures the speed of the orders coming into the market

o Lack of follow-through (we don’t see big moves)
o Price is testing trend lines
o Price is resting on big round numbers
o Price is resting on double-tops/bottoms
o Flat Trigger Lines

 There’s no MOVEMENT in the market up or down, only sideways

Wave Patterns and using our Trigger Zones; 4-Range Trading Tunnel Vision

- Trigger Zone Trading Strategy


o Tells us when the WAVE PATTERN is going to be a winner or not

 If its inside the ‘zone’ the pattern is HIGH %
 If the pattern is above/below the ‘zone’ this will be a higher risk trade.

- Does the 4-range develop ‘tunnel vision’ for day traders?

o Yes it does

o We use slower timeframes along with faster timeframes to see BOTH whats happening in the big picture and zoomed in for your next trade

- What are your stops and targets?

o Scalpers = stops and targets are always the same

 4/8/Runner
 5/10/Runner

o Day Traders = always different, depending on the market we’re trading and the S/R levels we see at that time.

 Stops at the previous swing-highs/lows
 Targets at the next levels of S/R
 Always changing, and I use

• Trend line
• Trigger lines
• OHLC levels
• Swing highs/lows

- How many contracts do we trade?

o 4 contracts

- What different types of charts do you use?
- What is the AB = CD Pattern
- Different colors on Time and Sales

o Green = buyers

 Light Green = excessive buyers (demand)

o Red = Sellers

 Dark Red = excessive sellers (supply)

o White = between bid and the ask (both supply and demand)
o Big money buyers/sellers

Dollar Index Curve-ball, Tape Reading made profit on Gold and Crude Oil Futures

815am est


- The dollar index is trending UP this morning

o Wide trading range
o Speed is slow, but its still early

o Average true range is steady, not at the lows, but not at the highs, again, its still early, this will improve with 830am news.

o Lots of overhead resistance levels as the dollar is rising this morning.

o In anticipation for a good GDP reading, this dollar may be pricing in the news already today, so look for the reversal off the highs later today.

o Dollar rising = looking to sell resistance on the markets we trade.

 That can easily change if the dollar tests resistance and then begins to drop
 So keep an eye on the dollar as it rises.

825am est

- We’re preparing our charts for the 830am est GDP news

- We see the crude oil futures have lots of support at 80.44, so depending on the news release, if GDP comes out higher than expected, look to sell short below the 80.44

o Profit targets will be 80.00, 79.62, and then the lows of the price wedge (trend Line) at 79.00

o If GDP comes out lower than expected, the price will bounce back up into the range above us, and look to buy 80.44, buy 81.00 and take profit at the highs of the trading range at 82.00 and 83.00

840AM EST

- GDP came out higher than expected, but the dollar appears to have already priced that into the market

- Because of this the big drop this morning was likely due to speculation on the GDP release, rather than actual lack of demand.

- Now we wait for the markets to react to the news for the big move of the day.

900am est

- Gold market is sitting in the middle of the price wedge, and it appears that we’re waiting for the news release at 2pm EST (FOMC Meeting Mins)

- Best thing we can do on the gold futures is to wait for the price to test the highs or the lows of the price channel

o Sell the highs
o Buy the lows
o Avoid the middle

930am est

- The US market opens with slow speed, and the dollar pushing new highs

o Sell the highs on the gold futures, we’re at the top of the wedge
o Sell the crude oil, but we need to wait till we get below 80.68

1045am est

- The news came out at 1000am about the Ireland bailout

o Euro sells off as people dump their euros

o Gold rises as they find shelter from the storm in the euro

o The dollar rises as a natural negative correlation to the Euro

o The idea that the gold can rise, while the dollar is rising, is a little fundamentally challenging because we don’t see it very often.

Buying Gold; long and short term strategies for technical day traders

- Buying/Selling/Holding Gold Futures

o Our relationship with gold is a little different than most people

 Fundamentals = printing money at a record-breaking rate = buy gold
 Technical = at the all-time highs = sell the highs

o So we know we should be bullish on the gold b/c of the monetary policy of the FED
o But our technical charts tell us to avoid buying at these all time high

 Buy the pullback

o Short term strategy = trade with the current short term trend, and avoid buying the highs

 (not much to do with the long term overview on gold)

o Long term strategy

 Economic outlook for the dollar = DOWN
 Outlook for Gold = UP
 Monetary policy = LONG GOLD

o Using the Dollar

 Negative correlation (DX moves up, GC moves down
 Looking for long entry opportunities

• Gold support = long trades
• Dollar Resistance = Gold LONG trades

 If I want to trade long on the gold I need support, which will be shown in dollar resistance

o Open a slower DX 12-10 chart

 90 days of data
 No template needed, im looking for trend lines, OHLC, etc, S/R

o Once you identify the Dollar resistance, now look for your entry on the Gold

 Not just buying the gold when I see DX resistance
 I need to have an entry pattern on gold futures

o There are many ways to invest in gold in the long run

 Buy gold Futures Contracts

• Buy at support and hold overnight
• Contact your broker and make sure you’re overnight margin is acceptable

 Physical Gold

• Coins
• Bullion
• Bars

o Lots of fees associated with buying PHYSICAL gold
o Handling fees, storage fee

 Buy Gold Stocks / Individual companies that make more profit as the cost of gold rises

• Anyone selling gold

- Using your stop strategy, when to move your stop and different scenarios

o My first two trades on crude oil, left the stop at -5ticks
o Scalpers

 Always move my stop to entry after my first target is filled

o Day Traders

 Little different

• Move my stop to entry at my first target
• Move my stop to the same number of ticks as my first target

o 10-tick T1
o Move stop to -10t
o This way you wont lose money, it will be a scratch trade.

- What are the different timeframes we’re using

o Range: no TIME variable, just range

 All the patterns look similar, easy to learn

o Tick : tick is the variable
o Time: time is a variable

o Different chart types:

- 3-Strike Rule

o If I don’t get my target filled within 3 tries, then move your target up/down to FORCE the target filled.
o Why not trade the DAX or the ES?

 The Crude Oil, Gold, Euro, and Russell have the best opportunities with the lowest amount of risk
 We make more money trading these than we will trading other markets
 This method will work on ANY market

• The DAX and the ES were two of my FAVORITE markets before the 2007/078 credit crunch
• ES = high volume, low range (fewer patterns, and less movement)

o Fake out breakouts

• FDAX = low volume, and high volatility

o High margin = $2500usd/contract

 Very expensive to trade DAX
 Many new traders will require WIDE stops on the DAX, and that’s too risky
 $38usd/point
 Use 10 point stop
 $380/point/contract

• 4 lots = 1200 stop
• Very expensive!!

 Rule on FDAX = 100,000 contracts < 800am EST

- Can we trade the Bonds (ZB)

o Just like the ES e-mini
o High volume
o Narrow trading ranges
o Very sluggish

- Can you trade Thursday and Friday?

o Holiday, closed thurs and fri
o You can trade, but it will be very slow and very high risk

- Where do I use the new divergence indicator?

o Slow
o Fast
o Trade Management
o Medium (you can also use these too)

- Review the Euro
- Review the Russell
- Review the auto trader

o Work in progress every day until the end of the year
o My first step was to find the best possible pattern, and use that as my starting point

 2-step price reversal at the highs or the lows
 Using divergence to spot the high and the lows

Wave Patterns sell the highs on Crude Oil Day Trading Strategy

825am est


- Lets get our week started with the news today:
- Crude oil futures in the middle of the sideways wedge pattern

o Higher risk trades come in the middle
o Lower risk trades (high %) occur at the highs or the lows of the wedge.

 Wait for the market to give us a higher % opportunity.

- 845am est

- We have crude oil just off the lows of the price wedge, so we have 2 opportunities to buy or sell the crude oil, but neither of them are very high %

o Id rather wait to buy the lows or sell the highs, not force a trade just because this is the only option I see right now.

950AM est

- This market has a slow and sluggish personality

o Average true range is low
o Speed is slow (Red POT Indicator)
o Dollar is not moving at all

1130am est

- The dollar index futures chopping around sideways at the high of day from last Friday afternoon
- The dollar index has been slow and sluggish all morning
- Might be due to the news @ 2pm EST tomorrow, FOMC Meeting minutes

Day Trading for Beginners; Easy way to learn patterns, 1-contract strategy, Divergence, Multiple Timeframes.

- Email JJ@SchoolOfTrade.com for a copy of the beta version


o Train on this next week
o Both 6.5 and 7.0 will be available.

- Using the Divergence method with the Fast Track

o Divergence Method:
o The goal is to get more accurate filters for our fast track entries

 Fast Track = 65% winning ratio (1:1 R/R)

• Im looking for ways to improve this
• Add more filters, looking to remove the lower % trades from my daily trading.

- Holiday Schedule: Thursday and Friday next week we are closed for the Holiday, re-open on Monday
- Trading with Different Contract sizes

o 1 contract = we have a specific strategy for 1-contract

 Also use the Fast Track

o 2 contracts:

 2 options:

• Add the 2nd contract and use the same 1 profit target
• Add another profit target, and use both profit targets

o No runner, fixed 2nd target

• Add a runner and wait for the big move

o This is NOT a fixed final target
o 3 contracts:

 Fast Track = take all 3 contracts off at the 1 target
 Day Trader = 2 options for day traders

• Use 2 targets

o Take 2 off at T1
o Take 1 off at T2 (higher %)

 Take 1 off at T1
 Take 2 off at T2 (more money)

- Easiest way to learn the patterns

o Beginners Course has all three of our high % patterns
o Intermediate course will tell you how to use indicators, market profile, other tools to identify sentiment
o Advanced course will teach you the entry rules, reading tape, reading speed and confirming your entries.

 Tips and tricks

• Always use market replay to review the price action we saw today
• I also review every single trade I take

o If you cant, you aren’t keep good notes, and if you have too many trades to review easily, you’re over trading.

• Take pics, use notecards, make sure you use every minute of the day to practice seeing those patterns.

- Different Stops for different timeframes

o Scalping always uses the same trade management

 Same stops and same targets

o Day Traders / Swing Traders / Position Traders will use different stops and targets

 Long trade =

• Stop is at the next level of support
• Targets are at the overhead resistance

o How you can adjust your stop to keep you in trades longer, not get bounced out because of choppy markets

 Widen your stop, but also widen your targets, and potentially use a slower timeframe

• If you’re having trouble on the 4-range scalping timeframe, move to a different timeframe
• 8-Range chart

o 8-10 ticks stop
o Targets = 8/16/Runner

- How to take more trades per day / fewer trades per day?

o Watch a faster timeframe = more traders

 Will be less powerful

o Slower timeframe = fewer trades

 More winning potential

- What will disqualify a divergence signals?

o Price action, read the tape

 Look for big money to tell you where the market is REALLY
 Trending markets will often have the divergence indicator be worthless

- If we see divergence on the 21-range as well as the 4-range, which is more important?

o 21-range
o Slower is the most important

- Does watching Options help you make decision on trading futures?

o Yes, if you have the knowledge
o But most traders will be overcome by too many variables to really use this info to your advantage.

- How do you make profit when you close your position at your point of entry

o Taking profit, and then moving my stop loss to my entry point.
o Then with a little profit already made, I may get stopped out at my entry point.

- DAX Template:

o The variable im concerned about it the BIG ROUND NUMBERS
o I will post this in the download section

- Aussie Template: traderoomslow_6a

Biggest Weekly Profit of 2010 Day Trading Gold and Crude Oil Futures

Hi guys!

We finished a record-breaking week in our live trade room with another day of profits and lots of opportunity to learn our trading methods.

We earned over 200 ticks every day this week, and we did this with simple patterns, and attention to simple rules, patience, and discipline.

Today was OPEX, so it was tough to tell what to expect, other than low volume and potentially a flat market.  We had to react to what we saw when we opened our charts @ 745am EST.

The Dollar Index made it easy for us today; moving market, going from highs to lows, allowing us to see these markets rise and fall, giving us profit every time it moved.

Don’t forget we have a short week next week, closed Thursday and Friday for the Thanksgiving Holiday, so plan accordingly.

See you Monday morning @ 745am EST when we get started trading again!

Live Trade Room Notes 11-19-2010

Our first job today is to check the news:

No news today for Options Expiration Friday

Options expire on Saturday, and today is the final day before those options expire.

OPEX Friday before a Holiday Week, people may be headed out a little early today.

So watch the speed of the tape, looking for periods of low volume to stay away from.

900am est

-          The dollar index is a wide trading range today, so this is good for us

-          The dollar has been rising off the lows of the range today, and now hitting overhead resistance which is causing us to have some choppy back and forth price action

o    Dollar rising and falling will cause the same on other markets

-          Crude Oil futures are the lows of the price wedge, so we want to buy these lows, rather than sell at the lows.

-          My next selling opportunity on crude oil will be below 81.63, that is the next support level to break.

930am est

-          Crude oil futures have bounced off the lows of the wedge (we bought the lows) and now the market is in the middle of the price wedge

o    Very important we are aware of the MIDDLE of this range

o    Sell the highs and buy the lows and don’t fiddle with your middle!

Day Trading Strategy for Day Trading Gold and Crude Oil Futures at 10am News Release

Another exciting day we had our live trade room, another 300 ticks of profit, and now over $11,000 this week alone on only 4 contracts.

We didn't have an easy day like yesterday, today we had to work a little harder to keep up with all the patterns, and we didn't see nearly as many large winning moves, so the market's personality was much different.  that's ok, we adjusted and made our money anyways.

This has always been my favorite time of the year to be a trader, and you can see our results are not letting us down.

Crude Oil Rollover to the next front month contract

 

The first step of the day is to check the daily economic news, and set our alarm clock around these events today.

Now lets check the dollar index futures because we have a strong correlation between the dollar and the market we trade.

Dollar Correlation: 

830am est

-          We’re waiting on jobless claims to be released

-          The markets are bouncing off the lows this morning from earlier this week

-          The dollar index futures have now broken the bullish price channel, and we can see a sideways range developing.

-          We have an outside trading day (below the lows from Wednesday)

-          Wide trading range (good)

-          Speed isn’t that great, but we’re used to seeing slow speed at this time in the AM session, so we can be patient.

-          Average True Range is rock bottom at the lows of the whole week, possibly the month. (big concern)

o    Narrow trading ranges on the dollar = narrow trading ranges on everything else.

845am est

-          The markets aren’t moving much, with the jobless claims coming in as expected

-          The dollar hasn’t moved an inch, which is causing the rest of these markets to stay still as well.

-          I noticed that I didn’t have a full 24:00 hours of price data on gold so I reloaded the historical data on my charts.

900am est

-          Gold futures are trading sideways at the highs of the range and the highs of the price channel.

-          We see gold drop to the lows, and we have two options

o    Buy the lows, considering we have lots of support at 1352.0

o    Or I can wait and sell the breakout short if we can break the major support level of 1351.7

Day Trading Strategy for Crude Oil Inventories News 1030am Wednesday

Today is wacky Wednesday


Wednesday before the Friday of OPEX. Third Friday of every month is options expiration. The Wednesday before that Friday is when traders begin to balance their portfolio ahead of the expiration on Friday

- Large un-expected times of volume
- Large buyers and sellers can make it hard to tell when to get in and when to get out
- Unexpected volume can mask the REAL moves in the market

835am est

- The dollar index is trading sideways
- Very narrow trading range
- Speed is slow
- Average True Range is rising (GOOD)
- Inside trading range (inside the highs and lows from yesterday)
- Resting on trend line support (dollar expected to rise)

o Dollar rises = selling other markets

900am est

- The gold futures market looks like a polar opposite of the dollar
- While the dollar was rising, the gold was falling
- Now both markets are trading sideways looking for more direction.
- Sideways markets are easy to trade

o Buy the lows
o Sell the highs
o Avoid the middle

- Also keep an eye on the trend line as support running right through the center of this trading range.

- Also notice the open space ABOVE the trend line as resistance, so look for a big winning move above that trend line if the price has the strength.

930am EST

- We know the crude oil has inventories at 1030, so we have to be aware of that, change the personality of this market today

- We also see that we are just about to ROLL FORWARD to the next month on crude, so we’re seeing 50% of the volume on the 12-10, and the other 50% on the next month of 01-11

o This is causing lower-than-usual volume on a more risky type of trading day
o Its also wacky Wednesday, which is yet another reason to be aware of our surroundings.

945am est

- The dollar index price alert alarm goes off, dollar is dropping below LOD
- Im looking to BUY the markets I trade with the dollar dropping

o The dollar may now reverse and RISE, which means we need to pay attention

1000am est

- We can FEEL the markets are slow right now
- The dollar just tumbled and we didn’t see any movement on the markets we trade

o Euro broke out to the up-side, so look to buy a pullback

1030am est

- We see crude oil inventories come in low

- We already know that Durable Goods came out low earlier this week,

- This tells us that lack of inventory is NOT due to excessive demand, but rather due to lack of production.

- The majority of the market read this wrong, pushing price to the highs, and giving us a PERFECT trade short off the highs

Price Reversal Patterns using Support and Resistance Day Trading Strategy

- Price reversal patterns and our trigger lines


o Using the 2-step pattern but keep a close eye on the trigger lines from slower timeframes

- Does a higher risk trade mean higher reward?

o Usually no, lower expectation for success
o The reward will be LESS than normal because your rules aren’t lining up.

- What technical indicators do we use?

o You will OWN all the indicators
o You also get charts, data, and every tool you need to be successful.

- What timeframe do we use when watch the dollar index

o 21-range and 13-range
o 30-90 days of market data

 Draw trend lines
 Compare your ranges
 Identify overhead res, and supp below
 Mark the highs and the lows with ‘price alert’ indicator, and wait patiently for the DX to breakout.

o This is all covered in our morning prep, every day @ 800am est

- Trade Management

o Scalpers: always use the same trade management
o Day Traders & Swing Traders: will always be different

- What entry do I use?

o Fast Track Method = Resting limit order
o Scalpers = use TRAP entry
 Uses your trading DOM with your worse-case scenario to TRAP price into your best order.
 Does not use market orders b/c they are too sloppy

o Swing Trader = both

- What do we look when we need BIG MONEY?

o To enter a trade, I want to make sure we have enough interest in that move.
o Use my filtered time and sales window
o Get the properties for these in the download section of the ADV Course
o Where and when do we use this?

 Used for entries trigger
 Used for exits
 Know when to enter and when to exit

- What is the definition of divergence

- Speed is the most important indicator:

Biggest Day of 2010; Selling Short on Gold and Crude Oil Futures Strategy

800am est


- Let’s begin our review of the markets with the dollar index futures

o Bullish price channel
o Middle of the price channel
o Bullish wedge pattern
o Selling divergence at the highs
o Flat trigger line = sideways dollar = sideways everything else
o Narrow trading range
o Speed is slow
o Average true range is ok, not too bad, but not that good either.

o ‘inside day’ which means we are inside the trading range from yesterday (Monday) and this means to expect similar price action on everything else.

- Now lets mark the highs and the lows with our ‘price alert’ indicator so we know when the market makes new highs and lows.

815am est

- Gold futures dropping this morning
- We’re seeing oversold momentum at the lows
- We’re seeing overbought momentum at the highs
- Low volume and lagging momentum are the biggest concerns for this morning’s market personality.

945am est

- The dollar continues to trade sideways back and forth up and down, which is causing the rest of these markets to trade sideways with lack of conviction.

- Once again, we see the pre-market (800-915) as the best price action of the morning

- Now after 930-1130 its been slow recently, and it looks like we may see the same thing today

- 10am brings new home sales news, so that may be a catalyst, but for now, the market is slow, sideways, and consolidated.

- The euro futures are trading sideways, so sell the highs of 1.3652 and buy the lows of 1.3572, and remember to avoid the middle of the trading range.

- We also have a nice winner on the Russell, wave short on the 21-range chart

o Momentum was perfect
o Good speed on the POT indicator
o Saw big sellers on the time and sales

Price Channels and Wedges, Drawing Trend Lines and Using These to Make Trading Opportunities

- Trading with trend lines; wedges and channels

o Open your chart and zoom all the way out

 Control + up/down arrow

o Drawing trend lines
o Defining different patterns

 Wedge

• Sell the highs
• Buy the lows
• Avoid the middle
• Don’t be afraid to trade wedges inside of wedges

 Channel

• Sell the highs
• Buy the lows
• Avoid the middle
• Don’t be afraid to trade channels inside of channels

 24-hour chart, not the OHLC

• 12am open
• 12am close
• 24-hour charts

 How do I use this to make money?

• Avoid higher risk trades by avoiding

o Trading in the middle
o Avoid Buying the highs
o Avoid Selling the lows

• Beware of channels and wedges on slower timeframes, they will be very important to your day trading results.

- Does the Dollar Index Correlation apply to ALL the markets?

o Yes, but some more than others

 Commodities and Currencies are effected the most
 E-mini’s have not seen the strong correlation that other markets enjoy.
 The correlation should show you instant feedback
 If the markets DON’T react in a very fast manner, something is wrong and we wait for the ‘correction’

o What timeframe do I use?

 21-range and 13-range charts
 90 days of data

- Tape Reading

o Looking for entry long when I see…

 Momentum up
 Nothing overhead to keep this trade from moving
 Big buyers on the tape

• ‘Above the ask’ is preferred

- Easiest ways to find your patterns

- Fast Track Trading Method

o 2 weeks to learn: patterns, entry rules, setting up charts and workspace
o 2 weeks of practice

 Doesn’t have to be 2 weeks, but this is what I recommend
 Just had 2 members today go live after only 5 days (1 week)

o Then you’re learning and earning at the same time!

- Chasing Trades

o Don’t do it!

o Wait for the next pattern

o Our trap entry technique seeks to identify the worse-case scenario to ensure that I'm always away of how far I can chase.

- What type of stop loss am I using?
- How often do we use the 5-second rule

o Used for scalping
o Slower timeframe day traders will not use this

- What do I mean when I say ‘big buyers’?

o Buyers on my filtered time and sales window
o Filtered for 5-10 contracts

- Auto Trader will be ready this week

o Fully automated
o Take the trades, enter, exit, trade management, it does it all.

- What is Average true range

- What is the 1030 e-mini reversal?

- How many trades each day do we take from our 4-range chart

o 10-20 trades per day

- 13-range and 21-range

o 3-10 trades per day

Stop Loss on Gold Futures selling the highs, 2nd move was winner, here’s why

830am est


- The dollar index is trading quietly at the open this morning and giving us some clues for what to expect later today:

o Outside day (moving market)
o Narrow trading range (be patient and wait)
o Middle of the trading range (be patient)
o Speed is slow (be patient)
o Average true range is ok (be patient)
o Trend lines as support (rising dollar = falling everything else)

 Short position considered to be higher % today

845am est

- Gold futures are trading at the lows of the wedge pattern, we want to buy the lows

o Entry long above 71.7 will buy the breakout
o Entry long at 56.5 will buy the pullback
o Keep an eye on the trend lines going through the center of the wedge
o Take your ½ position off at the trend line
o Take your final profit target at the highs of the wedge.
o Stop loss will be placed at the lows of the day’s trading range
o We will train you on this in our members training on Wednesday this week.

- Don’t forget the dollar has trend line support

o Expect the SHORT TRADES to be the best opportunities today
o So what do we do with gold at the lows of the wedge?

 Sell resistance on the way up

• Wait for price to jump up, and then look for the reversal back down
• Selling pullbacks

- Fundamentals (dollar index) tells us to look short
- Technical (wedge pattern) tells us to look long
- Lets wait and see what the highest % opportunity that comes

900am est

- We get a little more in-depth on the gold futures market and the 21-range chart shows us in a sideways trading range

o We are in the middle of the range, so we need to wait
o Sell the highs of 5.7
o Buy the lows of 9.9

1000am est

- We’ve trading profitably on the gold and crude oil futures, and now at 10am est the market’s personalities are beginning to change

o Slower speed
o Not as many moving patterns that we saw earlier this morning
o Average true range is falling

- Russell index futures are trading off the recent highs and now at the lows of the wedge.
- We also see the Russell has a WIDE OPEN SPACE if we can break below 716.3

o If we break this support, we then trade into the sideways range from 716.3 down to 688.1 as shown on the 34-range chart in the previous weeks.

- At the lows of the wedge, I want to buy the lows

- If we break the support, I will then look to sell the highs below 716.3

- Dollar index is rising, we are looking for shorts

1045am est

- Dollar index chopping around the PHOD to the P-OPEN

- Slow and sluggish on the dollar = slow and sluggish on everything else

- We also noticed the personality change, so lets be patient and wait

1115am est

- We’re looking to buy the lows on crude oil futures

o 13-range chart shows us at the lows of the wedge and the sideways range
o We want to buy these lows
o Check your rules

 ALL RULES LINE up = take the trade

1130am est

- Getting conflicting feedback from the markets we trade

o Dollar index is rising off support
o Crude oil is also rising off the lows

 How can this be?
 Something has to correct, and its usually NOT the dollar

o Dollar index average true range is falling, so narrower price action on the DX = narrower price action on the crude oil, gold, euro, Russell, any market you want to day trade.

Day Trading Patterns; Easy Ways to Find Trading Opportunities

- Tips and Tricks for Identifying Patterns


o Keep it simple
o Use range charts

 Compare a 3-min to a 13-range

• Minute charts are VERY different, sloppy, sideways, big candles, small candles
• Range charts ALWAYS look the same

o Focus on 1 market at a time and learn that 1 market first

 Each market has a different personality

o Stay away from the faster timeframes

 1min
 89tick
 4-range
 These are way too whippy and false-moves to be consistently watching patterns while you learn.
 Focus on the 13. 21, 34, 55, 89, 144 Range Charts (fibs)

o Limit your distractions

 Only watch for THESE pattern
 Don’t overcomplicate it, keep it simple

o Review your trades every day

 Why did you enter?
 Why didn’t you enter?
 Where did the trade go?

o Study them over and over with consistency

 Flashcards: print out the charts and review them before bed, when you wake up, throughout the day
 Market Replay: record the market and then replay the price action and you can look for patterns
 Beginner’s Course has a video on the 3 patterns, watch this video, and ask questions.
 Don’t be afraid to ask JJ for help identifying them.

- Contract Rollover:

o Blog search for : contract rollover and watch the video

o Crude rolls over each month (20th)
o Gold rolls every other month
o Dollar, Currencies, Emini roll over quarterly

- What are the different colors on the time and sales

o In the download section: ‘time and sales properties’
o Check out the advanced course download section for properties on the Tape

- Ways to sell the lows and buy the highs

o Wave pattern

 Buy the pullback
 Sell the retracement

o 2-step reversal if it fails

- Can a market be weak to the long side and the short side?

o YES. sideways and sloppy, indecisive

- Wave Pattern; different ways to enter the trade

o Aggressive: enter at the test of the trigger line
o Moderate: wait for momentum to confirm and then take the trade
o Conservative: use multiple timeframes to plan the entry using a 2-step pattern

- How do we determine a low volume day?

o Total volume is only used for contract rollover

 Total volume does NOT tell me whats happening NOW
 We may have ALL the volume at 8am, and now its 330pm and its slow.

o Speed of the market

 I need to know what’s happening RIGHT NOW

• Time & Sales = is it moving quickly, and with LARGE ORDERS
• Pace of Tape Indicator (POT) measures the speed of the orders

o Heavy speed = heavy volume
o Low speed = low volume

• Tells me whats happening NOW.

o Red Pace of tape (less than 100) = very slow
o Dollar is narrow trading range = very high risk
o ATR is falling
o If you see these at 8am (or whenever you begin your day) use extra caution.

- My computer keeps jamming

o Stop running programs you do not need

 Remove anti-virus
 Remove the firewall
 Close charts you don’t need
 RAM is the easiest way to improve your computer’s performance.

- What type of entries do we use?

o Limit Orders = Fast Track
o Buy / Sell Stops = Trap Entry / day trading
o Never use market orders (sloppy)

- Divergence Method Example

o DO MORE training in our members-only training next week
o Works on any market, any timeframe

- Setting up Automated Trade Management Strategies

o Adv Course = Setting up your DOM and ATM
o TUTORIAL: SETTING UP YOUR TRADING DOM W/ ATM STRATEGIES

- Open AND close:

o Always use the faster timeframe to see the Open and CLOSe
o If your OPEN/CLOSE does not match mine

 Re-load your data
 My data may need to be reloaded.

- Which markets will give us the most patterns:

o Aussie Dollar
o FDAX
o Crude Oil
o Gold
o Russell

- Which markets will give us fewer patterns?

o Eurostoxx FESX
o E-mini ES
o 30yr Bonds
o T-Notes

- Anything cheaper than $10/tick

o Pound = 6.25
o YM = 5.00
o NQ = 5.00

- Why is lunchtime so risky?

o Less volume
o Fake-out breakouts
o Market manipulation
o No news events to act as catalyst

Price Reversal Strategy sell the Highs on Crude Oil and Gold Futures

Professional traders react to trading opportunities with full acceptance of all responsibility and all trading results.


Professional traders get into that ‘zone’ where they see and they react on almost instinct.

That ‘instinct’ comes from repetition and consistency.

The first thing this morning is to check the news:

815am EST

- We begin our day with the dollar index

- We are concerned over volume this morning because it’s a Friday morning, and we had veteran’s day on Thursday

- People MAY have left for the week on Wednesday, but we’ll wait and see how the morning plays out.

Dollar index futures:

- Slow speed of the tape = be patient and wait

- Narrow trading range = be patient and wait for the price to break highs or the lows

- Lows of channel = price will rise (looking for shorts)

- At 2 weeks highs, so expect the highs to be tested and look to sell the highs (buy the lows on everything else)

835am est

- Crude oil futures at the lows of the channel and the lows of the wedge, so lets BUY these lows

Risk Reward Ratio for Day Trading Futures Strategy

- Risk/Reward Ratio


o How much risk per trade? (stop loss)
o Compared to how much reward on each trade (profit targets)
o Low risk/reward ratio is one of the most aspects for a new trader.
o New traders are expected to make mistakes

o Low R/R/R will allow you to make those mistake without costing you too much of the money you make on winning trades.

o I want the lowest RRR possible so I make more when I win and less when I lose.
o Fast Track Method uses a 1:1 RRR

 10 tick stop
 10 tick target
 20 ticks stop
 20 tick target

o Day Trading Method uses a 1.5/1 RRR

 6 tick stop
 4/8/Runner
 5/10/Runner
 Loss = -24ticks (4 contracts)
 Winner = 35ticks (4c)

• 1.45 RRR

o Way too risky trade!

 20 tick stop
 5 tick target
 10 trades

• 9 winners = 45 ticks
• 1 loss = 20 ticks

o +25t profit

• 7 winners = 35 ticks
• 3 losses = -60ticks

o -25ticks

- Which levels of S/R should be avoided? Which should be used for entries?

o Open/Close = avoid
o HOD/LOD = Yes!
o PHOD/PLOD = Yes!
o Auto Levels

 Red = Yes!
 Yellow (2-tops/bottoms) = Yes!
 Big Round Numbers = avoid

o Swing Highs/Lows =Yes!
o Yellow Trigger Line = Yes!
o Trend Lines = avoid

 TL’s are sloppy, sometimes its hard to tell when the TL is broken or when its holding

 Use TL’s to look for price reversals and profit targets, but I like to enter my trades a little away from the TL

• Look for a pattern around the TL, but never use the TL as the entry level.

- What times do I use for OHLC

o 24-hour chart (12am , 12am finish)
o 4-range chart to confirm the levels

- What do you do if you miss the move?

o Wait for the next one, follow your rules and entry with confidence
o Short = sell the retracement off these new lows
o Long = buy the pullback off the new highs

- Pace of Tape Indicator

o How does it work?

 Measures the SPEED of the orders coming into the market
 Does NOT count contracts, each order larger or small is counted as 1
 Use the POT to define market sentiment

• Is speed rising?
• Is speed falling?
• If price is rising and speed is falling we avoid the long trade and look for the reversal
• If price is falling and speed is rising, im looking to trade short
• Increasing speed confirms the move
• Lack of speed (decreasing) disqualifies the move.

o What is fast?

 Yellow or green

o What is slow?

 red

o What is the most important thing to watch for?

 Increasing vs. decreasing
 I use this information to make educated decisions

• Speed increasing confirms the move
• Speed decreasing negates the moves

- Max Loss each day

o 2 full stops in one day and im done trading live

 Then move to a sim account
 The goal is to earn my CONFIDENCE back

o 2 different types of losing trades

 You made the mistake
 The market decided to do something else

o If I exit the trade early ( cut the losses early) this will NOT count towards my 2 stops
o Never stop trading, move to demo
o My daily goal = $1,000usd

 Don’t stop trading!
 Move to a demo
 Cut your size in half
 Maintain that confidence that ive worked so hard to develop.

- What is the Fast Track Method

o The best place to begin
o Uses the 1:1 Risk/reward ratio
o Check the video on the blog
o Goal was to develop a trading method that uses low risk/reward

 Limit orders for entries
 Slower timeframes for the best pattern
 Simple trade management

o I want you to practice for 2 weeks
o Then live after 2 weeks of practice
o We train on this in our members training every week
o 65% winning ratio, 1/1 r/r, so you always make money on the FT Method.

- Swing Highs and Swing Lows Indicator

o Light blue lines
o We use these to take our entries
o Using Higher Highs & Lower Lows in our Trading

- Using momentum, what do we look for?

o Perfect for our entries
o Long = rising momentum from the lows

 Be aware of overbought momentum b/c it may curl over and shift down

o Short = falling momentum from the highs

 Beware of oversold momentum, which can easily curl up against us.

o We use multiple timeframes and the momentum indicators to tell whats happening on the fast, medium, and slower timeframes

 Long trade on the 13range

• I will check the 21 range momentum for it to confirm also

- How long does the training process take?

o 2 weeks of learning (1-on-1, skype calls, emails)
o 2 weeks of practice on a demo

 I give you charts, data, indicators, templates

o Trading Live

 Start on the Fast Track Method

• 2 week of live trading on the FTM
• Add 1 contract for every 1k you make or every 2 weeks, whichever comes later.

- Best time to trade Aussie and Yen

o Early evening of the US Session
o 6pm EST – 3am EST best times for these markets

- Getting in and getting out quickly, what’s the secret?

o We talked about this in training on Wednesday
o Check the video, will be posted later today