This morning we traded the Mini Russell in our Live Trade Room and found some excellent trading opportunities right after the opening-bell. In today’s ‘trade of the day’ we will look for buying opportunities on one of our favorite e-mini markets.
The first thing we need to do is find the long-term-trend, which is very easy using some simple technical indicators on our Anchor chart. The anchor chart is a much slower chart timeframe that allows us to see the ‘big picture’.
As you can see, defining the long-term-trend on our Anchor Chart is very easy; we use the color of the ‘cloud’ along with a simple regression channel to tell us which direction the market is moving.
Our goal is to trade with the long-term-trend because we will see fewer losing trades and our winning trades will be much larger.
Once we define the long-term-trend we will then begin to look for the entry pattern. We use a faster chart timeframe to find the specific entry pattern because this allows us to enter into a new position with a very small stop-loss (low risk) and a very wide profit-target. Whenever we have a small stop-loss and a wide profit-target we have a very favorable situation for our trade.
The goal is to trade with small amounts of RISK, and large amounts of REWARD. We call this the ‘risk-reward ratio’ and it’s the most important aspect of our long term success.
As you can see the entry pattern is very easy. We use a set of ‘rules’ to make sure we take each trade correctly, and we use a very simple technique to enter each trade once we see our ‘trigger’.
These trading opportunities can be taken with 1 or 100 contracts. You can trade like this with only $2,500 in your account, or you can manage $100M USD in large blocks of capital with a simple strategy like this as well.
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