Anatomy of a trade

Saturday, June 15, 2013

11:00 AM

To contextually have a framework on where to optimally enter a trade we need to find where the tops and bottoms are in the appropriate time frames.  One good time frame to start with is the 8 minute chart without the night session.  I like to set up the chart with Murray math since it gives a perspective on where the top or bottom or midpoint is.  Then use a trend indicator like the Clear Method and a momentum indicator like the Double Stochastic.

On the following chart you can see I placed the word sell at the 1640 level since the momentum was starting to wane shown by the Clear method line and Double Stochastic color turning back and forth.  The best time to short is when the Red 8/8 level is reached.

Once we have the setup we need to watch a shorter time frame chart with Murray Math for a signal to actually take the trade.  Below you can see we have a 1 minute 3 Line Break chart that has reached the red 8/8 line and is starting to reverse

Now it is time to initiate the trade the following chart shows that we entered at 1640.50 have taken off 2 contracts at 2 points and set the stop at 1637 in front of the 4/8 level.

Now the market has reached 4/8 and our total profit is $525 for 4 contracts.

Now the market has moved down below the 4/8 and looks like it might come back. The 8 minute is starting to move down so we place an order for 10 contracts at 1636.50

We are filled and now the market is moving down to our stop at 1633 just before the yellow 1/8 line.  We have unrealized profit of $1,000 plus $525 from the previous trade and if it goes to the 1633 another  $550 for a grand total of $2050 on just 2 trades.

The Market continues to move down closer to the 8 minute 5/8 level.  The Murrey Math has moved down on the 3 line break chart and the green 0/8 line has reversed the price.  Time to go long with a target at the Orange 4/8 line.