Crude Light trades were the prevalent in the markets yesterday (9/20/12). We started the day watching Gold, Euro, and Nasdaq. However, on another screen I was watching Crude. I anticipated a move on Crude because it was oversold. We switched over and began trading crude. I explained that the 720 minute was going to make an ADX magenta peak. In order for the peak to form, price would need to retrace to around 93.52. During the live trading room, we simulated 3 trades in Crude, which resulted in 164 ticks of profit.
Crude Light Trades
This morning, the high for Crude Light has been 93.48 (four ticks from where I anticipated the peak to come in). The ADX magenta peak has printed and I would now be watching the 45 minute chart to determine if will continue upwards.
Now, I could have just sat and waited for the magenta peak to come. But, instead, I was actually reading the charts and indicators and applying what we know on the live edge.
For example, we expect the magenta peak when the THD ADX is at or near 70. It was.
We expect divergence on the lows. There was.
We expect the 45 minute to flip the ATR. It had.
So I calculated where the peak would come in (line in the sand). Then I calculated the potential profit that was available (price was at 92.07 and potential was up to 93.52, which was at least 145 ticks of movement). Then I simply zeroed in on the 3 minute for very low risk Crude Light trades.
Today, I expect more upward movement as price will be retracing to the ATR on the 720 minute chart. As I am writing this, there is divergence at the ATR on the 45 minute. I could trade the 45 minute chart, as price is at the ATR on diverging volume. In this scenario, Crude Light trades entry was at 93.08 and the stop is at 92.85.
Clipper 1 is at 93.54
Clipper 2 is at 94.00
Clipper 3 is at 94.46
On other important note, the ATR on the 720 minute is at 98.00. So even with time decay, there is ample room for profits.
Or I could simply go down to the 3 minute and look for a low risk entry point. I could also be a little more complex and do a couple of contracts on the 3 minute and a couple on the 45 minute — depending on my level of experience and my risk tolerance.