Triggers Galore!

If you went long the E-Mini last Friday and observed the rules as reported then you ought to have been stopped out today at 1807.25 early this morning. Thus this campaign has come to an early end and leave us with a gain of exactly 1R:

Here it is one more time to wrap up our campaign: Entry at 1,794.5. As we closed above 1R yesterday afternoon we advanced our stop from 1,781.75 to 1807.25. As this one was touched we completed this campaign successfully. Not as much as we’d hoped but a winner is a winner and the rules are the rules

Speaking of which – several setups I posted yesterday have triggered today and today we’ll be spending some time to walk you guys through several of them. The best way of learning is by doing and in order to wrap your minds around our campaign management rules you should participate as much as possible until it becomes second nature and you don’t even have to think about it anymore. Plus the kick ass tools I have bestowed you with should help a lot. But before we get started here’s an update on a chart I posted this morning:

Not sure if you’re aware but the EUR/JPY has enjoyed a pretty tight correlation with the spoos lately (due to the current carry trade I take it). This morning I noticed that the EUR/JPY had detached – and that to the downside. And the spoos followed suit shortly thereafter. Something I’ll be keeping my eyes on going forward – you can be sure of that. Well, it’s pushing sideways right now – let’s see if equities will do the same.

Alright – on to our current setups:

The TF (Russell 2000 futures) sported an inside day yesterday which offered us two entries. The lower one triggered at 1,124.2 and we are effectively short. I usually take the actual IP-S trigger and deduct one tick (or pip on FX) from it. However my entry happens at the actual trigger. So my stop is one stop lower than the actual limit. I usually get filled and this way I earn myself a nice buffer. Nevertheless I use the trigger and also add one tick to the stop in order to arrive at my risk. In this case we had exactly 100 ticks plus 1 on the top and bottom = 102 ticks.

And here’s the risk calculation based on a $750k account. All I had to do was to plug the 102 ticks into our futures risk calculator and I’m good to go. Per my account size I am allowed seven TF contracts.

Optionally I can plug the entry price and the risk into Bernie’s Pyramid Calculator. We can use this one for pyramiding but for Crazy Ivan style trades we simply use it to calculate our R intervals. As you can see we’ll reach 1R at 1,114. Note that I used the ATR field for my risk but had to convert them back into handles (not ticks). I hope this example is sufficient as I won’t post the R intervals for the other setups – should be easy enough for you guys.

One of my favorite setups yesterday was crude and actually have more confidence in this one than in that TF short. For one we may be starting a new trend in crude whereas we’re definitely still trading against it on the TF futures. Anyway, let’s do this again – the triggers are on the chart and once again I buffered by one tick. My risk came out to 89 ticks.

Based on that I am allowed eight contracts which is keeping me slightly below the theoretical $7500 (1% R) mark. Better be conservative. Occasionally you can cheat a little but ONLY IF that additional contract is not more than a few bucks away from your target size. In this case 89 ticks means $890 for one contract. Eight times that (for eight contracts) is $7,120. Nine contracts would expose me too $8,010 and that’s way too much, so we stick with eight. Best not to get greedy, no matter how good a setup looks. Again, use the BPC to calculate your R intervals and remember to use 0.89 handles as your ATR.

On to gold – now that one was speculative but I had an inkling. Long we went at the inside trigger and based on the BPC we are already at the 1R mark – we’ll get to that in a second. But first the entry calculation:

Based on that 182 pip risk we only got four contracts. Which sounds like nothing but if it hits our stop at 1,224.5 then we’ll lose four times by 10 by 182. Which is four by 1820 and that comes out to 7280 bucks. A lot of folks trade gold and, based on their accounts size, get completely over exposed. It also doesn’t help that gold has a tendency to go sideways and then suddenly take off. So make sure you always stick with your position size!

Let’s see what Bernie has to say about our gold trade: Well, it seems that 1260.9 was our 1R point and you know what that means! You don’t? Alright, one more time – now that we have touched 1R and beyond we have two options at the EOD:

1. If we close above 1260.9 today then we move our stop up to that point.
2. If we close below 1260.9 then we close our position a minute or two before the bell.

On to the next victim – copper – another one I spotted yesterday. Beautiful context given the 100-day SMA and all. Anyway, we haven’t gone very far but it’s an entry.

Copper is expensive and here we only get two contracts which fortunately got us pretty close to our desired position size. Usually not a contract for small retail traders – you don’t touch it unless you command at least $500k in your account.

We’re doing one more but this time it’ll be FX – the USD/CAD. Nice IP entry again and we actually already are threatening the NLSL a bit lower. Not a bad start – if the market demons are in a good mood we may just go all the way. Now this time we have to use the FX risk calculator – which is extremely cool if I may say so:

Let me show you why – in order to trade the USD/CAD we simply select it from the drop down and it’ll do all the nasty calculations automagically. If you for instance trade the EUR/CAD it would actually pull the current USD/CAD price and use that to give you the correct amount of Dollars for the EUR you are trading. Confused? I don’t blame you – that’s a post for another day. Just remember that this will save you a ton of time – what usually takes you several minutes by hand is done in seconds.

Anyway, here we get 1,714,009 units – that’s assuming you use a broker like for instance IB that lets you do that. If you trade in standard lots then you use the field below it – it’s all done for you.

Finally an RTV-S from yesterday which has not triggered yet – the EUR/AUD almost touched its trigger but thus far no dice.  So if it does you get to practice on your own and hopefully you know the drill by now. FWIW – based on the rules today’s lows will be tomorrow’s trigger as well, so all is not lost yet 😉

Have fun but keep it frosty!

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,