4/2/98 - Trade
Recommendation to Buy Gold
Two minutes after the open, place a buy stop to go long at 302.20 (one tick above the high of the 75-minute price bar), or one tick above the high of the day at that time, whichever is higher. If filled, place a protective sell stop at 301.50 (one tick below the low of 4/1), or one tick below today's low (4/2) if lower at the time of entry.
NOTE: The blue text shows how the price was determined.
You would have placed a buy stop 302.20 and been filled three minutes after the open, with a protective sell stop at 301.50. With skiddage and commission, the dollar risk per contract would have been about $125.
The cyan line is a trailing stop and would have stopped you out at 310.90 with a profit of $850+. However, taking profits on strength can often bring larger profits. Gold opening with a gap on Monday would have offered an opportunity to get out immediately after the open at 315 with an extra $500.
The Daily Trading Cycle - The up arrows on the Gold daily chart (370 minutes in a trading day) show the bottoms of the 18-day trading cycle.
The Trading Cycle in the 75-Minute Chart - Each 75-minute bar is 1/5th of the daily trading session. The five trading cycle bottoms of this time frame are indicated by the up arrows. The trading cycle averages 15 price bars from bottom to bottom.
(1) When the red line is above the blue line and rising,
(2) watch for a drop below the red line to be followed by
(3) a setup bar with an entry signal of a rise above the high of the setup bar.
(4) Once entered, place a protective sell stop below the cycle bottom.
This buy signal is often 80-90% accurate in confirming cycle bottoms as at A.
This trade followed principles basic to low risk trading:
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