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Swing Trading Futures
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Swing Trading Futures

  #1 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

Swing Trading Futures

Watch out: TLDR material


Hi,

After being around for a while on this forum without any major contribution I thought I could share a little bit of my
journey as a trader and exchange some information with other traders about swing trade ideas for the futures markets.

Your own ideas are more than welcome in this thread as I'm always interested to see further potential opportunities.

But let's first give briefly some background info on my path as a discretionary trader.

After losing a lot of money through intra-day trading (winning periods of 2-3 months interrupted by major blow outs), I
came to the conclusion that intra-day trading is not the right way to go as a retail trader. You might think that my
psychology was the issue here, but I'm sure it's the method which led to my emotional response every 2-3 months - proof
for that is that I do not have that problem when swing trading. Anyway, I believe that intra-day price movements are
largely random; hence, the edge - if one is able to develop one - is very small in my opinion for retail traders (now, that
will provoke one or two traders here, I guess... ;-) ).

Just to be clear, there are for sure excellent traders out there making good amounts of money by trading short-term order flow
or similar. However, those who are able to do that year after year after year - and especially when they approach their
late thirties or fourties - are for sure one in a million.

If you are one of them, good for you! If not, maybe you should try something different...

In contrast to intra-day trading, I am certain that most people can learn and master swing trading strategies - i.e. trading
higher time frames for larger movements - as this is a totally different animal. It is a lot less stressful than intra-day
trading and requires a different skill set. Also, it is possible to have a day job and earn extra money on the side with
swing trading, something that is impossible with intra-day trading. That way, you can reach your financial goals much faster,
than with only one income stream.

Anyway, before elaborating more on the pro's and con's of intra-day versus swing trading, let's get down to business.

My discretionary swing trading strategy is based on classical chart patterns and I look only at price development (sometimes
I take some clues from volume development as well, but that is more secondary), no fundamentals, no fancy stuff.
I hold positions from one day to several months, depending on the situation.

I try to look at various futures markets to generate trade ideas with no preference for any particular contract.

I use fairly wide stops. In order to be able to do this, you have to be well capitalized. There is no way this
strategy will work for you, if you have only USD 5,000 in you account and plan to hold a position requiring USD 3,000 overnight
margin. This would kill you very soon. If you do not have enough money for this, paper trade, earn money somewhere else
in the meantime and come back later to trade with real money if you have enough available.

Furthermore, please note that I might change my mind on a scenario (and my position!) fairly quickly. So, if you plan to follow
any of these ideas, please be aware of that. I try to post any changes of my position in time, but can not guarantee that.

Finally, I do not know whether exposing myself and my trade ideas in such forum will harm my performance. But we will see.

In the next posts I will explain my current trade ideas. The first two are ideas where I already have a position in, the
third one is a breakout I'm waiting for to occur.

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  #2 (permalink)
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  #3 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received


The trades I am currently in are:

- LONG silver from USD 33.14 (mini-sized December contract)

- LONG crude oil from USD 87.50 (mini-sized January contract)


Note: Sorry, for the "cheap" charts, but currently I have only access to my tradestation platform every 2-3 weeks (I'm on a project
outside my home town). As I do not use any fancy indicators or automated system, I use barchart.com for my analysis, which is fully sufficient, and
place my trades through the webtrading application of tradestation. This is all very rudimentary, but it works. I choose to post my ideas
now with these charts instead of waiting and posting the nicer looking charts, as timing is critical in this business. Will try to post
tradestation (TS) charts whenever possible. I take screenshots of my TS charts with me for reference during the weeks when I have no access to TS.
Hence, my reference below to the TS charts.



Here is the rationale and the parameters for the LONG silver position:

After developing a major pennant in 2011 and until the summer of 2012, the breakout out of the pennant occurred in September at about $31.
Usually the price move leading to the pennant is copied from the breakout point. This would lead to a target of about $60.

After a move to about $35 price retraced to around $31 where it was "defended". I entered slightly above that level and
plan to sell 50% of my position at around $38-40 and keep the rest until $60 is reached or a reversal pattern occurs.

My stop is at $33.13. I will flip my position with 50% of my original position if that level is reached - with the new target
being $30.

Attached Thumbnails
Swing Trading Futures-silver_01_lt.jpg   Swing Trading Futures-silver_02_mt.jpg  
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  #4 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

Here is the rationale and the parameters for the LONG crude oil position:


That trade is a bit unusual for me, as it is somewhat "experimental". I could not find anything really helpful in the monthly
or weekly charts - which I like to do first before moving to the daily charts. However, I saw this small rounding bottom on
the daily chart which got my attention.

Price tried to break to the upside twice in that pattern but moved back to continue with the rounding pattern. I took my
chance at $87.50 with a LONG position and expect a breakout of this pattern on "short notice" with a move to around $95.
I will sell 50% of my position there and keep the rest until $105 is reached or I'm stopped out (will adjust my stop level
when $95 is reached). The $105 is derived from the trend line shown in the weekly chart.

My current stop is at $86.275 and I will flip my position, when that stop is hit -> new target then: $80.


Note: Beware of the back-adjustment of the continuous contract. This one looks different when I apply my standard back-
adjustment procedure on my tradestation platform (i.e. no rectangle there, but declining upper trend line). Hence, the $105
target, instead of $110.

Attached Thumbnails
Swing Trading Futures-crudeoil_01_st.jpg   Swing Trading Futures-crudeoil_02_mt.jpg  
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  #5 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

What I'm currently watching:

BREAKOUT out of the trend channel in Wheat

Burned my fingers already a few times on this one, as I've incurred some losses earlier due to fake breakouts (or premature activity by me ). Now waiting for a clear move outside of the trend channel before taking any trade.

Upside target: $1,200

Downside target: $600

Note: Beware of the back-adjustment of the continuous contract. This one looks different when I apply my standard back-adjustment procedure on my tradestation platform (i.e. no rounding bottom there, but declining lower trend line). Hence, the $600 target for the short setup, instead of something like $700. I will provide my respective TS charts on this one later.

Attached Thumbnails
Swing Trading Futures-wheat_01_st.jpg   Swing Trading Futures-wheat_02_lt.jpg  
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  #6 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

New trade:

LONG Soybean (mini-sized Jan 2013) @ 1446.44


Price broke out of a huge triangle - which started in 2008 - in 2012 and retraced to the upper boundary of that triangle (see notes in previous posts on back-adjustment - ascending triangle on TS charts instead of symmetrical one). Now, on the weekly the picture looks a bit different - and that's why this is a risky trade. On the weekly, a small Head & Shoulder has been formed with a break of the neckline (disregard the "potential" in the text box of the pic - was too lazy to change it ). However, the neckline of that H&S was pierced yesterday again from the downside. Hence, my bet on a continuation of the move upward.

Interestingly, a further bigger H&S formation could form in my LONG scenario. The left shoulder and the head are visible, but the right shoulder has yet to be formed.

Target: around $1,600

Stop: $1,370

Overall, watching different markets now in the last few weeks I saw some correlation between different instruments. From my perspective the next 2-3 weeks are crucial for the general market direction. This relates for instance to this trade but also for the S&P or Nasdaq. Do we get the next strong upmove or the final break down? The next few weeks will probably give an answer to that.

Attached Thumbnails
Swing Trading Futures-soybean_01_lt.jpg   Swing Trading Futures-soybean_02_mt.jpg  
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  #7 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

UPDATE:

Not yet out of Crude Oil. Moved my stop to $85.70 (yes, I do that sometimes). But it's still possible that I get out before that level, if overall market does not look healthy.

Today might be the day of the breakout either way...

UPDATE 2:

Out of Crude Oil at $86.10. Short now from $85.65 but not yet sure whether this is going to turn up again. Stop for the short at $86.30. Going long again, if $87 is hit.


Last edited by karoshiman; November 28th, 2012 at 10:30 AM. Reason: update
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  #8 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

Stopped out of my Silver position at the pre-determined level.

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  #9 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received

What a day...

Out of my Crude Oil short with a loss. Now long from 86.30. Will add if price breaches 87.

Re-entered silver long at 33.41.

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  #10 (permalink)
Trading for Profit
Munich, Germany
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: Equity Index Futures
 
Posts: 285 since Apr 2012
Thanks: 121 given, 116 received


My long scenarios are still intact. Price tested previous resistance levels and bounced back. Should have had my stops below that levels. Learning point for next time.

Summary of current positions:

QM (mini-sized Crude Oil, Jan. contract):
LONG from 86.30 (will add if price breaches 87.60)
Stop: below 85


YI (mini-sized Silver, Dec. contract):
LONG from 33.52
Stop: below 32.90


YK (mini-sized Soybeans, Jan. contract):
Long from 1446.44
Stop: 1370

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