Trade Example #3
In this Track 'n Trade Trading Training video, I want to take you through and let's do another trade on the U.S. Dollar.
Now, the U.S. Dollar is coming in through this time frame. We notice that if we look at the extremes, and that's what we always want to do, we notice that the U.S. Dollar has a tendency to drop all the way into expiration on this particular Contract. This is the December Contract. Notice that it generally has a tendency to drop into expiration, all the way from July towards the end of the year. So, we want to look for a downside potential on this market. Now, the way we're looking at it now, you'll notice that we've already got a little bit of downside potential coming in here. This market is giving us a Sell Signal, a yellow followed by a red. Now, the market has dropped down and it started to get this little rally, right in here. We're looking for this opportunity to continue down. What we want to do is we want to move the market forward.
Of course, let's come back and set our parameters first, on the Seasonals Indicator. Now, I like to come in here and go to the third tab, click on it. Let's set in our 80/20 parameters. We notice that right in here is where we generally see the market start to drop. So, I'm going to draw in my lines. From that point...it looks like...well, all the way into expiration, but even down into this point here.
I'm going to kind of limit us out, right at this point here, maybe. Because we start to see a little bit of a rally point in here. So, we need to be aware of that, we generally see a little rally in here. Then we see a little drop, then we anticipate another little rally, before we get kind of the bigger drop. So, maybe through this time frame, we're going to see some kind of an isolation of a sideways market. But we'll keep that in mind, but for now we're looking for this downtrend to come in. It has already kind of started back here a little bit early, so we're looking for another opportunity to take advantage of this.
As we step the market forward, we're going to start following the Bulls 'n Bears Signal to give us some kind of indication as to what we can anticipate. Now, look at this- what we have, we actually have a Buy Signal in the Bulls 'n Bears from a downside potential market. Seasonally speaking, this market has a tendency to drop during this time frame. So, we're getting a Buy Signal, so this is kind of a counter seasonal to what we anticipate. We don't anticipate markets rallying during this time point. But look at this! We had this little peak, right in here, that the market has a tendency to rally up over the top of. Maybe that's what we're seeing here, maybe we're seeing this little rally peak. We don't know, maybe we'll watch it. But if we wanted to, we could actually get in and take a long position here. I don't think that's what we really want to do. If we're anticipating this little bump right in here, maybe this little rally and then this would be an opportunity for us to turn and catch this nice long drop into this next point. So, we'll look for a downside potential, right in here.
Try to read the seasonals, kind of like a tea leaves in here. Then, as we step this market forward, it's rallying strong. Oh, maybe we should have got in, maybe we would have made some money. Now, it's coming back against us, coming back against us. Now, this is...OH! Look, it's doing beautifully, following this nice little seasonals trend. Yellow, now all we're looking for is one more signal. Give us a yellow followed by a red; that would be a Sell Signal for us. Is it going to do it? Wait, wait, wait, see, that's the great thing about using the Bulls 'n Bears in combination with the Seasonals- Bulls 'n Bears tells us when we need to wait, wait, wait, stay out of the market. Stay yellow, it's not yellow, neutral, neutral, neutral. Now, it's giving us a signal, it's indicating, okay, the market is started to drop again. This is in compliance with our seasonal trend. We're anticipating this seasonal drop in here.
So, let's go ahead and take advantage of that. Let's put an order in. Just in case it continues to fall, let's get in with 3 Contracts, on a Stop. We're going to step the market forward, and our Order is filled. Of course, we have to open our account, which we failed to do. Open our account, let's say we opened our account on September 3rd with $25,000.00. Hit Okay. Now, as that market continues to drop, we need to protect ourselves, we need to put some Stops in here. Of course, we're going to use the traditional rules of the Bulls 'n Bears for Trailing Stops. We're going to hold one there, we're going to put another one back a little bit further. So, we're just going to do with one.
Now, as that market, if it continues to drop in our favor, we can tighten up our Stops, and move those in to break even. Look at that, it's already dropped nicely. I'm going to pull this one to break even, and I'm going to pull this one down one more, and then I'm going to turn the text off here, so we can see. Now, as that market drops, now if it comes back against us, if it comes back too far, it'll get us out. Oh, that's a nice drop! That even gives me an opportunity to bring this Stop in down here, protect a little bit of profit, put that one at break even. Step the market forward, wipe the sweat off of my brow! I'm into a profitable trade! We can come over here, and see we're up $4,700.00.
At this point we can start anticipating where we need to place our Stops, for Auto-Trailing Stops. We can come in, go to Chart Overlays, and I'm going to turn on my Parabolic SAR for 1. Then, I'm going to go into the Bulls 'n Bears, and I'm going to turn on my Bulls 'n Bears Blue Light System. Now, I have 2 Auto-Trailing Stop placements. I can leave them right there, until they catch up. I'm going to come into here, and go to Settings. I'm going to say I want to Buy, this is my first one, so this is going to be my Blue Light System. Actually, I'm going to break this apart, in just one minute. So, I'm going to Buy 2, Trailing Stop based on Blue Light System. Say Okay. This one here, I'm going to go to the Settings. This one, Show Text, let's go to Settings, and I'm going to Buy 1 Stop, Trailing. I'm going to make this one based on the Parabolic SAR.
Now, as that market starts to drop in our favor, those Stops will automatically trail with those Blue Light Systems. So, now that's a nice move in our favor. It's doing well for us, if it comes back too far, it'll Stop us out. That one Stopped us out with 2 contracts. Notice, it's coming in and it's starting to happen right here on this yellow line. Right where we drew it in here, where we felt like the market might start to rally again, to come up into this little bump, or start to go sideways. But we're still in with one contract, in case it drops some more. One more, and we got stopped out there too. So, we got stopped out, we took advantage of this nice little downtrend, in the Seasonals, for $4,285.00 profit.