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I'm looking at a sell set up this morning on March soybeans. Notice on the chart that soybeans have been firmly below the 180 WMA even before the bearish crop report last Thursday. The market was sharply higher yesterday, then lower overnight. There seems to be resistance at 1180. Sticking to my rule of not entering the trade until the next number ending in 0, I have a sell order placed at 1270. That's the dotted blue line. Technicallly I guess I could have taken a short position at 1180 overnight, but I don't like entering positions during such low volume, plus I was asleep then anyway. If the market gets down to 1170 today, it will be down about 11 cents and that's as good a time as any to go short.
Can you help answer these questions from other members on NexusFi?
The market has set up a sell signal for 1280. Overnight the s&p chopped around and at one point this morning I put on a buy order for 1300 but it never got up that high. With volume picking up, the market has closed below the 180 WMA and exceeded the low of that close at about 1288, so I place a sell at 1280 which is the next lowest number ending in 0.
Here we go. After continuing to chop around, the March s&p has now gone up and I've initiated a long position at 1300. In my previous post I had a sell order for 1280, but after the market closed above the WMA on the 30 minute chart I cancelled that order. I then got a buy signal and confirmation for 1300, I placed the order, and it was just filled. The next thing I did was place a sell stop, good til cancelled, at 1290. 10 points, or $500 of risk. If the market goes back down to 1290 I'm out with a small loss. If it goes up to 1310 I move my sell stop to 1300. Keep the faith.
What do I mean about the next number ending in 0? Much of this system is built on the idea that, psychologically, numbers ending in 0 are important to people. In our non-trading lives, 10-year anniversaries and 40th birthdays are a big deal. Why shouldn't it be the same in the markets? If the market is heading in a certain direction and hits the next number ending in 0, I think there is a good chance it will keep going in that direction. People will see that the market has hit that 0 number and they'll want to get in on it. Interestingly, today we have a 00 number in the March mini S&P: 1300. How will the market react to this? We'll see.
The 0 number theory does not give you a huge advantage in the market. Such things don't exist. It gives you maybe a slight advantage that some days is totally meaningless. But like a veteran card counter at the blackjack table, we're looking for any slight advantage we can get that we can exploit over and over.
The mini continues to move up. Following my rule of moving my stop for every 10 points of profit, when the market reached 1310 today I moved my stop to 1300. This is my basis, so the trade is essentially a break even at this point. If the market goes back down to 1300 I will be out with perhaps a minimal loss for slippage and fees, and if the market goes to 1320 I'll move my stop to 1310 and lock in 10 points of profit.
Yesterday I initiated a long position in the March soybeans. On a 30-minute barchart, the market closed above the 180 weighted moving average in the mid 1180s, setting up a buy at 1190. By the time I woke up Thursday morning and checked the market, it had already exceeded 1190, so for various reasons I decided to get in at 1195 and not wait to see if it went back down to 1190. It was the best decision I could make at the time. I had to assume the market was going higher. What if went up another 20 cents? It's happened before while I sat there waiting for it to come back down. Also, because of my schedule yesterday morning I wasn't going to be at my computer watching the trade. If I wanted in, it had to be before the overnight market closed at 7:15 am. I placed a sell stop at 1185, 10 points back.
The soybean market continued to go up yesterday and last night, then broke back down to 1190 this morning. The trend is still up. We'll see what happens today.
In many books on foreign exchange trading, you'll see a lot of talk about the even-number trades (i.e., buying the Euro when it hits 1.290, for example. In trading the stock indexes (the Dow, for example), the "50" is quite important especially during times of high volatility. So, playing a bounce from a trade down to 12550 is a potential setup. I actually wrote a technical system that does this, and while it's performance recently has been middling, it printed a lot of money during the volatility spike in August.
I got stopped out on my soybean buy at 1195. That trade was just fraught with bad luck. However, after making lows this morning the soybean market is moving back up. I got a setup with a 30-minute close above the 180 WMA, confirmation when the market traded above that closing bar's high, and then I went long at 1190.
Overnight the soybeans are up, and this has allowed me to move into an approximate break even on this trade. I always place my stop 10 points or cents from my entry, then for every 10 points or cents of profit I move the stop. So on Friday when I bought soybeans at 1190 I placed the stop at 1180. Last night the market hit 1200 soon after the open, so I moved the stop to my entry point of 1190.
Notice also on the chart below that you had only one chance to get in at 1190. That was in the final minutes of Friday's trading session, then the market gapped up last night and never came back down. This is a good example of why it's important to take the signal when it comes.
Still in my long mini s&p position from 1300. This trade is going on its fifth day. The market has been caught in a narrow range, mostly between 1305 and 1310. Real tight. Technically I have a sell signal confirmed for 1300, and the market got close earlier this morning, but now it's back up over 1305. I placed a sell order for 1300 earlier but just now took it off. I'm going to have to watch this market close.
March mini s&p on a 30-minute chart since last Thursday:
