Best trade – week ending Jan. 11, 2019

The trade

Oil (CL): $1,070 Jan. 7

CL – oil futures, Jan. 7, 2019

Oil was on a tear this week, extending a rally that started in the first week of 2019 and continued to last Friday. Some commentators claim it was the longest continuous rally for oil since 2011.

Despite that, Nat’s best trade of the week was a counter-trend short on Monday, January 7.

The trade was posted in her overnight trading workbook, available to members at about 6 p.m. Sunday evening. Here is the link.

The market bounced around below her sell level in the overnight market, and finally triggered the entry about mid-way through the morning. The price continued to rally after the entry, and moved about 25 cents past her entry before reversing and dropping into the market close.

That 25-cent drawdown is the equivalent of $250 per contract, which means members were in a losing position until the market moved back down below the entry, and some may have been stopped out of the trade. Those who stayed in the position until the market closed had a gross gain of about $1,000 per contract for the day.

Runner-up: S&P500 e-min (ES) $1300 Jan. 8

S&P500 e-mini futures, Jan. 8, 2019

The  oil trade above wins the nod for the best trade of the week because it was so simple: enter a limit order overnight, paired with a sell order market-on-close, don’t look at the price action and collect the profit at the end of the day. A George Foreman trade: set it and forget it.

The trade the following day was a bit more complicated, but more profitable. The sell entry was triggered in the pre-market and again shortly after the day session opened.

Then the market made a blow-off spike that left our members momentarily in the red. The maximum drawdown was about $300. But it soon returned to the entry point and dropped almost straight down to the low of the day, before it bounced back to the entry level.

How much profit you made depended on how you managed the exit from the trade. People using a trailing stop, for example, would probably catch most of the $1300 profit that was available. So would anyone using a fixed profit target – typically about 15 – 20 points, which translates into a gross profit of $750 to $1.000.

But traders who exited market-on-close made virtually nothing. Nobody said this is easy.

 

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