Day Trading Journal for /CL Oil Futures
This is a day trading journal for a Short on Oil Futures on the 15th August 2018 using our “Day Trading Add-On Suite for ThinkorSwim”. (The intent of this new indicator suite is to provide dynamic support and resistance levels for short term trading). On the first chart below we can see that Oil Futures were range bound during the Asian Session (note: time axis on charts below are set to European time). But with a Bearish Bias as indicated by our Red arrows on our special False Breakout Stochastic indicator, which is part of our Main Elliott Wave Indicator Suite for TOS (highlighted with blue ellipse in the chart below). During this period the price action was chopping around our Special W5T EMA Cloud and at the same time we can see that all but the 5 minute time frame on our Multi-time frame Dot Cloud Indicator are red (bottom sub-chart on chart below). This indicates that the price action is Bearish on the 15min, 30min, 1Hr, 2Hr and Daily time-frames and below our W5T EMA cloud on the respective time frames. Again building a picture of Strong Bearish momentum building.
Only as the European session was starting did the price action come below the Cloud and the final 5min Dot at the top of our Dot Cloud turns red, as can be seen on the chart below from the A pivot to the Wave 1. The Wave 1 pivot found support at the Daily Support pivot on Thinkorswim. Also note that the stochastic pulls into the oversold zone during this move and our Yellow False Breakout dots appear at the bottom of our Stochastic Indicator. These False Breakout Dots signify strong Bearish momentum.
Wave 2 Pullback for Oil Futures
We can then see that the price action pulls back against the potential main bearish trend to form a 2nd Elliott Wave. Important observations for the Wave 2 are that the top 5 min DOT Cloud turns blue to denote the current timeframe is in the W5T EMA Cloud. Then for a short period tests outside the top of the cloud as can be seen on the main chart below. All this time the other multiple time frame dots remain red, giving confidence that this is a pullback against a strong Bearish Trend that is forming. Our W5T EMA did in fact hold as resistance to form the 2nd Wave and the price moved back down below the cloud and turned the top dot back to red. During the Wave two the Stochastic pulled back against the false breakout dots to cross in the overbought zone with the formation of Wave 2. Also we had out Red Arrow indicators for further Downward movements.
Check out below this chart for entry and trade management strategy for this Short Day Trade on Oil Futures.
Entry Strategy – Oil Futures Day Trade
Once the price action starts to move down and away from the wave 2 pivot we need to look for a sensible entry. This was during the hour before the main US markets opened. No short should be made before the Wave 1 extreme and in this case the Daily Pivot Point in the green dots on the chart below. Entry was setup at $65.98 , couple of Ticks below each. Stop loss (red hashed line on chart below) was 2 ticks above Wave 2 high. So the Risk to Reward to 2nd Pivot Level was 1:1 then to the 3rd pivot level for the day was 1:2. A little after the markets opened the Short Oil Futures trade triggered.
Management Strategy – Oil Futures Day Trade
After the entry the price action stalled just below the entry leading into the Oil Inventories report. At this stage a trailing stop was placed just above the green dot pivot point on the main chart. This was protection against a big move up on Oil Inventory report. Once report was released, the expected move down occurred with great momentum. Also observe that the False breakout Yellow Dots in the oversold re-appeared to show that strong bearish momentum. Once the large red candle closed we used a simple trade management strategy that we teach in our Bootcamp, in that, we adjusted the trailing stop 1 tick above the high of two candles back and keep adjusting. In the chart below you can see signs of exhaustion in price action, highlighted by pink ellipse. At this point it is a good strategy to take profit or wait to see if trailing stop , two candles behind, get taken out. Our trailing stop was take out for a profit of 117 Ticks, which is $1170 per 1 oil futures contract traded.
(Click on the chart image to enlarge in another window)
For this trade we used our Main Elliott Wave Indicator Suite for the ThinkorSwim Platform. You can see the Video Tour >>>HERE<<<
AND Our W5T Day Trading Add-On Suite. Watch the Video Tour >>>HERE<<<
By combining the power of these suites we have developed a robust futures day trading strategy as can be seen from the above trading journal of a recent trade