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| From The Desk of The Trader |
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“Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage.”
-- Stanley Druckenmiller
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FAF19 Day 5 7 February 2019 Daily Goal: 40 Ticks
Max Contract Size (Per Trade): 2 (Margins $700; acct balance over $1400)
Performance: +65 Ticks on 8 ContractsSummary: Today was a bit more interesting as the range was wider and the action much more tradeable. We opened the day (cash market) below all 3 TAOST Power Zones and ultimately dove significantly lower before rising into the end of the day.
Be sure to check out the recap video as I recorded a couple of trades at the end of the day and added them.Recap Video: Click here... |
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Today’s Trading Lesson: How A Trade Works
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Today’s lesson is a bit different as it’s mostly visual. I’ve included 2 annotated chart images detailing the steps and action locations of a simple trade.
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The image below should provide a bit more clarity as to how this trade would work. Had I entered this trade by buying 1 contract on the break through the high of the trigger candle, my position would have been as follows...
- Purchase 1 contract at 25,304
- Stop at 25,258 so risk of 46 ticks (-$230) per contract
- As it turned out, this trade would have had maximum upside of 83 ticks ($415) per contract... although there was no way to know how far a security will go in your favor at entry.
This is essentially what day trading is about... We look for the best risk adjusted opportunities to enrich ourselves day and day out.
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Hopefully, this adds to your understanding of how trades work. It's a simplified version (my favorite kind), but all of the other stuff is superfluous. At the end of the day directional trading always comes back to a simple transaction like this.
KIS,
Ev
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