This week, I took a trade on the SPX500 that ended up being a successful one by the time it closed. We caught a 29 point move when it was all said and done, and here is the breakdown behind it.
On May 23, I sent out an alert to the community that I had entered a long trade on the SPX500 at $3959.42 and set a suggested stop loss 152 pips below entry at $3807.29. My analysis behind the trade stemmed from speculation on the FOMC meeting that Wednesday. There were several concerns regarding the current rate of inflation and interest rates along with the Fed's policy going forward.
The main catalyst for taking this trade, however, was due to price action from technical indicators. I saw a nice rejection from the lows and a break to higher highs. My initial goal was to wait for a 100 pip move before I considered taking profit. The RR was not 1:1 as I wanted to give room for the trade to run in a volatile market. I chose to take a .01 size lot to limit the damage of a violent swing to the downside which has been prevalent so far in 2022. I also wanted to have lots of capital to work with in case such a swing occurred again.
During the trade, my position continued to sink lower and lower until I was about 70 pips underwater. Things weren't looking great although I kept in mind that harsh moves were going to be a part of the trade and I would need to keep it open while the market decides where to go.
On the day of the FOMC, we saw the hardest moves in either direction, especially at the open of the New York session. Throughout the day, however, price began to shift back up and brought me back to break even.
Finally, fears subsided on nearly as-expected news from the Fed came out and my trade started to move in profit. I sat in the trade for almost the rest of the trading day.
Instead of waiting for the target price, I manually exited the trade after a 29 pip move above my entry. The reason I closed was due to past patterns of quick moves to the upside after a Fed meeting followed by a sell off in the next days. I was happy with the profit, but had I stayed in, profits could have mounted to a 104 pip move (right where I had initially placed my TP). It was difficult to stay in for me after seeing gains fade from false rallies this year, but overall, a profit is profit.
This week, me and Nick caught a crazy move on the SPX500 that we are currently still in at the time of writing this. This one move has netted us around 1,500 pips in equity. We haven't closed, so this number will not be the same when the trade is over, but this article will go over what we saw, where we thought SPX was going to go, and what we did.
What we saw
Over the past month or so, the jobs market population started showing a much larger growth than previous months as businesses started opening back up and were desperate to hire. People flooded into the labor force looking for jobs. With more people trying to get jobs, the more temporary unemployment there was. So, unemployment claims and unemployment rates went up. But companies were still hiring, just not to the pace of the growing numbers of the job market.
What might have been considered an economic slowdown on the surface actually seemed like a sign of growth to us. Our analysis can be referenced here and here.
Where we thought SPX would go
From July 15th to the 19th, SPX continued to sink and eventually crossed under a recent bottom that was supposed to be support. On July 19th, the market had corrected nearly 4% from the highs which seemed like an overreaction to us. And on that same day, price had touched a big indicator for support at the 50 Day moving average. This level was going to determine whether price will fall lower to a bottom in June or come back to test highs.
What we did
We then went to smaller timeframes to look for decent entries. After price had hit its 50 DMA, it bounced, but that didn't necessarily guarantee a full recovery from the lows. Finally, on the 1H chart, we saw a consolidation zone where priced topped out. We were looking for a breakout above this level which did end up working out. When price showed us that it was breaking above, we bought in.
Now we're trailing our play so we don't have to close out at a fixed TP level which is so we can try to maximize our gains. We will either close out in around 1000 pips profit if price comes down from here, or we will continue to trail our stops.
The great thing about this strategy is that when we catch big winners, they really move in our favor. If we're wrong, we get stopped out in the red or at break even. A lot of the time, these big movers are rare and don't usually happen. But when they do, they really pay off.
So, fortunately we were able to catch a good swing on this trade and were aware of the risks involved. Thanks for reading up on this quick rundown of the S&P trade breakdown. Hope you all enjoyed!
Patrick's Outlook 7/14/21
Patrick put a short order out for AUD/CHF due to the daily being in a grinding downtrend and recently showing a sharp momentum further to the downside. The bounce had been hesitant and the 4hr was showing consolidation and buyers didn't seem convinced to get into the market.
AUD/CHF - Daily pullback with 4hr breakdown trigger
SELL STOP: 0.682, SL: 0.68675, TP: 1/2 off at previous 4hr pivot (~0.6797);
Trail remainder on daily price action (daily bar-by-bar if momentum shows or on significant pivots).
Patrick's Trade 7/19/21
Patrick took 1/2 of his position off as seen below.
He decided to hold for a bit more than the originally intended target because price was showing such nice follow through to the downside.He trailed the remaining 1/2 on the daily bar-by-bar. So hypothetically if each day were to close like these do, he would just trail his stop to a few pips above each day's high.
Crazy enough, I took a trade on CAD/CHF that resulted in a major profit, and then it set up again... You can read the blog post I made about it here.
So very similar to my last trade, I was bullish on the CAD, and liked the idea of jumping in on another pullback. Here's what I sent out to members inside the private group:
So I took the trade... and sure enough the bull rally continued! Shortly after, I was moving my stop to break even.
Once price rallied to the previous high, I started to trail my stop loss. Here's what I sent out to members:
Sure enough, it rallied a bit past this level on fresh CPI news out of the US (which, due to the CHF and CAD's relationships to USD respectively, caused the pair to spike higher). From here, I aggressively moved my stop loss higher, in case there was a spike the opposite way as we often see post news events.
In the end, the trade was a great winner. Closing out at about a 4 to 1 risk to reward. Meaning, for every $100 I risked, I ended up making $400. Not a bad way to start the week!
For full transparency, my trades are NOT always this good. I took a loss shortly after this on AUDUSD, which resulted in a -$550 loss. Here's what I thought would happen! (I ended up getting spiked out of the trade on a stop loss. Frustrating, but part of the game sometimes!)
You win some, you lose some. The main point though is that the big wins can outweigh the losses, and that's all that matters in the end. If you like my trade breakdowns, make sure to join us inside the private group, where I share all of my trades in realtime with analysis like you've seen in this post. Use code READER for a discount! Click here to join our private discord channel
CAD/CHF this week had an incredible run up, as the CAD strengthened against most currencies. Fortunately, I was able to catch some of the action. This was the trade I needed, since I have been in a bit of a drawdown recently. Here's a snapshot of some of the recent trades I've had before this one...
Not so glamorous, right? In total, I took 6 losing trades prior to this one CAD/CHF runner. And the crazy thing? I still somehow managed to earn a profit! 6 losses, 1 win, still profitable. How is that possible? Let's discuss it!
This week, I had my eye on the Canadian dollar, after last week the Bank of Canada reported their plans to start tapering off the money printing, as they see things recovering well overall for their economy. This to me was a bullish catalyst that was worth buying, but I needed a good entry. So here's where the technical analysis comes in.
After the sharp rally, we finally started seeing a proper pullback to demand. Finally, I had my chance. So I took a buy, with a stop loss below. Here is a snippet of the trade alert sent out to members in our private VIP group:
So, I took the trade and though it started slow, price started pushing off this zone nicely. Once it had rallied back to the highs, I started trailing my stop loss up.
This is where things got tricky though... but actually ended up making this trade the big winner that it was. Price started to pullback, and I added to my trade that was in profit. I sent out the alert to members inside of our VIP group that I was officially adding MORE to my trade, as seen below.
At this point, the secondary entry was just as good as the first, and the trade ran its way back to the previous high - this time with 2 profitable trades running on it. At this point, my trade was racking in quite the return.
At this point, I also locked in my stop loss just below structure. Some time after, price started to reverse, and ultimately tagged me out of the trade for a grand total of $3,576.40 on the trade.
Of course, not every trade is this good, but it really does only take one good winner to earn back losses and more. Happy to close out the week with a nice profit, and looking forward to more opportunities next week.
If you would like to trade with me and the rest of our analysts at A1 Trading, you can sign up for our private discord group where I share all of these trades. Use code READER for a $5 off our monthly or yearly membership, or 25% OFF our Gold membership. Have a nice weekend!
Trading doesn't have to be complex. In fact, in all of my trading experience, almost all of the money I have made has come from the simplest market approaches. In this post, I'm going to share with you one of my best trades for the month of March, 2021, and the entry style I used to make almost 3 grand in just a few short days.
The month of March started out slow. I had some winners, some losers, but by the end of the month I was just slightly negative for the month. To anyone who's been trading for a while, you know negative months happen. But no matter how long you've been trading, they can still be quite frustrating - especially when you're sticking to the plan but nothing seems to be playing out right.
In the last week of the month however, a setup I had been waiting for on NZD/JPY finally started to poke its head up. This setup is one of my favorites, and often has the potential to produce some great risk to reward opportunities. So I took the trade...
If you're looking to see all of my trades in real time, I share all of them in our private discord server. If you'd like to join, you can use code READER to get 25% OFF. Click HERE to sign up!
So what's the setup?
Well let's rewind and take a closer look.
My main reasons for taking the trade, as mentioned in the trade alert sent to members:
- Bought NZD/JPY at a key demand zone where buyers were strong historically
- Risked 50 pips initially on the trade in case I was wrong
- Bullish on NZDJPY due to a continued recovery environment, favoring the faster growing economy (NZD)
- Planned to trail stops if price went in my favor
At first the trade moved slow, but once it started running, it really kept going. From there I trailed my stop loss using price action and key zones to protect the trade from sudden reversals. Ultimately, price kept running and I ended up stopping out for a profit of over $2700.00!
So I have to add some context here. I'm trading with a larger trading account than most newer traders, so not everyone is going to be able to make those sort of gains. But - the point is that regardless of account size, some of the best gains come from the simplest approaches.
I had a plan in case I was wrong, I had a strong reason for entering long, and I had a plan to let the trade run if it went in my favor. Finally, keeping a journal is a key for holding yourself accountable!
I share my trades inside of our private discord for members, and spend a lot of time answering questions and explaining my trades fully. If you have any interest in joining our community, you get access to a whole bunch of cool stuff like trade alerts, chatroom access, and live coaching webinars. If you'd like to join, you can use code READER to get 25% OFF. Click HERE to sign up!
Thanks for reading, and maybe I'll see you inside the private group!
- Nick Syiek, Founder & Market Analyst at A1 Trading
Warren Buffett, one of the most successful and richest investors of all time, long-time owner of the established conglomerate, Berkshire Hathaway, and mega bull has recently turned bearish on the US stock market. Granted, he has been saying this since the April rebound, but he finally put his money into action.
Although Buffett would probably never short the market, he decided to get rid of his bank stocks by dumping JP Morgan, Wells Fargo, Goldman Sachs and other banks with smaller positions. He sold over 250 million shares, hundreds of billions of dollars worth in total, but that's not all.
The oracle of Omaha had also replaced his stake in bank stocks for a gold mining company, Barrick Gold Corp (NYSE: GOLD).
But why sell bank stocks when the Fed has funded them with trillions of dollars and pushing the S&P passed all-time highs?
Surprisingly enough, bank stocks have largely under performed the market in this latest bull rally. This is due issues regarding credit and debt; Analysts expect banks to be close to $900 billion in losses by 2022, according to CCN.
Here's the indicator Buffett uses to measure the Wilshire Stock index valuation compared to overall GDP. The way it's measured on this site (which is the accurate way) is by taking the annual GDP from Q1 and using that as the denominator throughout the year. So, it is basically the index divided by Q1 GDP.
In most recent numbers, GuruFocus has us at 179%, which they consider 'significantly overvalued' for the market. They also predict a 2.9% decline in stock market returns this year.
It's hard to predict what is going to happen in the market with tons of factors at play. For example, two weeks ago, jobless claims dropped into the 900,000s range, and investors believed the economy was recovering. The market shot up. Last week, jobless claims (which have been driving the market either up or down) reported back over 1 million at 1.1 million. Despite bad news, the market shot up harder than the previous weeks.
The problem investors are running into is that Wall Street will tell you that the economy doesn't reflect the stock market. And when there's bad news about the economy, the market tends to go up. However, when there's good news about the economy, that news matters all of the sudden, and it causes a buying frenzy. As an investor who's got most of their money sitting on the sidelines since April, it's frustrating to try to get an idea of when is the best time to buy. Do we brush off the fact that the US is in a recession? Do we join the hype train and ride with the bulls?
The answer is painfully simple: Bull and bear markets all come to an end eventually before it resets. Look past the trees and view the whole forest. Is a vaccine going to fix the damage already caused by the pandemic? Most stocks on the S&P 500 are showing negative returns expect for a certain few. There is lasting damage to the economy, and if you were forward-looking, it would make sense to see the market reflect that in stocks. Some analysts are talking years of rebuilding before the economy 'normalizes' again.
Here is the US30 on the 4H chart showing long wicks on both the tops and bottoms of several candles. That is a big sign of uncertainty where investors can't decide on what to do. No one really knows what is about to happen in the next week, month or year, not even Buffett himself. It's about being rational and understanding what makes sense in the long run.
Put yourself in an unbiased position and ask, 'should the S&P really be at all time highs right now?' The obvious answer should be no, but again, the market does not always make sense.
What to Look Out For This Week
Watch for vaccine news: This week may see another frenzy of buyers as a successful breakthrough on treatments to the coronavirus will most likely become approved by medical officials.
Watch Big Tech: The stocks like Amazon, Apple, Google, etc have been the main drivers of the market. Analysts are finding long entries on all of these companies excluding Netflix.. Traders are likely to follow.
Watch Technicals: This is definitely a trader's market now. News does affect price, especially good news, but indices are respecting lines of support, resistance, breakouts, wedges, etc. On the 4H chart, the US30 broke above the wedge with a strong green candle. A break in highs could mean that the SPX500 might want to continue its run for now.
Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.
This week I was really proud of this trade. Not just because it was profitable and ended the week well, but because of the lessons learned along the way.
This week I officially added a new system to my strategy portfolio. This system is a breakout system, focusing on catching large moves in the market, and keeping a tight stop in case the trade goes wrong. I've been testing this system for a few weeks now and backtested it rather extensively - and the results seem pretty solid!
So for this week, I took my first few trades. I took 2 trades initially, both of which stopped out for -$100 each. Then this trade came along...
USD/CHF was trading lower throughout the day, and I wanted a piece of the action. I set my sell stop order, thinking that if price was to break this significant low, we could see price slip lower. Sure enough, the order was triggered, and the trade was on.
USD/CHF slipped further and further down, quickly recovering the two previous losses. Once the trade had gone in my favor, as part of the strategy, I moved my stop to break even. From there, I let the trade run.
After a few more hours, USD/CHF had closed for a huge profit of over $600, and the breakout was successful.
The moral of the story though is that taking 1 winner and 2 losses can be psychologically stressful - especially when there are even more losses in a row. But, by letting the winners run and keeping your risk managed, there seems to be some really great opportunities out there.
That's all for now. Happy trading everyone!
The reality of trading forex is much different than the illusion we see on social media. Finding verified results for nearly all these traders is impossible, because they likely don't have the results they talk so much about!
In this video, I share some of my real results. They aren't glamorous, but they're real, and they're public! The power of trading is not in overnight success, but in long term potential using compound growth.
My goal is to continue to grow this account (and my other accounts for that matter) at a slow and steady rate, rather than trading with high risk of ruin.