Trading levels and reports for Feb 28th
By Jim Wyckoff www.jimwyckoff.com
(Note: This is the first installment in a regular weekly series of educational articles on trading techniques and how to be more successful in the very challenging business of trading the futures markets.)
I had a fellow email me recently, asking: "Without giving away any precious secrets, could you tell me a way to improve my entries and exits (on trades)? It seems nobody wants to share their system."
Well, first of all, I don't have any trading "secrets." What I do have is many years of market experience, including studying the markets and technical analysis--and listening carefully to the best and brightest traders share their philosophies on successful trading. (You should be suspicious if anyone tries to tell you they do have a "secret" to trading success, but that's another story.)
On better entering and exiting trades, first of all you need a trading plan--before you enter the trade--and you need to stick to it. Your trading plan can have different scenarios and options once you're into the trade, but the key here is don't "fly by the seat of your pants" when you're into a trade. You don't want to let emotions dictate your strategies while you're actively trading a market.
Know how much money you can stand to lose and then place a stop accordingly, and then don't change your mind when you're in the middle of the trade.
If you've got a winner going, you should also have a plan in place regarding when to take your profits. Again, your trading plan can allow for some flexibility once you are in the trade.
More specifically, I like to "buy into strength" and "sell into weakness." This trading method abides by the old trading adage, "The trend is your friend." Conversely, traders who try to "fight the tape" and be a bottom-picker or top-picker usually wind up getting their fingers burned.
One of my favorite trading "set-ups" is when prices have been in a trading range--between key support and resistance levels--for an extended period of time (the longer, the better). Then if the price "breaks out" of the range (above the key resistance or below the key support), I like to enter the market--long on an upside breakout or short on a downside breakout. A safer method would be to make sure there is follow-through strength or weakness the next trading session--in order to avoid a false breakout. The trade-off there is that you could be missing out on some of the price move by waiting an extra trading session.
If you are long the market, set your sell stop just below a technical support level that's within your tolerance for a drawdown. If you're short, set your buy stop just above a technical resistance level that's within your tolerance for a drawdown. Don't set your stops right at support or resistance levels, because there's a decent chance that those levels will check and possibly reverse the price move--and you'll miss getting stopped out.
If you've got a winner and decide to let your profits run (per your initial trading plan), use trailing stops that utilize technical support and resistance levels.
| Contract (March 2006) | SP500 (big & Mini) | Nasdaq100 (big & Mini) | Dow Jones (big & Mini) | Mini Russell |
| Resistance 3 | 1306.73 | 1731.67 | 11190.33 | 749.00 |
| Resistance 2 | 1303.17 | 1718.83 | 11167.67 | 746.50 |
| Resistance 1 | 1299.23 | 1709.17 | 11135.33 | 743.75 |
| Pivot | 1295.67 | 1696.33 | 11112.67 | 741.25 |
| Support 1 | 1291.73 | 1686.67 | 11080.33 | 738.50 |
| Support 2 | 1288.17 | 1673.83 | 11057.67 | 736.00 |
| Support 3 | 1284.23 | 1664.17 | 11025.33 | 733.25 |
| Contract (March 2006) | British Pound | Euro | Ten Years | US Bonds |
| Resistance 3 | 1.7456 | 1.1912 | 108 4/32 | 113 17/32 |
| Resistance 2 | 1.7438 | 1.1895 | 108 | 113 9/32 |
| Resistance 1 | 1.7419 | 1.1880 | 107 27/32 | 112 28/32 |
| Pivot | 1.7401 | 1.1863 | 107 23/32 | 112 20/32 |
| Support 1 | 1.7382 | 1.1848 | 107 18/32 | 112 7/32 |
| Support 2 | 1.7364 | 1.1831 | 107 14/32 | 111 31/32 |
| Support 3 | 1.7345 | 1.1816 | 107 9/32 | 111 18/32 |
Tuesday, February 28, 2006
This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
Sincerely,
Ilan Levy-Mayer, M.B.A
Vice President
Cannon Trading Co Inc.
http://www.cannontrading.com
http://www.E-Futures.com
ilan@cannoncapital.com
Yahoo IM ilanlevy1970
310-859-9572
800-454-9572
Fax 310-859-0547
9301 Wilshire Blvd. Suite #614
Beverly Hills, Ca 90210
posted by Cannon Trading at 1:04 PM
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