Waiting For Confirmation

There are some basic rules to trading for this account. One of these rules is to wait for confirmation of direction before placing a trade. Confirmation of trend means that the security closes a period of trading in that trend. The closing of the period within the trend is very important. You will read about this later in the post. This rule, when followed, has saved this account a lot of money. But, when this account has felt the need to be the early bird and trade before confirmation, losses have occurred on a regular basis. A couple of examples to share would be in gold and in the Nasdaq QQQ's.

A few months ago a trade signal went off on the QQQ's. After analyzing the trade, the account purchased some call options convinced it was in a bullish trend. This analysis included looking at the way the dow and S&P averages were moving as well as some bullish moves of stocks within the Nasdaq. What it didn't include was a confirmation close of the trend. Since that trade, the price has barely budged, and the calls were stopped out.

This past week showed a trade signal for being bearish on GLD . It was very close to support at $150.00. The plan is that if if breaks below $150.00, $140.00 would be a 3-6 month target. But from the recent experience with QQQ, a confirmation close would have to come first before a put trade of any kind would be executed. The trade almost happened. In fact, in pre-market trading on Friday, GLD was trading below $150, and the thought was that a trade would almost surely be made on Monday morning. For most of the morning, it continued trading below $150. But then in the afternoon it completely reversed and not only went back above $150.00, it closed the day at $152.81. That was more than a $3.00 intraday move. The waiting for the close was instrumental in this account not placing a losing trade. Had the account made the trade early in the day, it most certainly would have been stopped out by the end of the day at a loss. Because the account waited for confirmation of trend, trading capital was saved for another trade.

Waiting for confirmation generally will mean that the trade will never start at a bottom or a top. You will rarely sell at the top or buy at the bottom. But successful stories of that happening are few and far between. That is why you hear about them. What waiting for confirmation will do is protect you from trading too soon. This will no doubt save trading capital that in the end will be as much as any top to bottom trade will ever be. It will also increase the chance of overall profit, as trading commissions will also be less. It is important to have the rule of "waiting for confirmation" within your trading plan. Otherwise, the story might be about the trader who would love to trade but has no capital.

Not Purchasing All At Once

Sometimes your research allows you to take on a position that contains many units (shares or options contracts). One thing that needs to be kept in mind is not going in 100% all at once. You should schedule your buys throughout the trade. Major risk abounds by going all in. Capital protection and trade verification need to be achieved.

When purchasing many options contracts or many shares of a stock or etf, an investor or trader feels confident that the expected move will happen. But if that trade is wrong, the losses can increase quickly. One protection against that action is to plan a purchase program in stages. Determining how much to buy when is up to the investor. But going all in right away risks capital that should not be risked. Sometimes sacrificing a little bit of profit in order to protect capital is essential and should be used when possible.

Investors and traders tend to have their egos show up while trading. Let's face the fact that making money is the purpose and feels good. But sometimes we are wrong. The trade sometimes goes exactly the other way the moment we enter. A key to winning trading is to wait for the verification before the bulk purchase. Allowing for verification before the bulk purchase has saved many a traders' capital. This strategy also allows for more trades to be executed because of the fact that losses taken when we are wrong are much smaller than if we go all in.

So remember to use a proper purchase plan when making a decision to purchase lots of stock or many options contracts. Hopefully it will not only save your capital, but extend your profitable trading career.

USO trade finished Code Yellow

The USO trade has ended. The October $35.00 call option was sold for $2.43 before commissions and fees. The price of the USO ETF was at $36.37. The trade ended Code Yellow.

Some reasons for the sale:

- Decrease on the time value of the option was moving quicker than increase of intrinsic value of option.

- Brent has reached above $97.00

**Disclaimer** - This is just trade information. It is not a recommendation to buy or sell any of the securities mentioned in this blog. Do your Due Diligence before any trading or investing.

Current Status of USO trade Code Yellow

The USO trade is still currently on. The status of the trade is Code Yellow. USO closed the week at $35.95. That is a rise of $1.12 for the week. The October $35.00 call bid price closed the week at $2.29. That is a rise of $0.61 for the week.


 **Disclaimer** - This is just trade information. It is not a recommendation to buy or sell any of the above securities. Do your Due Diligence before any trading or investing.

New Trade in USO

There has been a new trade in USO. It is an Crude Oil ETF. The account has purchased October $35.00 call options. The account paid $1.68 before commissions and fees. The price target for this trade is $3.20. A stop loss price has also been decided but will remain unannounced until after the trade is finished.

**Disclaimer** - This is just trade information. It is not a recommendation to buy or sell any of the above securities. Do your Due Diligence before any trading or investing.

Trade Status Color Codes

For each trade, a color code will be assigned as to designate its status. The colors are below:


Code Green - This status means that the trade is profitable past the target set. Once this happens, the trade's stop loss will be moved up.

Code Yellow - This status means that the trade is profitable, but has not yet has reached the target price. The stop loss will move up to the cost basis of the trade.

Code Orange - This status means that the trade is below the cost basis but above the stop loss.

Code Red - The trade has hit the stop loss and is now over.

Welcome to Trading Futures Options

This blog has been created to follow a futures options trading account. ETF options will also be used when necessary to execute a trade.