The Daily Trade
An Example of the Usefulness of Stop-loss Orders
Recorded on September 19, 2007.
In this trade I demonstrate another entry at the 61.8% fibonacci retracement level. This strategy allows
me to join a trend on a pullback, and most importantly, not chase the trend. I will attempt to enter the
trade long at 13,926 which is the 61.8% retracement of the previous move and one point above the 200EMA which
should provide a good support level. My plan
is to use two mini-Dow contracts where I will try for +3 points ($15) and +7 points ($35) on my exits
leading to a possible $50 gain on the trade. For my stop-loss I will use -7 points on both
contracts which allows for a possible -$70 loss on the trade. Once I get +3 ($15) on one contract my
maximum loss will be -$20 barring any bad fills not in my favor.
- Contract: CBOT $5 Mini-Dow December 2007 (YMZ07)
- Long Entry: 13926 placed at the 61.8% retracement of the prior up move and at the 200EMA
- Profit Exits: 13929 & 13933
- Stop Loss: 13919
- Video running time: approx 6:45
Note: There is no sound in this video.