Holistic Trading Academy

Tuesday, December 6, 2016

Anatomy of $4,400 Trade using the Harmony Trading System-Logic and Execution

Anatomy of a $4,400 Trade. Step by step logic and execution (This trade was time stamped and posted on Stocktwits.com- http://stocktwits.com/HarmonyTradingSystem) on 12/01/2016 starting at 12:43 PM Central

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Define the Trading Environment:

OPEC agreed to its first cut in production in eight years, which led to a surge in prices that started during the Globex session and continued thru the majority of trading for the day. However, with Prices extended +8%. Around 11:47 AM central the prices started to shift from bullish to bearish. The shift in the psychology of the market was detected via the following:

1-Aura cloud measure price psychology shifted between a bull market to bear market at 11:46:46 AM Central. See Chart1

Entering and Managing the trade:

2-Captain Short setup was triggered at 12:45 PM Central- The Captain setup is a consolidation of 4 candles then a breakdown from that average of the 4 candles. Posted a 15 contract short at three prices (51.52/51.45/51.48) between 12:49 pm and 12:54 pm (central). I expected the price to drop quickly from my entry point and that is the reason I accumulated the 15 contracts so quickly. See Chart 2/Chart 3

Draw Down Worries

3-Prices started to rally into the 51.61. My average cost 51.48 so 13 ticks down on 15 contracts my drawdown was $1950. My Stop for the trade was at 51.63 which is one tick above the trend line. Needless to say I was a bit worried. I was getting close to getting stopped out. I was comfortable with the risk but did not want to take a $2500 stop. I was patient with it and what helped me stay calm is I kept repeating to myself just stay calm and focused and breathe….I guess that did the trick.

4-at 1:04 PM central my fortunes were about to change. Prices hit a wall and started drifting lower. I saw an opportunity to add another 5 lot short at 51.56. With the Last 5 contracts shot I was all locked and loaded. My cost average is 51.50 and was looking to see it start paying off or I may have to consider ditching the idea.

Getting excited prices finally breaking lower

5- Target # 1 per the Harmony Trading System was 51.40 and I got out half of my position for +$1100 and reduced my stop to break even + 1 tick. Chart 4

6-With the recent run up in prices it was reasonable to assume that any legitimate draw down should be deeper. The Harmony Trading System generated a Target #3 at 51.14 so I pended 9 contracts at that level. See Chart 7/8. I filed the 9 contract at 51.14 and the trailing stop picked off the last contract at 51.23.

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Chart#1