Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.
Pretty thin out there on the short term setup front. I think the best play are the spoos right now – we’ve got a date with the 25-hour scheduled sometime near the open. That should happen around 1840 and if you add a tick then you’ll match a brand spanking new Net-Line Buy Level currently on the daily. So this is pretty easy peasy – long above 1840.25 – if triggered I will put my stop below 1834 (i.e. the 100-hour SMA). Yes, quite a stop which should result in a very small position size.
So let’s do the math – if our trigger is at 1840.25 and my stop is at let’s say 1833.75 – that comes out to 6.5 handles or 26 ticks. We type that in our handy futures risk calculator and we swiftly arrive at 3 contracts given a principal of $100,000.-. If you use a smaller stop then you simply measure the distance from your entry to your stop and use that instead of the example above.
FWIW – if you’re bearish (see previous post) you can also be short here with a stop above the NLBL. In this case you probably get away with a much smaller stop – somewhere around 4 – 6 ticks ought to do it. Obviously this affords you a much larger position size – 13 handles for a $100k account.
That’s all for this morning – see you later this afternoon.