Notes for Trade Recommendations Based On Closing Prices, Volume & Open Interest
A note to users regarding use of trade recommendations based on closing prices, volume and open interest.
1) Trading recommendations are based on daily closing prices of the futures contract. Daily opening, high and low prices are not considered.
2) The relationship of daily closing prices to trading volume and open interest is the basis upon which these trading recommendations are made. Volume and open interest are essential for the sustainability of price movements. For example when closing price rises and trading volume and open interest decline there is a chance the price rise will not continue.
3) These trading recommendations are based on market conditions at the time of preparing this analysis. Market conditions can and do change rapidly.
How To Use This Information for making your trading decisions:
1) When using these trading recommendations always keep in mind Grandmill’s advice, “Be your own trading advisor”.
2) The time frame for these trading recommendations is short term while Grandmill’s trade recommendations and price projections have a longer time horizon.
3) Stop loss orders should be used for all trades.
4) The suggested trades are based on CLOSING prices. It is possible for a stop to be hit because the daily high or low price exceeds closing prices. Therefore placement of stop orders should consider daily price ranges.
5) The recommended stop is based on support/resistance levels. In some cases there may be a substantial draw down in capital should the price move against you and the stop hit.
6) A trailing stop is recommended. As price moves in the direction of your trade re-set your stop.
7) In the event your stop is hit, exit the trade. Take the loss, small losses are easier to accept than larger trading losses. Do not hold the position open hoping the market will turn around. Chances are it will not.
8) An alternative trading strategy to consider is BUYING at the money puts or calls instead of futures contracts. Advantages are greater financial leverage and losses are limited to the price paid for the options. Selling options may have greater financial risk.