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YMM1, profitable strategy, (3, -1) fade Stretch, 10 & 11 May


Hi,
Both 10 May and 11 May (3, -1) price measurement projections achieved the trade offset objectives, profitably. 11 May produced a 6.2:1 reward risk ratio, i.e., risked $65 to make $405 profits per contract.

YMM1 11 May: Faded first move by the Stretch and applied that price rotation fade to the (3, -1) formula. Below are the following price reversals.

11 May: Previous settlment=12700. Stretch calculation = 27
12700 + 27 = 12727 (12740 = 11 May high. 12737 = 10 May high).
12727 - 27 - 27 - 27 = 12646. This satisfies the (3, -1) formula, second consequetive day. 27pts x $5= $405 per contract = 60% profit. Reward:risk= 6.2:1

10 May:
Basis June e-mini $5 Dow futures (YMM1)
Trading from unchanged, 12631, and fading the first move, i.e., -1 of (3, -1):
12631 - the Stretch calculation = 12631 - 27 = 12604 (12601 = low at 21:52PDT).

12631 - 27 = 12604, representing the fade, i.e., -1 of (3, -1)
12604 + 27 + 27 + 27 = 12685 (high = 12692 (12694 = high at 07:01PDT)
This completes the 3 of the (3, -1) formula.

Below you'll find a corrolating 2.618% entry level.

Measuring from the 9 May high, 12677 - 2.618 of the 10 May Stretch = 12677 - 70 = 12607. 12601 = low (21:52PDT).
hunter, quick question, you said you used 12 pt stops right? so regarding today's trade, if you use the 1x the stretch and got short at 12727, you got stopped at 12740, right ? may be i am mistaken, if so, what stop did you use in a day like today ? 12-13 was certainly not enough it seems...not trying to pick on you or anything like that, just trying to understand your trade
Hi Ayn,
Each trade dictates its own set of stop loss rules. No, I didn't get stopped out last night. My 11 May strategy projected a Three Line Strike (Pit Bull Three price failure) pattern ... that tested the previous day's high, 12737, and failed. The stop on today's short was a few points above 1.618% of the Stretch basis trading from unchanged. 11 May Stretch 27 and 1.618% of 27 = 43.

Usually I'll apply a stop that is a few points above a round number; never at a round number, e.g., above 12740. My YMM1 short, 12725, (unchanged + Stretch = 12700 + 27 = 12727... high 12740) was given a stop at 12748, expensive... poor money management, .... but with absolute bearish conviction; and with good reason. YMM1 is trading around 12567 -133(12:02PDT... low: 12542 @ 10:36PDT).
thanks for the reply hunter