WTI Crude Oil: How To Turn A Stop-Loss Into A Stop-Win
2022.04.01 20:27
Sometimes, we can get kicked off by the market from our trading positions. But does it have to prevent us from securing profits? Well, not this time.
No April Fool’s today – instead, here is a quick review of the trade entry provided in the pre-opening US session on Monday and its “stop-win” dragged upwards on Wednesday.
Film of a Trade (Trade Plan Explained)
The dip took place as the oil market bottomed at $98.44 (facing rejection from the bulls towards the $100 mark), triggering the suggested entry around $99.55-101.29, highlighted by the yellow band. It happened at the same time when the Kremlin announced a significant de-escalation around the Ukrainian capital of Kyiv and Chernihiv.
Thus, our subscribers got long around that pre-defined landing space (support). Not long afterward, the first recommended target, projected at $113.90, was half-filled up. My recommended stop – initially placed just below the $92.20 level (March’s swing low) – could now be lifted:
- To new swing low ($98.44)
- To breakeven, or slightly above it
Personally, given the current volatility on the WTI crude, I suggested dragging the stop up to $102.83 (Monday’s low – Mar. 28) and then lifting it again to $104.55 (Wednesday’s low – Mar. 30) once the prices break the $107.84 level (Tuesday’s high – Mar. 29).
Since black gold was at that time trading at $107.20 (we were getting very close to it while I was writing my Oil Trading Alert on Wednesday, as prices made a high at $107.70 that day), I suggested setting a price alert up there (at $107.84).
WTI Crude Oil (CLK22) Futures (May contract, daily chart):
Monday
WTI Crude Oil Daily Chart
Wednesday :
WTI Crude Oil Daily Chart
Friday ):
WTI Crude Oil Daily Chart
Update: as I was writing these few lines on Wednesday (Mar. 30), my alert finally got triggered, so our stop was therefore lifted to $104.55 according to our flying map (trade plan).
Wednesday :
WTI Crude Oil 4-Hour Chart
Here, I voluntarily removed the intermediate stop levels for better clarity, although you can look at them in the following chart:
WTI Crude Oil 4-Hour Chart
Friday :
WTI Crude Oil 4-Hour Chart
As you can see, the level provided was optimum given its possible support function (that is, acting as a floor for rebounding prices).
On a side note, prices encountered some resistance as they were reaching the current month’s Volume Price of Control (VPoC). Therefore, exchanged volumes started accelerating around that level, and we witnessed a new accumulation cycle.
Suddenly, the United States announced the largest ever release of crude oil barrels from the US Strategic Petroleum Reserves (SPR). President Biden made a call on oil giants to increase drilling to boost oil supplies.
In response, the market retraced back to our support as prices recorded a 7% drop – at the end, we got stopped, ideally still profiting from the market reversal (even though a retracement happened).
Who said a strict risk management framework got out of fashion? That’s exactly how important it is for successful trading!
