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Commodity Trading Lesson Index
 
 

Lesson 47: Mrs. B raises her stop/loss order again

On Monday, January 14th, 2002, after the markets had closed for the day, Mrs. B called her commodity broker with the following order,

"Sell l contract of Chicago May Wheat at $2.99 ½ /Stop - Open Order Good Until Changed or Cancelled"

"Cancel my previous order to "Sell l contract of Chicago May Wheat at $2.87 ½ /Stop"

Chicago wheat futures closed on Monday, January 14th, 2002, at the price of $3.05 ¼.  Mrs. B is raising her stop/loss order in an effort by her to protect part of the paper profits that have been accumulating in her account.  Unless the wheat market gaps open at a sharply lower level, Mrs. B should be able to exit from this trade with an actual (although still hypothetical) trading profit.  Mrs. B left her profit/exit order unchanged.  She saw no need to move it based on the price action in May wheat since she entered that order.  Mrs. B's stop/loss and profit/exit orders are still OCO orders; whichever one fills first the other will be cancelled as no longer needed.  January 15th, 2002, may be a key day for Mrs. B.  If the market moves significantly lower tomorrow, she will probably be taken out of her position.  If the market advances, without having dropped below $3.00, Mrs. B will reconsider the level of both her stop/loss and profit/exit orders after tomorrow's close.  January 15th could be a crucial day for Mrs. B.  Let's watch and see what happens to her Chicago Wheat position.

 

            Bruce Gould

To order a copy of Bruce Gould's "Choppy Market Method" to understand "Mrs. B's" reason for picking May Wheat Futures at this time, at this price,  click here.

Proceed to lesson 48 by clicking here.

 

Always remember that stock, options, and futures trading may involve substantial risks and that past performance is no guarantee of future performance.