CME is a stock that is not to be taken lightly meaning a wrong move can be very costly as the weekly to intra day swings can be very large. On the other hand having a defined trading appraoch with indicators that give you a edge trading CME can produce huge profits in the stock or trading the options.
In the chart above you can see there were blue bars at the bottom of the chart and the indicator is LOW meaning a big move is going to start. The price was around $180.00) From there the price had a initial spike to $250.00 (Nice gainer) But that wansnt even the true buy signal. The true buy signal came in on the 2nd set of greens where i wrote LONG on the chart. You can see once the bars turned back to green the stop was only one bar (the low of the last red bar) NOT all the way back down below $180.00 like most traders are taught. That stop is simply to big for the reward the stock can produce. Our stop was about $10.00 points with a target of $320.00 or about 100 points! 10:1 risk / reward. The options were trading at $10.00 on the day the buy signal triggered, then making a high around $95 on the option!
Looking at this chart once CME took off to the upside you will notice that the blue bars came in to tell us that the move is over up at $330.00 which is a great place to exit all of the trade and be flat as a correction is going to occur.
The blue bars give us a high odds area for the start and the end of a move no matter if it is on a daily chart of a 5 min chart the indicators are dynamic and work on all timeframes. If you would like to see specific charts or have questions please email us at trade@eminischool.com
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