Getting Started

    The program we are using to show you how to start trading is FireTip, which has a demo version of the software that you can use for two weeks to practice trading. You can download it for free by putting in any name or email address you want in the sign-up form at IronBeam.

  • The Trading Matrix
    The Trading Matrix

    Looking at the trading Matrix, highlight the commodity that you want to trade and then click on the button for Advanced Trader. The new window that pops up is the Oil Advanced Trader which is listed at the top. The two prices that are in bold are the prices you will get if you buy or sell the market and the one with the square outline is the current price. I like to edit the window by right-clicking on the bar of tabs where is says Bid to uncheck the Orders boxes as I don't find them useful and it saves screen space. Now you left-click on the price you want to buy from and right-click on a price to sell from. The blue and white box will center the prices.

    Advanced Trader
  • The Chart Window
    Plain Chart

    Here is a simple chart window for Oil that is what you are initially given and now we have to adjust the settings in order to be able to make an informed decision on making a trade. The first thing you can do is increase the size in the top right corner and then click on the Edit Chart button.

    Bar Styles

    Make sure that the Bar Style is Candlesticks as they are the easiest to read. From here you can select the time period you would like and alter the bars appearance.

  • Shared Tab Properties
    Shared Tab Properties

    Next you want to change the settings under Shared Tab Properties to change the appearance of the chart. These are the settings I like to use in order to reduce eye strain while still having the bar colors stand out.

  • Adding Indicators
    Adding Indicators

    Now that you have your chart basics, it is time to add the most important signal to your chart, so click on the Add Indicator button and then select the Moving Average by clicking on the green plus sign.

  • Moving Average - 20 Bars
    Moving Average 20 Bars

    Now you have to change the settings by changing the Period to 20 and pick a Line Color.

  • Moving Average - 40 Bars
    Moving Average 40 Bars

    Once you have one Moving Average line, now you have to add a second but this time set the Period to 40 and change the line color to something different than the other Moving Average line.

  • Moving Averages on Chart
    Moving Averages on Chart

    Now that you have the lines on your chart, you can see that the trend was down and it did not change until the blue line crossed over the red line.

  • Adding Parabolic SAR
    Adding Parabolic SAR

    The second indicator that you should add is the Parabolic SAR by clicking on the Add Indicator button and selecting it with the green plus sign.

  • Parabolic SAR Settings
    Parabolic SAR Settings

    When the settings for the Parabolic SAR come up, they should already be set to the following values so keep them the same or make the changes if necessary.

  • Parabolic SAR Triangles
    Parabolic SAR Triangles

    Now you should have the Parabolic SAR indicator on your chart in the form of the small red and green triangles, which are another signal to let you know how you should trade the market.

  • Duplicate Chart Windows
    Duplicate Chart Windows

    Once you have one chart set up the way you like with all of it's signals added, then it is time to click on the Add Duplicate Chart Window and either add a duplicat chart tab or a whole new chart window.

  • One Minute Chart
    One Minute Chart

    Now you select the commodity settings and then change your Bar Period to show a 1 minute chart which is the best, along with the 5 minute chart, for making quick trades that you will exit the same day.

    The Advanced Trader, Signals and Indicators

    FireTip has an Advanced Trader that makes it easier to enter, exit or adjust orders along with many signals and indicators that are very useful in making profitable trades.

  • The Advanced Trader
    Matrix-Advanced Trader

    Looking at the trading Matrix, highlight the commodity that you want to trade and then click on the button for Advanced Trader. The new window that pops up is the Oil Advanced Trader which is listed at the top. The two prices that are in bold are the prices you will get if you buy or sell the market and the one with the square outline is the current price. I like to edit the window by right-clicking on the bar of tabs where is says Bid to uncheck the Orders boxes as I don't find them useful and it saves screen space. Now you left-click on the price you want to buy from and right-click on a price to sell from. The blue and white box will center the prices.

    Advanced Trader
  • The Advanced Trader Volumes
    Advanced Trader Volumes

    When you have your Advanced Trader open, you want to keep an eye on the Size column to make sure there are plenty of orders at all the nearby prices as that lets you know that the market is being actively traded and you can look out for big numbers that can signal that someone is about to enter the market with a large order that could potentially swing the market quickly.

  • The Advanced Trader Thin Markets
    Advanced Trader Thin Market

    If you compare these advanced traders you can see in the one above that the orders under the size column are close together with large numbers next to the current price, signaling an actively traded commodity. Now if you look at the one below, you can see that the orders in the size column are much smaller and there are some empty prices with no orders. This occured because there was a report about to be released, so almost everyone has removed their orders as they are waiting for the results of the report so that they'll know if they should be buying or selling the market.

    Advanced Trader Thin Market 2
  • A Commodity Contract Month End
    A Commodity Contract Month End

    In this Oil 1 minute chart, you can see that there was a sell opportunity from a price of 70.93 but the price stopped moving at 11:30 PST. That is because this was the last day to trade an Oil August contract so if you had not exited the market by this time then you would be responsible for taking delivery of all those barrels of oil. Luckily, your brokerage can exit you from the trade but you will incur extra fees so make sure you're not still in the market. A warning sign if you're not sure when the contract will end is all the bars in the yellow circle that appear as dashes so there was no price movement because nobody was trading this month contract.

  • The Advanced Trader Closing Spreads
    Advanced Trader Closing Spreads

    This is what the Advanced Trader looks like when the market has closed and the price stops moving. The current price in the middle has a square outline, but the bid and ask prices in bold, to buy or sell the market, are not next to that price and there are almost no orders in the size column.

  • The Time and Sales Window
    Time and Sales Window

    This is the Time and Sales window and it lists every single order for the selected commodity with buy orders in blue and sell orders in red. Each price change is listed along with each order at that price and it has a running total in the Cumulative Volume column. You can use this to see if there are a lot of orders placed in either direction.

  • The Weekend Price Gap
    The Weekend Price Gap

    This is a Yen chart showing what can happen when the market is closed over the weekend. The price closed at 89.105 on Friday the first and when it opened on Sunday the third, it had gapped down to 88.800. This is why you generally would not want to still be in the market over the weekend if you're day trading.

  • CAD Employment Rate Announcement
    CAD Employment Rate Announcement

    This chart shows the Canadian Dollar and what happened when the Interest Rate Decision was reported at 5:30 am PST. The price had crossed to a downward trend at the yellow X and the yellow circled red bar that was reversing five green bars, signaled a sell opportunity. Then at 5:30 the price suddenly swung upward for a $500 price movement on the release of the report, so you must know about these announcements ahead of time to make sure that you are not caught out.

  • AUD Interest Rate Decision
    AUD Interest Rate Decision

    This chart shows the Australian Dollar and the results of their Interest Rate Decision. Depending on the commodity that you're trading, there are different set times that they release reports depending on their local time. This is the regular time for Australian reports which is 4:30 pm PST, showing that you can trade at any time if you are trading the right commodity. These major price swings, here showing a single red five minute bar with a $600 price difference, occur regularly, so it is best to be outside the market when these reports are due to be released.

  • CAD Interest Rate - No Change
    CAD Interest Rate - No Change

    This chart shows a Canadian Dollar and the results when their Interest Rate Decision was announced. The interest rate was not expected to change and in fact it did not change, but that does not mean that the market will stay quiet. The price still swung downward for a $400 move in the first five minutes and eventually for an $800 move, so knowing about the times of these decisions is very important and a great money making opportunity.

  • USDX Inverse to Euro
    USDX Inverse to Euro

    These charts show the direct correlation between the U.S. Dollar Index and other currencies, in this case the Euro. The chart above is the USDX and at 5:30 PST there is a large downward spike on the bar that closed at almost the same price that is opened, and in the Euro chart below, it is the exact opposite with a large wick upward at the same time. The prices then moved as almost exact opposite mirror images of each other over the next three hours, so this is something to keep in mind if your trading one, that the other is usually moving in the other direction.

    Euro Inverse to USDX
  • Trading a Reversal Signal
    Trading a Reversal Signal

    This chart shows what can happen when your're waiting for a trend to reverse course. The price was initially in an upward trend until the high red bar started a reversal to the blue and red Moving Average lines. Now we would be looking for another reversal to continue the trend back upward, especially off of the top of the green bars each denoted by a small yellow line. None of the bars went higher than its previous bar until the third green bar with the large downward wick which was a possible buy opportunity. Since the price had moved so far below the Moving Average lines and there were several Parabolic SAR green triangles above the price acting as resistance, it was not as great a buy signal as the wick made it seem. If we were to enter the trade anyway, then we would have to make sure that our stop loss sell order was below that wick so we would not be stopped out quickly with a loss. Once the price has come back to our entry point, it is a good idea to exit the trade with a minimal gain or to break even, as the price had not initially done what we had hoped.

    Putting Together your Trading Plan

    Once you have decided on what commodity to trade and have set up your charts with all the signals and indicators that you like, now it's time to have a plan for what patterns you're looking for to enter the market. It's also important to have an understanding of what rules you'll set while you're in the trade and when to exit the market.

  • The Moving Average Signal
    Crossing Moving Averages

    The first and most important indicator for trading the market is the Moving Average. We have already set up the chart with two Moving Averages, the red and blue lines, and now we are looking for the point where the lines cross each other. From the cross-over, we are looking for the lines to start separating to indicate to us that a new trend is forming.

  • The Parabolic SAR Support
    Parabolic SAR Support

    Another great indicator is the Parabolic SAR as it provides extra assurance that the trade that your making has a support and lets you know about where you should have a stop loss order.

  • Bars Closing at Their Highs
    Bars Closing at Their Highs

    Now that we know which way the trend is going and that there is some support from the Parabolic SAR triangles, I like to look for the price to move back towards the Moving Averages and to test the Parabolic SAR. Usually I'd like to see three or more bars of the same color(red, coming down) moving back before you get the reversal(green) to continue the trend like the green I've circled. When a bar in this situation closes at it's high and has a wick that's tested the support it is an excellent signal to enter the market from the yellow line at 68.96. After buying the market, it's just a matter of deciding on a price target, taking into consideration the support/resistance level at 69.00. You could exit the trade early from 69.00 to 69.04 to quickly make some money in the first couple minutes. If you waited, then the bunch of bars that all have the same high is a good point to exit the trade or when the Parabolic SAR is broken.

  • Multiple Support Trade
    Multiple Support Trade

    Continuing on from the last trade we can now see a new point to buy back into the market or to add to our position if we had not exited earlier. There is still the major support of the Moving Averages, boosted by the Parabolic SAR and now as the price has moved sideways there is the added support of the even dollar level of 69.00. We can enter the market with a buy stop at a price of 69.02 just above the high of the circled green bar. Since the price jumped during the next bar we would just have to decide on a possible price target and on where we want to move our stop loss.

  • Setting A Stop Loss
    Setting A Stop Loss

    Now that we have entered the market it is important to set a stop loss. The natural point for a stop loss after buying the market at 69.02 would be below a previous low which is circled at a price of 68.90. That would limit our loss to $120 in case the market moved against us or you could put it a bit lower to give yourself some more leeway if the market doesn't move up quickly, or set it as low as how much you're willing to risk. Through much trial and error I've found that it's best not to keep your stop loss right next to a low point as the market has a funny knack for going just to that point to stop you out for a loss before it moves back the way you wanted. So I would generally leave it about five points lower or at a regular risk point of $200 to $300 depending on your risk appetite.

  • Moving A Stop Loss
    Moving A Stop Loss

    Now that we have entered the market, have set a stop loss and the price has moved a fair bit to give us a profit, it is a good idea to move our stop loss. I like to move my stop loss into the positive as soon as possible to lock in a profit and prevent a loss. So after a big jump like that bar for $200 I would move my stop loss from around the price of 68.90 to near the yellow line around 69.10

  • The Flag Pattern
    The Flag Pattern

    Once the price has made a quick move, a common pattern to look for is a Flag if the move has stalled, as now the price will move sideways to get closer to the Moving Averages. You can see that it actually looks like a flag on a pole and notice that the highs were about 69.25 which puts us halfway to a good price target of the support/resistance level of 69.50.

  • A Trailing Stop Loss
    A Trailing Stop Loss

    Now once the price has broken the Flag Pattern, we can move our stop loss up underneath each bar as it closes in order to trail the price, until it is finallly stopped out when the bars changed to a red reversal.

  • The Parabolic SAR Stop Loss
    The Parabolic SAR Stop Loss

    Another way to move your stop loss is to follow the Parabolic SAR triangles. They are farther away from the price as the move starts but once a price has moved a fair distance I like to use it because sometimes the price has just stalled and will continue soon. Here it would be triggered at a price of 69.41.

  • Setting a Targt Price
    Setting a Targt Price

    Alternatively, you can set an exit target price at a common support/resistance level such as the 69.50 level seen here. Sometimes you just want to take a nice profit and then you can wait to see if there will be a new signal to enter the market again.

  • Colored Bar Reversal
    Colored Bar Reversal

    When a run of consecutively same colored bars changes, it can signal a reversal in price so it also provides a good exit price. Sometimes the price will just test the low of the reversal going a few tics lower before continuing the trend so you could keep your stop loss just below that level.

  • The Moving Average Stop Loss
    The Moving Average Stop Loss

    Finally, you could use the Moving Averages as your stop loss signal by following somewhere around the yellow line. It can work for big price moves in commodities such as Oil as you can stay in the trade longer. But it can come at a price as the price had hit 69.55 before coming back to 69.35 so your profit would drop from $550 to $350 before it finally returned to 69.55 and went further.

  • A Trade Re-Entry Point
    A Trade Re-Entry Point

    If you had exited the trade at any of the earlier stop loss points, then we would start to look for a signal to re-enter the market. Since the first circled red reversal the price started setting new low red bars until it touched the Moving Average line and at that point a green bar closed at it's high, signaling another buy opportunity.

  • Multiple Bars Closing High
    Multiple Bars Closing High

    Whether or not you enter the market at the high of the first circled green bar, the following bars also closed at their highs, further signaling that there is still an opportunity to buy the market.

  • Finding a New Support
    Finding a New Support

    Now when you're back in the market, you need to look at the support levels to see where to place a new stop loss order. Using all three of the support levels of 69.50, the Moving Averages and the Parabolic SAR we would keep moving our stop loss as the price moves up to the next support of 70.00.

  • Setting a New Exit Target Price
    Setting a New Exit Target Price

    Once again we would look for a target price to exit the market. The first option would to have a sell limit order in the first circle at a price of 70.00. Or we could wait for a stop loss to be triggered by either of the two yellow lines where the price moved lower than the previous bar or finally when the Parabolic SAR was triggered.

  • Recognizing a Sideways Channel
    Recognizing a Sideways Channel

    Once the price has hit a new support level and is moving sideways we can see that it starts to form a channel in the purple lines. At this point we can look to possibly enter the market again with a buy signal.

  • An Exhausted Move
    An Exhausted Move

    At the end of the sideways channel, we can see a circled green bar that is reversing a trend of six red bars while still staying on the side of the overall trend. The entry price is 70.07 and after the initial move if we didn't exit the trade from the low of the red bar after the first yellow circled high, then we can see that the price tested the same high twice more but was unable to break through forming a triple top resistance level and the end of the major price movement.