hey everyone okay today we talk about contract trading okay contract trading is uh pretty scary stuff there is a lot of money to be made and a lot of money to be lost so contract trading is definitely understanding levels and and what they represent so we're simply going to do a live trade here build off of the scalping swing position and position traits that we built upon in the previous series so i think we all understand the difference between procedurally why we should take those those trades and and where we should take those trades and what they represent so the data behind those trades is what's more important a lot of people get confused right like we talked about a lot of people think that just having the raw information of oh a position trade means we're in it for a long time that doesn't mean anything understanding why we enter position trades is the more important information right that's the definition that will allow us to make more money when we're talking about trading contracts when we are looking at some of these bigger and deeper positions we need to be very aware of the different scenarios that can happen okay we simply right now have marked our origin level in here okay so you can see where the origin level has been tested and held and all this stuff so we have um what we want to target in terms of a trade we we have a target that we're comfortable with now we need to understand what are the different scenarios that could happen upon touching it right because you have you have a couple different things that can happen here you can go straight up and fall short because everybody starts shorting at say 10 384 and you get a ton of volume to pull back so if you're sitting at 10 401 you may never get filled okay you can alternatively go right over top of that look like you're about to break up and then have a huge pullback right maybe it might not be that drastic maybe it might go i don't know maybe 10 450 and then it has a huge pullback or you could hit your target dead on and then you could have a huge pullback so there's kind of a balance to be had here right there's kind of a risk balance to be had if you're doing 100x on your position then what's going to happen is at one percent you're going to be liquidated so if this goes up too much like so if it goes up to 10 10 480 for example your position is going to get liquidated because you entered too soon however you might miss the trade right if you go too much on the nose of the move you run the risk of either missing the move because it shorted too soon or not getting ingredient price so there's kind of this balance to be had here right the best way to do this is to have a set target and be comfortable with it and if you miss the move oh well too bad so sad that's that's the best way to do it so if we go and look at my trade here you can see i have my trademarked at 10 398. you can see that 10 398 on the finance the futures chart is extremely close to this i think it's maybe well i suppose we could just hover over the candle and see what the price is ten thousand four hundred and eight dollars so i'm ten dollars below that i might i might reduce it one more dollar what i want to protect myself against is getting liquidated if this thing just skyrockets above some level 100 over what it's supposed to before it pulls back right because this happens too so if i was right here i want to protect myself from this thing going to like say ten thousand five hundred and five dollars or or something before a bigger pullback happens and all the greedy people come in but i also don't want to be greedy because this is going to be a knife catch so this trade is going to kind of pan out in a few different ways you have two sequences of events we identified the first three where it falls short it hits the target perfectly and it slightly goes over okay this is sequence one of events sequence two is it actually goes test this level and then breaks up over top and you never actually have a short complete here so there's something very important to know this is going to be a knife catch level so so whenever you guys are taking these contract trades you need to understand what the level represents what is the data telling you about the level okay so the data here is that this is an origin level right this origin level is telling you what it's telling you that it's a breakout level so if you see the price go like this up hold its range continue to hold its range and slowly ladder down but continue to kind of build out a trend like this rebuild its second trend right like cycle up this is probably going to be breaking out things don't hold their range against the level like this unless they're typically breaking out especially an origin level right like this is this is a pretty polarized type of level you're either going to knife catch reject because a billion shorts are going to come into here or you're going to look to set up a breakout on this level like that so you have to understand what the level that you're targeting is are you targeting a breakout level right so maybe we can go and look at a few other examples of what has happened in the past okay so here's here's a good example you have an origin level here right the same thing you go up you touch the level right here and you instantly knife catch it now this looks like it was originally an inverse level so this is actually telling you that it's failure so you're knife catching failure so this was a little clearer right like the data here represents failure so your knife catching failure and and so be it looks like we also have an origin right there why do i have it marked here no i'm sure there's a reason why i haven't marked there that's fine i'm going to leave it there i'm sure i've worked my way through time frames and had it marked there here here's another example of you know what the data represents inverse level touches the inverse level that's rejection right what's this this is a breakout level so when we break above that it's going to break out this is another breakout level so when we break above that we're going to break out right origin levels you see how this is is kind of the exact scenario that we talked about you go up you touch an origin level you pull back but you hold the range once you hold that range like this you are going to probably be breaking over in a big way right so and it happens right there you hold the level you hold the ring or sorry you hold the range you hold the level and then you break out in a big way right so let's see what's next here come back up to our level up here come on you just want to go yeah i guess i could uh could have just moved the chart and uh close it out so now we can kind of see that what scenario is going to happen here are we going to be holding the range right like do we do we create scenario one which is on the left here is a scenario one where you're knife catching this level and it's having a huge pullback or are you in scenario two where you've touched this level and you start holding your range right so this is kind of how you have to dictate your differentiation here between contracts because what might be an ideal short might hold its range and then you need to get out of your position before you lose all your money because if it's starting to hold its range if it's starting to do scenario two here you you can instantly see how it's going to have a bigger breakup to a larger level here understanding how we have to trade contracts and how we have to trade leverage is is pretty crucial and important it's not so much about just picking levels tossing a contract and and crossing your fingers right there's always a way to see exactly how you should handle your contract so so this is kind of a live example of what i'm looking at right now just to walk people through like oh okay so this is a trade that i would take right and i would be i would i would see this and i would take this trade with caution i would be monitoring this because i know this is a polarized level i know that this is going to touch it and pull back pretty hard or it's going to hold the range and and attempt a large breakout so um it gives me a very clear directive of what i want to do with this trade and kind of what i expect from the outcome so yeah this is something that i would put you know a 100x kind of position on because there's not a lot of risk i don't think and um see how it reacts when it hits the level okay so we're back last night we were looking at this chart and we had our order up looking to try to take a short here on on bitcoin as a position trade how treat these position trades as as time goes on so this is not something i felt comfortable with leaving overnight now sometimes i do feel comfortable leaving position trades overnight or shorts or longs basically hoping it gets filled while i'm sleeping and this is not one of them due to the type of level this is due to it being an origin we talked about this yesterday if we do take a short here and we're sleeping when this happens and it happens to sit here and push its range like this oh let me move this over and it does happen to sit here and kind of push its range like this right it uh we're sleeping it's three or four in the morning or something and uh you know it comes here our order gets filled yeah great scenario if we uh pull straight back and we we wake up to profits but if we do sit here and hold this range this thing could completely fly before we wake up so in in this particular trade because of how polarized it is because it has kind of two actions that it's going to have here it's going to either reject in a big way or move up in a big way right due to it being a break level a breakout level i should say we don't we don't want to leave this unattended so last night we went to bed we closed our positions very simple and this morning we reopened it again and then you can you can see simply here this is trying to just hold its range and you know break its movement break its trend so we came back we opened our position here in the morning here um when we woke up we we set it to a level that we think is going to get hit that's uh pretty greedy hopefully it does and we'll be monitoring it just in case it does come and say it pushes this level and falls short ten dollars of our trade if it starts to pull back we're gonna get into the short pretty quick there so we are we are definitely gonna be monitoring this uh not stuff we can do while we're sleeping again we we can have something to say like this for example let's go and break this chart down and we have a hold level rate here right you have a whole level there we're going to find the actual valley yeah you can kind of tell it sits right here so this is something that i'd feel comfortable taking maybe a long on overnight because i didn't feel like there is going to be a move up to here with or sorry a breakdown before i move up to here right so what i'm saying is that i think this is going to move up to here and we can make our decision here but i don't feel like it will fail this target and just pull straight back instead what i think is going to happen is i'm going to be able to take along on this valley relatively safely and and then see what happens right close my position somewhere and then take my my re-short here this is something i would feel more comfortable leaving overnight than trying to knife catch a possible breakout level because again that breakout level isn't it's not necessarily going to just break out it doesn't have a guarantee that it's going to break out it's either going to again i keep saying this but two options here it pulls straight back or we go for a large breakout to a trend or or some other level that we haven't really looked at yet so we are simply just going to leave our short open so we came back today to leave the short open we're going to be monitoring this there's no benefit in leaving this overnight again this is kind of sloppy trading when you just kind of cross your fingers and hope we can take all these other trades in here in the meantime like i took along here down at ten the um ten thousand thirty five dollars right about here and i closed it on the trend right because you have the trend kind of goes well here we can use the rate tool to find the exact level here so you have this to this right here which actually adapts to this second candle right here i know because i've already done this and i simply was able to close a short and when when this level gets hit i know that it's going to attempt to continue to break up right so it's going to continue to hold the level this is the perfect level to get out of your long position it's the leg of the move on the on the on the top side so so it's the top of the valley this is saying the move is going to break it's also the trend and and when it passes this trend it's already set up to break the move so so now we can simply look at taking another re-entry down here in the 10 kind of 53 or 54 range something like that or 1055. just see how it reacts and if it's something we want to take a position against and then and then we can relong this again again relatively safe very much scalp trades right these are not position trades we are looking to take a position trade up top and uh take this kind of scalp trade from below so so this is you know sloppy trading if we uh decide to leave a position like that and it's not because we shouldn't be leaving positions overnight we can leave positions overnight this is due to the type of level and the type of reaction that we're expecting if this doesn't knife catch it's going to break out in a big way right so so this is again something where we could you know kind of roll the dice and sure i i'm of the uh mindset that i'd rather miss the move than to roll the dice on something because there's always you can always make money in the markets you don't have to force it right so this is uh just kind of a day two follow-up to this trade and how i treat it how i treat these position and contract trades a healthy way to look at trading when you're when you're talking about big leverage when you're talking about starting 200x on things when you're when you're needing to micromanage these positions it's very important to make sure that you're micromanaging them properly and that you know exactly what to expect so that in the moment when these things are happening you can make your decision and still be in profits before you know something terrible happens okay all right see you guys on the next one