Short Trade Comment for Micro Gold Futures (MGC) – January 16, 2025
Trading conditions:
This short trading idea is on Micro Gold Futures (MGC), currently trading at apx $2740 expected reversal in the range of $2,748-$2,760major area of psychological struggle, with a total of 30 contracts spread over three sales orders of scale. The trade has a high reward-to-risk ratio of 6.20 and focuses on precise performance levels and profit taking.
Short Trade Plan Details:
| Sales order | Price | Number of contracts | Percentage of Budget | Weighted admission price | Stop the loss |
|---|---|---|---|---|---|
| 1 | $2,748.60 | 5 | 16.67% | $2,748.60 | Non-stop |
| 2 | $2,753.30 | 10 | 33.33% | $2,751.73 | Non-stop |
| 3 | $2,760.70 | 15 | 50.00% | $2,756.22 | $2,763.11 |
Trade Highlights:
- Weighted Average Admission Price: $2,756.22
- Stop Loss (Full Position): $2,763.11 (+0.3%)
- Take profit: $2,713.50 (-1.6%)
- Reward-to-risk ratio: 6.20
The size of the situation is absolute $82,686.50assuming all three sell orders are filled. Adjust the position size and contract sizes according to your personal risk tolerance.
Calculation of profit or loss:
| Story | Price movement (USD) | According to Contract (USD) | Total Position (USD) |
|---|---|---|---|
| Stop Loss ($2,763.11) | +$6.89 | – $68.91 | from 2,067.16 |
| Take Profit ($2,713.50) | from 42.72 $ | +$427.21 | +$12,816.41 |
Purpose of Trade:
-
Resistance Levels Near $2,750:
- $2,754.20 aligns with the high value area on November 7 and represents a strong resistance level.
- Long traders expect profit from previous rallies (December 19, December 31, and January 15) near this level, increasing selling pressure.
-
Round Psychological Numbers:
- Gold prices often retrace near psychological milestones like $2,750where market activity is spinning.
-
Risk-to-reward ratio:
- The tight stop at $2,763.11 limiting potential losses, while the target is negative at $2,713.50 offers substantial profit potential.
- Lower targets further away $2,713.50 included $2,668 and $2,650 for traders leaving a runner position.
Implementation and consideration:
- Scale in: Enter the short position incrementally using the three sell orders until the weighted average entry price of $2,756.22.
- Exit strategy: Take a profit 80% of the position (24 contracts) at $2,713.50leaving 6 contracts as a short swing for further potential downside.
- Market Research: Look for price action and rejection signals near key resistance levels like $2,754.20 and VWAP today at $2,729.70.
Final thoughts on my gold trading idea:
This short trading idea on Micro Gold Futures aims to convert from $2,750 while providing a high reward-to-risk situation. With scaled entries, precise stops, and realistic profit targets, the trade is structured for controlled risk management and strong potential returns.
Disclaimer: This trading idea is for educational purposes only. Not all orders may be filled. Trade at your own risk, adjust position sizes to your liking, and ensure proper risk management. A visit ForexLive.com for additional views.
