Trading Momentum Moves Intraday

[FulcrumTrader 10]

I have noticed a good shift with all the Momentum price moves with follow through I have been watching in the market the past few months. There has been really good energy behind many of these Momentum moves and I have found myself working these type of trades frequently past weeks. The markets have provided many Momentum based opportunities in both Futures and Forex action......currencies alone have had brilliant moves.

 

For those taking shots at these very robust set ups with solid follow through, what are your weapons of choice for targeting the action?

 

 

Recent FED day trade example for a Momentum set up I traded -

[electroniclocal 10]

Fulcrum, in addition to tracking the order flow, I use 2 CCIs to track trends and changes in Momentum. Using a 45 and a 6 or 9 period CCI, I use both the interplay between these two CCIs as well as identifying turns in Momentum. Examples of a number of these trades are here.

[BlowFish 10]

Hi FT, Might I ask why you don't use other side resting inventory as a target? Is it because this type of trade you are simply going for a quick momentum fuelled move? If momentum was strong after 21 ticks would you hold on if there was no resting inventory in the way? Would you bail early if momentum subsided?

 

Sorry for the avalanche of questions. It seems to me that you have built up a very robust set of tools and I was a little surprised that you did not appear to be looking at them for exits (though I could quite easily have missed something).

 

 

The trouble I find with 'momentum' is that it can change very rapidly (instantaneously actually). Of course you can smooth or decrease the sampling rate with the issues of lag that introduces. I don't use a momentum indicator per se though I have looked at pace, trade intensity, volume, delta etc. to construct novel and useful indicators. I think after a while you can gauge momentum pretty well by how price develops in real time.

 

If I wanted a pure momentum indicator I would look at change in price (velocity of price) multiplied by the volume that occurred during that change (the 'mass'). I guess delta nuts might split up the volume dependent on the bid/ask at the time. I would average this over a sample period.

[ziebarf 10]

The trouble I find with momentum is that it just costs too dang much!

 

"FulcrumTrader Premium Daily Advisory Service

$57.00 per month subscription"

 

 

Or this guys momentum, which is really steep!

 

 

"CONSISTANT PROFITABILITY SET: $2500

 

Over 200+ hours of theory and live recorded training in 17 DVDs

2 hours of 1:1 mentoring by EL in 8 separate sessions

Full set of iterative trading plans

EL Trade Summary and management DVD"

[UrmaBlume 10]

Chris,

 

Price/Cumulative Delta divergences can indeed be great setups for momentum trades.

 

One way to find where these trades are most likely to occurr is by scanning different instruments for the out-of-sequence presence of commercial/smart money and the presence of out-of-sequence local price volatilities.

 

This table shows a scan of the most active US futures for unusual activity from smart money/commercial actors plus for greater than normal local price volatilities.

 

The setups you describe are much more likely to be where there is more commercial activity and they result in increased price volatility. The scan below was taken 1015 9/27 PST:

 

It's always better to be trading what's hot and not trading what's not.

 

 

 

Cheers

 

UB

[FulcrumTrader 10]

The trouble I find with momentum is that it just costs too dang much!

 

"FulcrumTrader Premium Daily Advisory Service

$57.00 per month subscription"

 

 

Or this guys momentum, which is really steep!

 

 

"CONSISTANT PROFITABILITY SET: $2500

 

Over 200+ hours of theory and live recorded training in 17 DVDs

2 hours of 1:1 mentoring by EL in 8 separate sessions

Full set of iterative trading plans

EL Trade Summary and management DVD"

 

Actually, I have no idea who's course you are showing that costs $2500 for momentum trading? Who is that and show a website link.....thanks. Also, the FulcrumTrader chatroom has nothing to do with Momentum trades....that room is for those trading supply and demand based Cumulative Delta methods.

[FulcrumTrader 10]

Hi FT, Might I ask why you don't use other side resting inventory as a target? Is it because this type of trade you are simply going for a quick momentum fuelled move? If momentum was strong after 21 ticks would you hold on if there was no resting inventory in the way? Would you bail early if momentum subsided?

 

Sorry for the avalanche of questions. It seems to me that you have built up a very robust set of tools and I was a little surprised that you did not appear to be looking at them for exits (though I could quite easily have missed something).

 

 

The trouble I find with 'momentum' is that it can change very rapidly (instantaneously actually). Of course you can smooth or decrease the sampling rate with the issues of lag that introduces. I don't use a momentum indicator per se though I have looked at pace, trade intensity, volume, delta etc. to construct novel and useful indicators. I think after a while you can gauge momentum pretty well by how price develops in real time.

 

If I wanted a pure momentum indicator I would look at change in price (velocity of price) multiplied by the volume that occurred during that change (the 'mass'). I guess delta nuts might split up the volume dependent on the bid/ask at the time. I would average this over a sample period.

I do frequently use the next zones of resting inventory as targets for thinning out multiple contract positions. I would though at least cover 2/3'rds of my overall trade at the 3 to 1 (risk:reward) target. You do not have to cover all the trade at the 3:1 target but per my plan I cover 2/3'rds. If I do get counter indications printed while in the trade, I am eligible to terminate trade at that point per my trade plan for the set ups.

 

I do look for Momentum moves in the market at 4 key times of the day....some time based (like first hour of a cash session), and at other times just after a supply and demand event has played out (like an inventory grab). I think finding the momentum moves that actually stick in a market do need to have solid reasoning for the energy that is creating the action. For myself, I have found 4 key times of the day and/or events that initiate some of the best actionable Momentum moves.....so I do not take all the signals I see each and every day. I wait for Momentum signals within the 4 times or events that I have set in my trade plan.

[FulcrumTrader 10]

Chris,

 

Price/Cumulative Delta divergences can indeed be great setups for momentum trades.

 

One way to find where these trades are most likely to occurr is by scanning different instruments for the out-of-sequence presence of commercial/smart money and the presence of out-of-sequence local price volatilities.

 

This table shows a scan of the most active US futures for unusual activity from smart money/commercial actors plus for greater than normal local price volatilities.

 

The setups you describe are much more likely to be where there is more commercial activity and they result in increased price volatility. The scan below was taken 1015 9/27 PST:

 

It's always better to be trading what's hot and not trading what's not.

 

 

 

Cheers

 

UB

Yes very good point, this is why I frequently will track a supply and demand event play out in the ES but I will actually trade a different instrument to take advantage of the move. Many times I will trade TF or DAX when I see certain Momentum moves initiate in the ES.....of course there are also times when I just take the trade in the ES itself. I watch market breadth during the trade day and I watch the futures instruments relation to each others pricing/delta levels (too see what looks strong and what looks weak).

[BlowFish 10]

Got to love momentum in the DAX, it can be wild. One of the most schizo instruments out there imho. It can meander in a few point range for hours and then be swinging around 50 points at a time.

[FulcrumTrader 10]

Got to love momentum in the DAX, it can be wild. One of the most schizo instruments out there imho. It can meander in a few point range for hours and then be swinging around 50 points at a time.

To this day, the DAX and CL are still the instruments I like to trade the most. Both instruments have very definitive supply and demand events creating directional energy for dramatic price runs.

 

The DAX last night had numerous momentum moves and once the Euro bounced off session lows the DAX shifted into that amazing rally mode back to the 6320's. It is hard not to LOVE the DAX price action!

[FulcrumTrader 10]

Again, the Momentum moves have been very good in the DAX.

 

 

[ame=http://www.youtube.com/watch?v=S2iV1C5Ex1g]YouTube - Momentum Trading The DAX With Cumulative Delta[/ame]

[MiniFlowTrader 10]

Again, the Momentum moves have been very good in the DAX.

 

 

YouTube - Momentum Trading The DAX With Cumulative Delta

 

Have you noticed how much better these divergences work with bullish divs vs bearish divs?

[FulcrumTrader 10]

Have you noticed how much better these divergences work with bullish divs vs bearish divs?

Both standard and hidden divergences work just fine in either direction, but I do pay special attention when a Momentum trade sets up with the prevailing trend.

[MiniFlowTrader 10]

Both standard and hidden divergences work just fine in either direction, but I do pay special attention when a Momentum trade sets up with the prevailing trend.

 

For bullish setups there is almost always instant satisfaction, bearish can last for days or can get wiped out from short covering (at least that is what backtesting has shown, but I tested on a bull market).

 

I think a lot of it has to do what the long term trend is.

 

How do you define standard vs hidden div?

[bakrob99 11]

The trouble I find with momentum is that it just costs too dang much!

 

"FulcrumTrader Premium Daily Advisory Service

$57.00 per month subscription"

Or this guys momentum, which is really steep!

 

 

"CONSISTANT PROFITABILITY SET: $2500

Over 200+ hours of theory and live recorded training in 17 DVDs

2 hours of 1:1 mentoring by EL in 8 separate sessions

Full set of iterative trading plans

EL Trade Summary and management DVD"

 

 

That's the kind of negative posting without any information that I don't expect to find here (at Traderslaboratory). Why not give your reasons for claiming these services are "expensive". If they are credible - they are hardly expensive for an education. You obviously think they are ripoffs , implied in your language, but you choose not to support your reasons. Just innuendo.

[FulcrumTrader 10]

Actually, I have no idea who's course you are showing that costs $2500 for momentum trading? Who is that and show a website link.....thanks. Also, the FulcrumTrader chatroom has nothing to do with Momentum trades....that room is for those trading supply and demand based Cumulative Delta methods.

Like I had mentioned before in this thread....oh well.

[bakrob99 11]

To this day, the DAX and CL are still the instruments I like to trade the most. Both instruments have very definitive supply and demand events creating directional energy for dramatic price runs.

 

The DAX last night had numerous momentum moves and once the Euro bounced off session lows the DAX shifted into that amazing rally mode back to the 6320's. It is hard not to LOVE the DAX price action!

 

Could you show some examples in CL please.

[FulcrumTrader 10]

For bullish setups there is almost always instant satisfaction, bearish can last for days or can get wiped out from short covering (at least that is what backtesting has shown, but I tested on a bull market).

 

I think a lot of it has to do what the long term trend is.

 

How do you define standard vs hidden div?

Delta Divergences are not all the same so this is very difficult to backtest properly....some have divergences of 4,000 contracts still held and some have 80,000 contracts still held (while price re-tests the area the held inventory was previously initiated). After watching Cumulative Delta for 7 1/2 years now real time, I can say for sure there are certain Delta Divergences that are extremely high probability for actionable trade set ups. Areas of resting inventory either build with each re-test or start to degrade, so watching the play out of the inventory commitment is the key imo for trading Delta based set ups.

 

The two types of divergences that I track with CD are;

 

Regular Delta Divergence - where price returns to an area of held inventory and the inventory holds, with price equal or beyond the pricing levels when the inventory was initiated previously.

 

Hidden Divergence - where price returns to an area of held inventory (but never beyond), and the inventory fully capitulates (goes neutral) simultaneously with an addition of over-committed new inventory late chasing the move into an area of anticipated breakdown/breakout. As price does not fulfill the expectation of the breakdown/breakout and starts to bounce, the newer over-committed inventory bails fast fueling an extended departure from the area of price in play.

 

There is another very good trade set up I track for called an Inventory Grab, and these supply and demand events also provide actionable scalp or position trades.

 

Delta Divergences of the various types possible are not something that can be all grouped into a single statistical event (for back testing). There is more to tracking supply and demand events in the markets, to see the various patterns of activities from bigger liquidity players, than looking only for basic Delta Divergences. The good thing imo is tracking the actual order flow through Cumulative Delta is a heck of a lot easier than trying to learn Market Profile. What I have found over time though is very few traders know how to use the Cumulative Delta information properly. Once a trader understands what they are looking for in the Cumulative Delta distributions it becomes very actionable information.

[FulcrumTrader 10]

Could you show some examples in CL please.

Sure....I will try and put another video together from today's action and post it later for you. The CL is an exceptional instrument for Momentum set ups imo, and I can't really think of any time in past years when the CL was stuck in lower volatility trading intraday.

[cunparis 10]

Fulcrum,

 

Have you tried your setups with currencies? I've been trading the Euro a lot lately so I look at cumulative delta with the Euro and it seems that price & CD are more independent than with other markets. If you have an example with Euro I'd love to see it.

 

Thanks

[BlowFish 10]

By currencies I guess you are looking at futures? Delta is pretty meaningless on spot where volume is approximated from bid ask changes in the first place

[cunparis 10]

By currencies I guess you are looking at futures? Delta is pretty meaningless on spot where volume is approximated from bid ask changes in the first place

 

Yes talking about Euro futures. I'm thinking maybe all the arbitrage that has to go one would skew the delta. Sometimes it seems euro can go up for hours while delta is going down.

Edited October 7, 2010 by cunparis
Specify I meant "Euro can go *up* for hours".

[BlowFish 10]

I used to find that in the DAX occasionally too. I think under certain circumstances (small corrective moves for example) some of the participants will switch to passive buying/selling (limit orders) to do their business. This could go on for quite a part of the day.

[bakrob99 11]

Is thee a decent Cumulative Delta indicator for Tradestation? I guess any of them would have to use Upticks/Downticks and might not reflect as accurately as the ones being shown here?

[cunparis 10]

Is thee a decent Cumulative Delta indicator for Tradestation? I guess any of them would have to use Upticks/Downticks and might not reflect as accurately as the ones being shown here?

 

I've tried and while interesting it's totally different than true bid/ask. Every time the bid/ask moves without price moving there will be a discrepancy.

 

If you want to make one just put:

 

Value1 = Upticks - Downticks;

Plot1(Value1[1] + Value1);