Day Trading the E-mini Futures

[Predictor 11]

Going to try once more on short side... no more updates though. seems like a bad stop out

[goodoboy 10]

Currently short... reading tape. a bit difficult today.

 

Strong Chicago PMI seems to be interpreted as bearish for market... may decrease probability of qe3. Movements may be subdued with FOMC tomorrow.

 

Still short..

 

Looks like failed break out to upside... still market isn't driving to new lows... yet

 

No longer like short side.. stop out.. had some profits but pushed too far. Market seems likely rangebound but may go higher. Done for day.

 

I agree,

 

short 1380.75, stop at 1382.75, target is 1376.50. However, since this market is currently looking choppy, I will move stop to breakevn. currently watching for break of 1378.50 since saw some support here yesterday.

[goodoboy 10]

I agree,

 

short 1380.75, stop at 1382.75, target is 1376.50. However, since this market is currently looking choppy, I will move stop to breakevn. currently watching for break of 1378.50 since saw some support here yesterday.

 

Exit with at 1378.75, after seeing this area did not hold. Also, exit cause inverted head and shoulders forming on the 5 min chart. Will review after market close.

[steve46 12]

Bit of a break here on my side so I thought I would check this thread out

 

Based on the last time stamp it looks as though folks are undecided or perhaps on the wrong side today...for example if you took a short at the last test of lows, you took a bit of a beating.

 

The chart shows the inset (darker blue bands) where we expected price to move in a range while participants waited to for both domestic and euro econ news (we are still in a news driven market)...

 

On my side I am evaluating balance and value per the multi day "strip" data that I was taught a long while ago...basically we overlay multiple days data and get a longer term picture of where the market thinks value might be and when folks might be motivated to put money to work. What I do that is a bit different is to combine this with time based pivots...and I use confluence of the two to provide entries...today for example at the top of my insets we had short entries in the 82 area and long entries at or near 76+.

 

I show 82.25 or thereabouts to be VAH and 76.50 to be the previous days low.

 

and for those who have problems picking out entries, as mentioned previously I like to pre-position either in the Globex overnight market or prior to the open at about 5:45am PST..this keeps you out of the volatility and if you are on the right side (especially on days when the market trends) you spend most of the session scaling out...

 

The attached chart shows one of the algo patterns that I use to enter. The red arrow shows failure to find sellers and the green shows one (of several) possible points of entry..The bollinger bands serve as "training wheels" for students learning to recognize the setup..

 

Good luck

Edited July 31, 2012 by steve46

[Predictor 11]

And we finally break lower... My tape reading put me on the right side of market. However I was too aggressive, didn't use a big enough stop, or didn't take profits quick enough. I'd like to say I caught it but was stopped out again. The 80.50 was the key level today. I think we may trend lower. There are huge expectations for the Fed and I think the risk is higher they disappoint. One of the things we seen today is just how long the LQ providers can support the market. There were other dynamics today.. as there were some strong stocks holding up/masking overall weakness. They did an excellent job of running the stops today before unloading.

 

Steve, appreciate your informational posts. I think it is better if you call your entries before posting the charts. As an aside, I find that I rarely get anything useful out of other's charts. Also, are those arrows that you personally marked? I don't 'get' why a red arrow should be used for "buying". How do you indicate short entries?

Edited July 31, 2012 by Predictor

[steve46 12]

I am sure that by now you are used to being ignored Tiger..... but just this once, and for future reference......I'll let you know when I need your help posting comments...I hope thats clear...

 

I don't mind repeating myself....once...the red arrow shows the market's unsuccessful attempt to find sellers....once that candle closes....and the bid has "held"....the odds of finding a favorable entry are improved...the green arrow shows one of several possible long entries...

 

Good luck folks

Edited July 31, 2012 by steve46

[Predictor 11]

Steve.. I've placed you on ignore.

 

Others, I am weighing a reshort somewhere around the 80ish level. I still think they could take this higher. One thing to note is that the oil markets closes at 2:30.. given that oil has been weak, when the oil market closes it might give the bulls another chance.

[goodoboy 10]

Bit of a break here on my side so I thought I would check this thread out

 

Based on the last time stamp it looks as though folks are undecided or perhaps on the wrong side today...for example if you took a short at the last test of lows, you took a bit of a beating.

 

The chart shows the inset (darker blue bands) where we expected price to move in a range while participants waited to for both domestic and euro econ news (we are still in a news driven market)...

 

On my side I am evaluating balance and value per the multi day "strip" data that I was taught a long while ago...basically we overlay multiple days data and get a longer term picture of where the market thinks value might be and when folks might be motivated to put money to work. What I do that is a bit different is to combine this with time based pivots...and I use confluence of the two to provide entries...today for example at the top of my insets we had short entries in the 82 area and long entries at or near 76+.

 

I show 82.25 or thereabouts to be VAH and 76.50 to be the previous days low.

 

and for those who have problems picking out entries, as mentioned previously I like to pre-position either in the Globex overnight market or prior to the open at about 5:45am PST..this keeps you out of the volatility and if you are on the right side (especially on days when the market trends) you spend most of the session scaling out...

 

The attached chart shows one of the algo patterns that I use to enter. The red arrow shows failure to find sellers and the green shows one (of several) possible points of entry..The bollinger bands serve as "training wheels" for students learning to recognize the setup..

 

Good luck

 

Thank you kindly. Good info, price action stayed within range as you mentioned. I'm not sure how you get these values, but price action stayed right in this range. The volume profile that TheNegitoar delivers per day shows these values as well. Very good.

[goodoboy 10]

 

 

 

The attached chart shows one of the algo patterns that I use to enter. The red arrow shows failure to find sellers and the green shows one (of several) possible points of entry..The bollinger bands serve as "training wheels" for students learning to recognize the setup..

 

Good luck

 

Thanks just a few questions

 

1. If a trader decides to buy at the VAH area 1376.50, would that be consider as a counter trend trade? Just asking.

[steve46 12]

Thanks just a few questions

 

1. If a trader decides to buy at the VAH area 1376.50, would that be consider as a counter trend trade? Just asking.

 

Its an important question that you ask...how do know what the primary trend is on a given day? Clearly you have to have some kind of reference to lean on right?

 

I am sure you know that people use all kinds of methods to find that reference.....what I was taught to do was to combine a form of market profile with a system that some institutions teach their employees, called "time based pivots"....on the Market Profile side of things I organize data in a fashion similar to what you see on Negotiator's charts.....If I remember correctly he likes to display a series of days, each one seperate from the next....The difference (for me) is that I overlay the data so that it forms one big display...and then I process that data in a couple of different ways....

 

First off you should know that for me, the most important data is the most recent 2 and 3 day period...from my point of view that data usually has a good chance of representing the current (what I call the "primary") trend. I process that data using a method that I call "characterization"...which means that I try to find patterns of behavior....(does the market often go south in the morning only to rebound in the afternoon for example)....

 

No idea whether this is making sense to you but I also try to answer two basic questions. The first is......is this a balanced or unbalanced market....and the second is...what kind of approach is working in this market?....from my point of view there are two approaches to trading....either you are a breakout trader, meaning you are "initiating" a trade based on price breaking above or below a threshold price or range of prices.....or you are a "responsive trader", putting on a position based on the idea that the market is moving in a range (much like today), and if thats the case you want to look for the market to establish a local high and low that you can use for your entries and exits....

 

By the way, in a balanced market you want to trade responsively short at the top of the range, long at the bottom...that should help to explain my first post today...and in a unbalanced market you want to take the breakout and hope that the trend continues...

[goodoboy 10]

WOW, the sellers just took the 1376 area that has being showing support the last 3 days. It will be very interesting to see if buyers can take this level again. Well, atleast to me.

[Predictor 11]

Second short target hit. I captured a small part of it but not nearly enough to make me profitable on the day. I should have held longer. Many funds will only execute near the close because they think it is a fairer price. Apparently, many funds were thinking like me.. I don't like to be in the market near close though because market can be erratic and higher risk.

[goodoboy 10]

Its an important question that you ask...how do know what the primary trend is on a given day? Clearly you have to have some kind of reference to lean on right?

 

I am sure you know that people use all kinds of methods to find that reference.....what I was taught to do was to combine a form of market profile with a system that some institutions teach their employees, called "time based pivots"....on the Market Profile side of things I organize data in a fashion similar to what you see on Negotiator's charts.....If I remember correctly he likes to display a series of days, each one seperate from the next....The difference (for me) is that I overlay the data so that it forms one big display...and then I process that data in a couple of different ways....

 

First off you should know that for me, the most important data is the most recent 2 and 3 day period...from my point of view that data usually has a good chance of representing the current (what I call the "primary") trend. I process that data using a method that I call "characterization"...which means that I try to find patterns of behavior....(does the market often go south in the morning only to rebound in the afternoon for example)....

 

No idea whether this is making sense to you but I also try to answer two basic questions. The first is......is this a balanced or unbalanced market....and the second is...what kind of approach is working in this market?....from my point of view there are two approaches to trading....either you are a breakout trader, meaning you are "initiating" a trade based on price breaking above or below a threshold price or range of prices.....or you are a "responsive trader", putting on a position based on the idea that the market is moving in a range (much like today), and if thats the case you want to look for the market to establish a local high and low that you can use for your entries and exits....

 

By the way, in a balanced market you want to trade responsively short at the top of the range, long at the bottom...that should help to explain my first post today...and in a unbalanced market you want to take the breakout and hope that the trend continues...

 

Thanks for your point. I understand some of what you wrote, but will take some reading to fully understand. I like the last statement balanced and unbalanced.

 

What I would like to do is determine the daily (intraday) trend when I am trading. This way I am trading with the momentum of the day and not against it. I think this increase my probability of being right.

 

So here is what I do to determine trend of the day (and which direction I should trade) and of course this method is still in testing mode:

 

1. I consider price behavior over night and determine whether price is above or below the pivot point. If its above = one piece evidence trend for this day is up. likewise the otherway

2. I consider LOD from previous day. If current price is above that LOD, another piece of evidence trend for this day is up. likewise the otherway

3. I use 50 ema on 60 min chart. price stays above it, more evidence trend is up for that day. likewise the other way.

 

Thanks,

[Predictor 11]

I thought I'd expand on my interpretation of the late day activity. The sell off was an indication of pre-positioning for FOMC announcement tomorrow by hedge funds. Many institutional traders only run trades at or near close of days --without any regards to price. Several funds were likely buying while some were selling. The sellers detected the increased liquidity and executed as much as they could, depressing prices.

 

I was there today.. I had the right trade from the very morning. I was aggressive on my re-entries. It should have been enough to secure a nice day's profits but somehow I ended up missing slightly. I almost never lose outright. I'm almost always reading the direction correctly which is why I tend to use a larger stop historically.

 

We also seen some other dynamics.. funds selling poor stocks and buying strong stocks. I think the market may be transitioning to a "stock pickers" market. If QE is on table then all stocks/weak stocks are bought.. but if QE is not on table then I expect to see some flight to quality.. overall this may mean for more rangebound index action.

[goodoboy 10]

I thought I'd expand on my interpretation of the late day activity. The sell off was an indication of pre-positioning for FOMC announcement tomorrow by hedge funds. Many institutional traders only run trades at or near close of days --without any regards to price. Several funds were likely buying while some were selling. The sellers detected the increased liquidity and executed as much as they could, depressing prices.

 

Thanks,

 

I was wondering why such a selling off. I have actually seen this in the past the day before big news (ie job numbers) where right at close price action drops hard. There are some smart people out there. Tommorow is important day IMO as far as which direction the market could go. I recall last ADP job numbers was better, but unemployment rate remained the same causing some mix price action direction that day. Either way, I will jump on board after the news and will not play the news.

 

As far QE3, over the last 6 months Ben says the same thing "we are prepared to force actions if needed" (something like that). I don't know what he will say, but IMO, I doubt there is any QE3 coming now. We see.

[TheNegotiator 13]

Thanks for your point. I understand some of what you wrote, but will take some reading to fully understand. I like the last statement balanced and unbalanced.

 

What I would like to do is determine the daily (intraday) trend when I am trading. This way I am trading with the momentum of the day and not against it. I think this increase my probability of being right.

 

So here is what I do to determine trend of the day (and which direction I should trade) and of course this method is still in testing mode:

 

1. I consider price behavior over night and determine whether price is above or below the pivot point. If its above = one piece evidence trend for this day is up. likewise the otherway

2. I consider LOD from previous day. If current price is above that LOD, another piece of evidence trend for this day is up. likewise the otherway

3. I use 50 ema on 60 min chart. price stays above it, more evidence trend is up for that day. likewise the other way.

 

Thanks,

 

Regardless of whether or not I personally believe that you're method as outlined for determining a trend is good, the old saying does indeed go:-

 

"The trend is your friend,"

 

and

 

"except when it's about to end."

 

So, my question is do you have an objective method for determining whether the trend may have come to an end before the price activity breaks certain markers?

[TheNegotiator 13]

ADP came in better than expected. We have ISM at 10am then FOMC at 2:15pm. FOMC takes centre stage of course although ISM is a good figure. Anyway, here's a chart:-

 

[goodoboy 10]

No trade dismorning from me on ES due to failure to breakout out of a range at about 1380.25. Will wait til news to come out and reconsider.

[goodoboy 10]

ADP came in better than expected. We have ISM at 10am then FOMC at 2:15pm. FOMC takes centre stage of course although ISM is a good figure. Anyway, here's a chart:-

 

 

Thank you kindly. The ranges are tight today. A bit challenging to make any real direction.

[goodoboy 10]

So, my question is do you have an objective method for determining whether the trend may have come to an end before the price activity breaks certain markers?

 

No, I don't have a method for this besides what I mention last night. For instance, before going to bed from the criteria above, I am thinking downtrend. But I woke you and see buying momentum and price action above pivot point, etc. So now, at any pull back I want to go long. However, today at open bell, sellers just took over. Now all the criteria above is right on borderline. Price action seems to be stuck in a range. That volume profile shows good areas of price reaction.

[joshdance 10]

And we finally break lower... My tape reading put me on the right side of market. However I was too aggressive, didn't use a big enough stop, or didn't take profits quick enough.

 

Remember that thing that you declared "real traders" never do--move their stop close to entry? Well, I also tried three times to short yesterday morning, and each time had a very small loss or very small gain. I finally caught it in 82s, and rode it down to 76s (where I then reversed long after a bit at 75.50--this trade was posted live, but not the short from the high). Perhaps instead of a larger stop, you should consider a smaller one. Just an idea, and not trying to be too snarky, but it's kind of ironic. Rule #1 for me is capital preservation, and wider stops are, for me, not the best way to accomplish this--reading the market and entering with enough precision, and being willing to jump back in if I'm a little early, is how I have done this. Taking a tiny loss and jumping in is ok for me--taking several large losses and jumping in each time is not.

[joshdance 10]

1. I consider price behavior over night and determine whether price is above or below the pivot point. If its above = one piece evidence trend for this day is up. likewise the otherway

2. I consider LOD from previous day. If current price is above that LOD, another piece of evidence trend for this day is up. likewise the otherway

3. I use 50 ema on 60 min chart. price stays above it, more evidence trend is up for that day. likewise the other way.

 

Neither the pivot point, nor the price in relation to the prior day's range have anything to do with "trend." They are important pieces of information (well, not the pivot, for me anyway), but it says nothing about the actual behavior of the current market. What if Monday closes near the high, and during the overnight market, it sells off to below Monday's low, and then peeks above Monday's low just before the open. You are bullish here because the market is above the low? That information is great for context, but you are looking for some kind of black and white method to determine if the trend is up or down, but it does not work that way. The overnight market can be a good indicator, but the market can be up overnight, followed by selling during much of the day session. In other words, use the context of the market, and its current behavior in that context.

 

Ironically, the EMA is probably your best determinant of trend there, but a 50EMA on a 60 minute chart is not going to give you an intraday trend direction. It's too long of a time frame, with too slow of an EMA. Maybe for a multi-day swing position, but not for day trading. Either use a shorter time frame, or a smaller EMA, or better yet, don't use one at all.

[Predictor 11]

Joshdance, well the reason I was stopped out the last time with my target of 72ish. was that I moved my stop to lock in some initial profits. In the other cases, if my stop was 4-5 ticks larger I would never have been stopped out. If I had caught the entire move then I would have been profitable on-day. I agree with you that if you use a large stop that you can't let it get hit. I'm very strong at reading the tape which allows me to take smaller losses typically then a stop would. But, if I use a tight stop then I don't have that opportunity-- to read the tape and make a decision. I was only stopped out by about 4 ticks in my other attempts. But its okay because there are always more opportunities. My belief is that I win by default provided I keep my losses in check.

 

I want to say my style is very aggressive. I know a lot of MP traders implore staying out of the middle. I will drive from the middle, from lows, and from highs. This style allows me to capture profits every single day whereas I wouldn't be able to do that with a more conservative style of trading. It also ensure that I capture those moves that don't retrace to the VAH. I think the biggest mistake that profile traders make is focus on range days and always trying to fade. I will do that too but its all based on the context. We seen how even with Steve's beautiful chart, the market took a dump shortly after it was posted.. it didn't respect that too for very long. The difficulty in fading the range days is that if you accept the market is going to go back to center then it requires using a rather large stop... you only want tight stops when you think the market is going to continue moving against you -- important to note.

 

Let me say, you are absolutely right, if you can use a tight stop and be aggressive on re-entries then that might be more optimal then a mid-sized stop. However, I've found in most of my systems that the larger stops always do better whereas the tight stops tend to turn into break-even equity curves even on my best systems. I use that sort of research to help me make my discretionary trades. You can take it that I don't always take my own recommendations.. I experiment a lot. I also factor in context and the probability that I think the market is likely to trend against me. Likewise, the market has became more spikey which as encouraged me to try tighter stops. Josh, I want to make clear that I don't have any beliefs or agenda in these matters, I just share what I've found to work. What size stop do you consider tight? What size do you consider large?

 

I even have a Tradestation script that allows me to import my discretionary trades and then optimize them within Tradestation. This allows me to see what "would have worked best". The computer using the same entries that I took with a larger stop had almost a straight-line equity curve. I plan to do some imports of my recent trades and evaluate.

 

I think beginners should understand is that its okay to break even in futures. Part of my style is based on the idea of getting into the market and being able to break even and then pushing my best trades and cutting the worst ones. This style of trading is based on the idea that there aren't any very good edges anyway. So, I take whatever the market gives me. It requires a completely different mindset to what most vendors teach which I believe is absolutely wrong for achieving top level performance. What they teach is OKAY for achieving basic performance but not top level. I won't name names but most all trading coaches/vendors teach a style that is absolutely not in-line with what how I believe the top discretionary traders trade. My style is based on my experience in being right predicting the market a very high % of the time, if I were to try to wait for a better entry then I'd lose many good trades and worse I'd get a higher % of bad ones.

 

This is not to say this is the only way I trade. I also have systems with strong edges which I enhance with my market read.

 

Josh, I think you may have some potential. We seem to have some at least possibly similar ways of approaching the market. Perhaps, we should collaborate in the future. I'm busy now working on some important projects but maybe later. PM me your journal.. I couldn't find it.

 

PS:

I will be taking a break from trading for the next few weeks while I finish an important project. I've had a very strong performance this year, and I don't need to "try to make things happens" --which is not what the style I described above is about. I'm happy to let my account sit at near equity highs for a bit...

Edited August 1, 2012 by Predictor

[steve46 12]

Yes Josh, "you may have some potential"......

 

Goodoboy....this little note may help (hope so)....I like to use a 30 min chart to get a better idea of what the big players are doing...what I do that might help you is this

 

1. the left most red arrow is placed at what I think is an area of interest. I call it an area of interest because just to the left of that you can see the previous candles and the wicks sticking up and down, suggesting that both buyers and sellers were trying to operate there...

 

Also you can see that eventually the sellers won, and they took the market down (look at the wide range red candles that follow as price trends.

 

and, when price tries to retrace back up it creates a lower high....with more wide range down candles...this tells me that this was a strong move

 

2 As price comes up to that area again...the next red arrow shows where some folks thought they would get in ahead of the open (that next arrow is positioned above a candle at 6am, a full half hour before the bell)

 

These are folks who (generally) are a little bit ahead of the crowd...so what you get from that analysis is ONE opinion based on the premise that certain folks (who might know a bit more than the rest of us) think that this market was headed south...

 

The right most red arrow shows the retracement prior to the FOMC announcement as some folks try to move it back up, but they cannot...again it forms a lower high....

 

I'll leave the rest to your judgement.

 

Good luck

Edited August 1, 2012 by steve46

[Predictor 11]

One thing to note is what stop losses actually: first, they do not "protect" you from losses like insurance. They merely transfer open drawdown loss into closed loss, whether or not this is a benefit depends on what the market does next. From my research, stop losses 1. Limit the MAE (good), 2. Often increase the Average Losing Trade (bad), and 3. Almost always increase the drawdown (very bad).

 

Most traders understandably want to keep their losing days about the same size or smaller then their best winning days. Yes, I don't want to take a big losing trade but what I really care about is how much I can lose in a day whether it comes from many small losses or 1 big loss, I really want to limit my MAX % LOSS per day. So, I've a max dollar loss based on a % that I'm comfortable with that I can lose per day.

 

I want to explain why I have this. I'm very strong at trading even if I didn't have the loss limit then on most days I could recuperate from early losses. But, that's not the point of the my max loss limit. There are a few days, maybe as few as 1-2 out of the year, where I might just completely be reading the market wrong and dig myself into a big hole. That's psychologically damaging. Again, I come into the market from a position of strength and self belief -- not from one of a scarcity mindset. If I have a bad day, I don't have to get that back in the same day.

 

In other words, my max risk limit per day doesn't have anything to do with optimizing my profits but about managing risk. As I noted, my research has shown that the larger stops do tend to result in straighter line equity curves but they have the cost of reducing the average win to the average loss size. I like for those to be closer to equal even though its not always optimal which is why (based on my read) I will make adjustments.

 

My point is, most traders just do things without really thinking about what they are doing or understanding how these things work. I encourage traders to THINK and research these areas for themselves.

 

My 2 cents... admins feel free to move this to another thread if desired. Steve, you're on ignore and no idea what you just wrote but based on your history, I'm sure that I'm not missing anything.

Edited August 1, 2012 by Predictor