Day Trading the E-mini Futures

[TheNegotiator 13]

Sorry, missed the important bit off the chart!

[TheNegotiator 13]

Fail there at 1280.75 was important. See if there's any more to the downside here.

 

Bigger DX chart attached.

[sdoma 10]

 

As for dollar index, you sure you don't have it? Which feed do you have?

 

I have dtn.iq, all it says is "invalid symbol" when I try to load it.

[TheNegotiator 13]

try @DX#

 

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[sdoma 10]

try @DX#

 

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Nope. What feed do you have?

[TheNegotiator 13]

I have dtn and cqg.

 

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[TheNegotiator 13]

What a day in the markets! I wanted to share a trade I did today. It kinda sucked. I made 10 points overall on it. I bought 1163.75. Damn! Here is a chart of the lovely rejection of the nearest major volume level. 1163.25 on the button. Sweet as you like.

[steve46 12]

That was a very nice read at the low...nice trade Negotiator

 

Here is my chart for the day using a 2 minute time frame....I like the shorter time frame when it gets volatile because I helps me to see what I call "demonstrations of momentum"

 

Long story short I like to let the market "display" momentum before entering a trade...as price moves from one blue supply/demand node to the next, I look for;

 

wide range bars

speed at which the candles are created

supporting data (I read the tape)

critical time periods

 

if I see a significant display of momentum, I look to enter at the next retracement to either an upper or lower boundary of the blue supply/demand nodes.

 

I like this way of trading because it reminds me of putting together a puzzle..

[TheNegotiator 13]

Of course these other things must be monitored when placing the trade. I agree wholeheartedly on the lowering the tf when we get the volatility we have had last week. I think it's really important to maintain a bigger picture view within the day, so make myself look at a 15/30min chart but I tend to look at a lowish volume profile. Say something like 1500/2500. But it depends on the market.

 

As for that particular trade, I'd just like to point out that I am not advocating bottom fishing in a market like this. But over the past week I have noticed that at the really 'good' levels you're not really being given two bites at the cherry so to speak. But if you get in and monitor the trade carefully and make sure you're decisive, you give yourself a very good chance of taking a good trade. I think an example of a level which didn't work so well was around the 1218 mark. I think you have it on your chart steve. It didn't really show much of a profit on the way down, but you could have got in an at least not lost money for the opportunity.

 

I think the important thing to note when the markets are behaving like this is just wait for the better opportunities. The areas that you wouldn't normally imagine could be tested will probably be. Above all have patience. Don't be a margin call statistic if you can avoid it.

[joshdance 10]

I do not normally trade ES but couldn't resist this on Friday. I opened up the charts around 2:30 and planned that if we broke 1198 I would look for a short. Simple demand line break (1st red line), retest/fake up, enough longs trapped to short, target earlier support around 1185. 10.50 handles in 7 minutes, gotta love that. Took another demand line break (2nd red line) plus VWAP rejection, shorted 1190.75 on the way down and closed 1187.75 for a quick 3 handles. I think I liked ES the last couple of days (took a couple of trades on Thursday as well) because it behaved like CL, which I normally trade

[joshdance 10]

A question for you market profilers that I have been wondering lately--when you're into new territory like ES is right now, do you use volume at price from the continuous contract, or from a merged back-adjusted contract? If so, why do you choose that one?

 

In other words, do you prefer the integrity of the volume information at the actual previously traded price, or do you prefer that it's accurate to see where volume traded at the same relative price level?

Edited August 6, 2011 by joshdance

[steve46 12]

I'd like to offer a quick suggestion especially with regard to the use of volume

 

When we look at charts posted for educational purposes, I think people get the impression that one can base a trade on similar data (a specific type of chart with volume displayed)...

 

It seems to me that what matters is not the static volume level as seen in those charts, rather the way that volume comes in, or fails to come in, as price tests a particular level. Also I think one needs to be able to indentify automated execution as it comes into the market, and again it is difficult if not impossible to do that using a standard chart display....in contrast, I noticed a real improvement in my accuracy after I learned to read the tape. The dynamic aspect of volume became easier to read, and you could see not only when volume came in, but more importantly whether the market was able to sustain a bid (whether the market could "hold a bid" at a specific price).

 

To each his own preference of course, but I find that I can more accurately and easily determine whether price would hold and reverse or take out a price by reading the tape.

 

Good luck

Steve

[TheNegotiator 13]

Here's a thought on what ES is trying to do. Attached is a long term volume profile similar to the one I posted before. 1163 area is still the 'line in the sand' for me and with that as a point of reference, the last three days worth of action have suggested a couple of things so far(and tentatively). Value is building below the prior accepted 1163 area and although it is broad and it is only 3 days so far, volume is substantial elevated compared to what is 'usual'. Any further development below this 1163 area could possibly suggest intention to attempt to test the lower and bigger boundary at 1058. However, being that the market is sensitive to news at the moment, any reasonable development above 1163 could mean shorts will scramble to exit and create a short covering rally of decent or strong magnitude. The next few days will be important to decipher whether value continues to develop as it is or if this is a pause or if even we are ready to test the recent weakness with a rally.

 

Manage your risk and wait for the right moments.

[TheNegotiator 13]

Update today, although the ES was skewed to the upside today, nothing has changed from what I said in the last post. Development continued for the most part in the 3-day balance. Although we probed higher and showed strength, reversal on close was strong enough to suggest that there is more development left. So it's still possible to move strongly either way tomorrow. Don't second guess the market. Let it tell you what it wants to do.

[iwshares 10]

Don't second guess the market. Let it tell you what it wants to do.

 

Great quote, I'll keep remembering that when the markets moves against my position!

[TheNegotiator 13]

Great quote, I'll keep remembering that when the markets moves against my position!

 

Staying in an objective state of mind is one of the most difficult things in trading, especially when you have a trade going against you.

[TheNegotiator 13]

Thought I'd share a chart for anyone who is still out there! Who would have thought a couple of weeks or so ago that a 19.25 point day would be dull?!? In fairness, there have been a few very nice opportunities, such as selling the initial balance high back to vwap/50%/day low volume(and something else which I can't think of right now!), reversing the same trade and buying at double test and fail of yesterday's vpoc/close early on.

 

Anyway, seeing as how we are pretty well balanced up to now, I was looking at my chart to see what we would have to take out if there were to be a late break of any substance in either direction, barring any game changing news.

 

Here it is.

 

Any thoughts?

[steve46 12]

Again I appreciate the idea of using MP concepts to find potential "target" prices that the market may want to take out (I assume this is the point of the previous post)

 

What traders may find difficult however is the execution, especially when markets get volatile

 

And so I suggest that you may want to consider a method that accomodates intraday volatility. When we see the Vix come into the 30+ range I prefer Bollinger Bands set to 2 SD with a 20 period EMA midpoint....

 

To obtain volatility based intraday targets I simply review my time based pivots to find the nearest local extreme (today it was 1184) and then I read the tape and looking for price to test the upper band (or close above). On the next close below a band, I look for a favorable short entry...reverse the process for longs. The virtue of this method is that it adapts immediately to local vol...

 

Using that method today we got filled at 1139.75 (right at my target) in what would normally be a very difficult open to trade

 

Good luck traders

Steve

[TheNegotiator 13]

 

using that method today we got filled at 1139.75 (right at my target) in what would normally be a very difficult open to trade

 

 

1139.75?

 

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[steve46 12]

Yep, sorry about the typo

 

1183.75

 

The attached chart makes it easier to see what the mechanism is....basically you want to let the market show you a reversal of momentum, and from my point of view the best display of a change of momentum is seen when price tests a BB extreme, closing at or outside the BB then reverses direction moving back inside the band. In terms of my approach, I want to see this happen at the top of an overhead supply node (blue horizontal block). Preferred entry is just below the red arrow...

Edited August 13, 2011 by steve46

[TheNegotiator 13]

Steve,

 

I never really got on that well with Bollinger Bands personally, but I know people use them and they find them useful. What I think is key is how you are using them. That is in this case you are trying to see what the behaviour is of the market in relation to the BB, around the the zones you have identified as previous places where supply and demand were not in balance. The BB example you posted tells me that the market has pushed away from exponentially weighted moving average of price to the up side and has moved through the 2nd standard deviation and failed to move beyond the zone of interest. The point I was a little more interested in was actually the second attempt on the same level which actually showed a contraction in the BB at the high of the candle. I do seem to remember that BBs are used in this way sometimes, to identify potentially price reversal on an extreme test and band contraction. Question is, would you consider using this type of entry strategy to add more at the BB contraction point?

 

In all though, identifying zones and trading them is imo not going to be enough. There must be other factors in your trade selection based on what the market is doing as the zones which have been identified are based on what the market has done.

[TheNegotiator 13]

So for this week, my initial focus will be on listening to the market to ascertain its intentions. Will there be a move higher and what will that show? Will it be reversal type behaviour or will it be further retracement before sellers step in? Or will the balance from last week be retested? The boundary between the two distributions from last week fall at 65 and 63 is also an important area. The next thing I'll be monitoring based on this is the relatively tight balance from Friday and the conviction of any breakout from its price range. Overnight action so far has been skewed to the up side, although it has been contained by Friday's high(by 3 ticks). If there is more action upwards, I'd want to see development above 1193 and 1200 area.

[TheNegotiator 13]

Area between Friday's VPOC 1176.00 & close 1177.00 may be a good initial gauge of initial intentions if we test it. Overnight low is currently 1176.25 so that is a decent enough pointer that importance has been placed on it. To the up side, it's likely to be Friday's high. So currently the market is balanced between Friday's volume point of control and its high.

[Niko 10]

Do you have a bullish or a bearish bias for today?

[TheNegotiator 13]

It's looking strong, but overall the market has had a big shock. I think we may go up but I'm wary of finding sellers too. It doesn't matter too much which way it goes though, I plan for both.