(I am referencing E-mini's, not micros below. And I am assuming profitable exits.)
I have a friend that usually takes just 1 to 3 big swings a day. He will enter a trade and an initial stop at $150 to $200 per NQ contract and then watch as the trade (hopefully) gets some traction. He will NOT usually set an initial exit, but will watch as the trade rises (if long) to probable Resistance levels and will see how price reacts at those levels. He will then "manage" his stop, meaning he will raise the stop to a prior support level. I have watched him on short squeezes in this very market get 10, 20, and even 30 NQ points. He doesn't want to miss any of the big move and so he just lets the market take him out as it eventually drops below his raised stop. Although, if we get to Floor Trader Pivots R2 or R3, he might take off some of the contracts to lock in profits. Be it seems he rarely simply gets flat all at once.
I trade much shorter time frames.
In a trending market, I just assume we are going to get a small dip at each resistance level in an uptrend. So I get flat, then I look to reload long on a dip. In a downtrend, I will usually take profits at the next support level and then hope for a pop to reload for more down.
What is really interesting about shorts though is they usually move about 3 to 7 times as fast as longs, and so they often easily overshoot. I will often hold those trades a bit longer, being on the lookout for the beginning of relief rallies that often defy belief.
If the market is "in balance" (a slow day with lots of reversions), then I will scalp the snot out of the range. Most people get chopped up in ranges, but they are my favorite. I will sell the highs of the range and buy the lows until we break out of the range. Most people are looking for the price to move to the other side of the range, but I get out after just 3 to 5 ticks in ranges and wait for the reset. The mid-line is a magnet, and so once we get below the mid-line, I know the pressure is once again developing to the upside. But I wait until we have dropped more and I see evidence of a reversal before trying a long.
Whether we are in a range or in a trend, sometimes I see the profits and simply decide to take them off the table. I may miss a great move, but I don't care! There will always be another trade. Just $200 per day is $50k per year! So I must not be greedy. Most of my trades are $35 to $50 on YM and NQ and if I see something over $30 I often get a twitchy finger. But I do usually wait a little longer until I see a small stall all my fastest time frame chart.
I have mentioned Support and Resistance levels several times here. The big ones are often fixed for the day and are determined from the action of the previous day. These include--
- The previous day's Open, High, Low, and Close.
- The Floor Trader Pivot Point and R1, R2, R3, and S1, S2, S3.
- Volume Profile TPO analysis including the previous day's Value Area High (VAH), the Value Area Low (VAL), the Overnight High (ONH), the Overnight Low (ONL), and the Point of Control (POC) (also known as the "high volume node").
- Bigger time frame trend lines.
- POCs from previous days.
- Moving averages
- Fibonacci levels for retracements after big moves
- The current day's "Developing" Value Area
- Volume Weighted Average Price
- Newly formed intraday pivots and trend lines.
Why do these work so well for both entries and exits? That i will save for another post...
Last edited:
