Approach to trading the ES contract
- Thread starter StevenBruce
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Going into todays open we have the following data
Value Area High = 894
Value Area Low = 886.50
Reports scheduled for release include
Core CPI at 5:30am PST
Empire Manufacturing at 5:30am PST
Long Term TIC at 6:00 PST
Capacity Utilization at 6:15 PST
Industrial Production at 6:15 PST
Michigan Sentiment at 6:55 PST
If you look at the economic calendar using either Briefing.com or Forex Factory.com you can see that the Europeans release their information before we do. One can expect that the information they release will reflect continued weakness (as will ours)
At the open of the German (DAX) market we entered a short position on the Globex and will try to hold until the US market opens
As was pointed out previously, we also expect increased volatility due to options expiry. One can look at the Open Interest for QQQQ May Calls & Puts to determine where the battle lines will be for today. Speculators (and institutions) having bought or sold premium will want to move the markets in the direction of some of those strike prices.
Value Area High = 894
Value Area Low = 886.50
Reports scheduled for release include
Core CPI at 5:30am PST
Empire Manufacturing at 5:30am PST
Long Term TIC at 6:00 PST
Capacity Utilization at 6:15 PST
Industrial Production at 6:15 PST
Michigan Sentiment at 6:55 PST
If you look at the economic calendar using either Briefing.com or Forex Factory.com you can see that the Europeans release their information before we do. One can expect that the information they release will reflect continued weakness (as will ours)
At the open of the German (DAX) market we entered a short position on the Globex and will try to hold until the US market opens
As was pointed out previously, we also expect increased volatility due to options expiry. One can look at the Open Interest for QQQQ May Calls & Puts to determine where the battle lines will be for today. Speculators (and institutions) having bought or sold premium will want to move the markets in the direction of some of those strike prices.
We would be looking to take partial profit on a touch of 880
Pre-market short did not work and was stopped out
Where do you get the value area numbers?
Is that the only aspect of market profile you utilize?
You refer to we, the people who taught you and your office. I am just curious if you would tell us a little about your trading education and experience?
I am enjoying and learning from your thread so far.
Thanks.
Is that the only aspect of market profile you utilize?
You refer to we, the people who taught you and your office. I am just curious if you would tell us a little about your trading education and experience?
I am enjoying and learning from your thread so far.
Thanks.
In answer to the question "why the Dow Cash rather than the S&P Cash?"....I was taught this approach based on the Cash Dow and I did my own research based on comments by Art Collins. One could use the S&P cash as well. I am used to this method and prefer it.
I work in a small professional office, and prefer not to comment on them or identify them because I believe it would not help traders trying to learn from my comments. I can say that I execute orders from a daily book of business, and I manage mutiple accounts including my own.
I work in a small professional office, and prefer not to comment on them or identify them because I believe it would not help traders trying to learn from my comments. I can say that I execute orders from a daily book of business, and I manage mutiple accounts including my own.
Market Profile numbers are computed from the previous day's data. The are more accurately referred to as the "Previous day's Value Area High and Value Area Low". They are not the only Market Profile numbers I use, however they are (in my opinion) the most important.
The "Value Area" is that area where 70% of trading occurs. The upper and lower bounds constitute the Value Area High and Low. These limits are automatically calculated by most software. On Esignal for instance the Value Area is shown on the right side of each Profile displayed as a magenta colored line. The top of the line is the Value Area High, the bottom of the line is the Value Area Low.
For those interested in learning about Market Profile I recommend starting by reading "Mind Over Markets" by James Dalton. Once you have that background, a student should probably continue on to read and study "Markets in Profile, Profiting from the Auction Process" also by James Dalton.
Additional resources include Brett Steenbarger's blog. Link is as follows
http://traderfeed.blogspot.com/2007/02/market-profile-best-practice-in-trading.html
I hope this helps.
Now for today's action
First we have option expiry. That means that the first and last hour will display most of the volatility. So we know that in order to make money we HAVE TO get on the right side early. We can't miss an entry. So with that in mind we start with the pre market
The overnight market moved down first on weak economic news from Europe. Then just prior to the open, the Globex moved back up to open at 889.
The previous day's value area high & low are
VAH = 894
VAL = 886.50
1. So we opened "in value"
2. We look for price to test one or the other extreme
3. Because of options expiry we expect to see what professionals call a "gamer's day" or a "pinball day" meaning we expect price to swing back & forth early and to chop around at midday.
As can be seen from the chart price opened in value and tested down to VAL at 6:41:50. Price hits the VAL exactly "to the tick" and reverses. The trade runs north to a high of 892.50 for 6 pts
At 7:13 price retraces down to touch 886.50 again. Our policy is to take the second touch long with smaller position size. This one takes only one tick heat down to 886.25. This one moved north to a high of 895.50 for 9 pts.
At the VAH the reversal trade occurred and took 1.5 pts heat. That trade moved south to a low of 876.75
As always, the management protocol is to establish the trade and scale out at 2, 3, 5, 7 and 10....we leave bullets to run to end of day if necessary.
First we have option expiry. That means that the first and last hour will display most of the volatility. So we know that in order to make money we HAVE TO get on the right side early. We can't miss an entry. So with that in mind we start with the pre market
The overnight market moved down first on weak economic news from Europe. Then just prior to the open, the Globex moved back up to open at 889.
The previous day's value area high & low are
VAH = 894
VAL = 886.50
1. So we opened "in value"
2. We look for price to test one or the other extreme
3. Because of options expiry we expect to see what professionals call a "gamer's day" or a "pinball day" meaning we expect price to swing back & forth early and to chop around at midday.
As can be seen from the chart price opened in value and tested down to VAL at 6:41:50. Price hits the VAL exactly "to the tick" and reverses. The trade runs north to a high of 892.50 for 6 pts
At 7:13 price retraces down to touch 886.50 again. Our policy is to take the second touch long with smaller position size. This one takes only one tick heat down to 886.25. This one moved north to a high of 895.50 for 9 pts.
At the VAH the reversal trade occurred and took 1.5 pts heat. That trade moved south to a low of 876.75
As always, the management protocol is to establish the trade and scale out at 2, 3, 5, 7 and 10....we leave bullets to run to end of day if necessary.
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