Approach to trading the ES contract

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Ok then FOMC announcement is an interesting event day.

Typically we have low vol (both volatilty & volume) until the release

The "prototype" is to take it down the day before and then mark it up into the announcement.

The suggested strategy is to

1. know the context (what I've just stated)
2. prepare by getting your S/R lines in place
3. process the data before the market opens
4. develop an action plan

For me the "action plan" is simple

We look for price to consolidate while the market waits for the release. The tendency is to move the market up (slow grind up) pre the release. So we look for a test of previous high or low to confirm or deny our plan.

The attached chart shows the premarket, with S/R lines, pivots(daily, weekly, monthly) and a 200 ema in place

Based on the data at hand premarket, we make the inference that price is going to follow the established protocol and grind up.
If thats true we are going to look for a place to get long.

We notice that in the premarket, they have marked it up to previous resistance at 900 and then pulled back. This pullback is one of the places where we might find a nice entry.
 

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Now in this next attached chart, the ONLY thing we have added is a 9 period ema (displaced +2 points).

Notice how the market opens and then moves down to test that 9 period ema
 

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Then we advance to the next bar (same chart) and we can see
the result of that test. Price moves up off the open to again challenge previous resistance at 900. A long entry at the test area (896.25) would have resulted in a profitable position right away.
 

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and we advance the chart a few bars further.

Here you can see that the long entry at 896.25 (approx) would now (if held) have hit 10 points profit. You can also observe that price has now tested previous resistance (line we put in prior to the market open). This is the natural place to exit the trade, keeping a few contracts in place in case in continues.
 

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Unfortunately I have to stop here. I have a strategy to trade the actual announcement, but I am not willing to reveal it. I hope the comments to date have been of help.

The main message (the big picture) is

1. "find a logical way to approach the markets"
2. "find a logical way to view the data"
3. "prepare yourself prior to the open"
4. "plan your trades based on what you expect the market to do"
5. "if the market does what you expect....execute with discipline"
6. "if the market surprises you....adapt and change your plan"
7. "when you get into a profitable trade, hold it.
8. "when you get into a loser....honor your stops.

A retail trader can do some of these things, but is inconsistent. This inconsistent behavior can often be attributed to lack of discipline and/or lack of emtional control. A professional does all of it (and a little more) consistently. If you understand this, one way to "get there" is to make a check list and move methodically through it, until you have each point under control.

At this point is it probably a good idea for the moderator to close the thead.

Wishing everyone the best of luck

Stevesbg
 
Exceptional thread, stevesbg.

If possible, a moderator should bump it periodically, so that the new traders will have access to the knowledge base.

Good trading
 
Yea, thanks for the great thread Steve.

Just tried to PM you but it said you arent receving messages. If you are leaving, could you shoot me a quick PM for a couple last questions?
 
Quote from stevesbg:

Once you orient yourself to the market on the longer term, you assume that the odds favor one side more than the other.

In this case we believe that the odds favor the long side. Although we take trades on both sides we may size our long positions bigger and we may give them more wiggle room (bigger stops).

One method that works consistently well is to combine signals from several methods to find an entry. When two or more of these signals occur in close physical relationship to each other we believe that the chances of success are increased, because there are likely to be more traders on the trade.

We look for signals using the following sources

1. Market Profile numbers
2. Pivots
3. EMAs
4. Ergodic Indicator
5. MACD indicator
6. Events

Where two or more of these "line up" in close proximity, we call that "confluence" and assign that setup higher odds of success.
More...

great thread steve!
where do you get the market profile numbers from? do you do your own market profile charting on CQG or some other software ?
 
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