Hey Sommi
I'm going to post in red here just so you clearly see what points you're making I'm responding to:
I spend about 15-30 seconds before each opening session to prepare. This includes looking at 30-min and Daily levels as well as data out for the next few hours on ForexFactory. When you glance at it every day you don't need to spend too much time on it. I have no technicals on my screen and the only Levels marked are the obvious 30-min or daily ones.
Interesting that you are only looking at 30min and Daily Levels and no technicals. Everyone's prep is different and the best form of prep is when the market tells a story to you so you have a sense of what the story is being told to you - the basis being, understanding where the market participants may come in and interact, especially OTF.
Personally I have a top down analysis from weekly at beginning of each week to daily -15 min chart with daily, weekly and composite volume profiles taken into account. Kindly of a mix following a Jim Dalton MP, FT71 VP approach to market structure. That just works for me, everyone should find their own prep style that speaks to them.
I am observing the price action and trying to gauge which team is winning; the
buyers or the
sellers. If we approach a major level the first time, I will sometimes look for a good reason to fade it and scalp out if possible. However, there must be evidence in the price action first. This is extremely important. I have completely changed my approach to trading to be reactionary as opposed to just collecting at levels/regions of interest and hoping it holds.
Being prepared for the day is only half the job done. The other half is reading the day as it occurs. We could make it complicated but I will start it off slow to guide you on the right path;
I will give you my very basic preparation for the day. It changes and evolves as the hours of the day evolve. These are extremely important. Do not underestimate these. These help you build Context and Edge when it comes to trading. If you did not need these, everyone would just code "X happens when Y happens" strategies into their automated machines and they would generate profit every day.
When I first started trading, no-one would walk through these with me. There are too many secretive f@ggots who only care about themselves. After working hard at these, I am happy to share these with you
Your first preparation batch starts here. This is what most selfish people will tell you, then they will keep their mouths shut.
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Preparation for Eurostoxx/Dax
1. What are the major 30-min and Day levels that I need to watch out for?
2. Is there big data coming out?
Yep key areas to watch out for as the market approaches need to be written down and glanced at during the session, how does market participants interact, what is the delta telling you, have we got aggressive one way action with one side lifting the offer/bid.
Knowing data release times is key too - especially prior to it as sometimes (especially UK data) is leaked and cable and other products may start to move prior to a release.
These are your two important pieces of preparation that can be automated and shared to everyone.
The next tools you need will happen 'live' and its really survival of the fittest. This was never explained to me when I was starting off and I always wondered why; I guess it's because they were selfish scum.
Your second preparation batch is;
1. Have there recently been any big moves that I should take note of? This changes depending on the market you are looking at.
Hint: Regarding Eurostoxx/Dax trading, you should check to see if Asian markets had a big move. If they haven't, then be weary in the price action of levels breaking right off the bat when the European cash opens.
Bonus Hint: Check the H-Shares, Aussie Spi and Japanese Nikkei 30-min charts to see if they had any big moves in their most recent session. This is not a linear piece of information to grab, but it opens your mind. For example, if all 3 have finished in the Red or near Red, this may gauge you to look closer at the direction of the Eurostoxx/Dax upon its cash open.
This is excellent, I rarely pay attention to Asian markets, although I have my squawk telling me of any overnight moves in Asia, but must say that it doesn't grab my attention unless there is fundamental news that's gripping the market eg Chinese CB news. I'm going to talk to my broker to get a feed for Asian products.
How do you track them? Line chart to see if they are correlating?
2. Has the S&P been correlating with these markets in the previous session? If it has, then watch it during the European market as well. If it correlates near the open then becareful of all fades. This is not a tick for tick thing, you need to watch as it behaves in the first 1-2 hours of the move.
Do you tend to play futures open divergences in Dax, Stoxx - say if ES has been correlating negatively with Nikkei and Dax, Stoxx opens near unchanged will you indiscriminately get short lifting the bid or wait for a mini pullback and play the convergence?
Hint: You have more of a chance fading levels and hopping on reversions when you have to compete against no other forces.
Bonus Hint: Your chances of a level breaking through or continuing the trend are significantly higher when you have more markets moving together in line with you. For example, if the Dax is near the lows with the Eurostoxx, and the S&P500 is near the lows as well, you have very good reasons to scalp or momentum-play from the short side if the price action is conducive to this.
Agreed although I'm only really focusing on the Dax moving with the Stoxx. Perhaps having an ES ladder won't do any harm too. Thanks for the hint.
Third preparation batch
1. What is the price action behaving like today? Is this what I want it to be for my style of trading? Every day, there are new players entering the market and so it is constantly changing. Sometimes, the wicks are safer for fading more often than not. Other times, it moves like a big swing. You don't have to get too hung up on this, but just be aware that every day tells a different story. We always want to automate and we always want to auto-pilot and just relax. But unfortunately, I have not figured out a way to and so until then I have to keep applying focus and attention to the 'type of day' it is.
I feel volume profiling really helps with determining 'types of day'. Say a neutral extreme day where price opens at its high, moves down over time but volume dries up and we get a major reversal where buyers eventually pick it up and prices closes on its high and major volume occurs around the highs then we see that the auction rejected lower prices by the lack of participants in the market and the 2 way auction / value was decided around the high. After trend day these day types can potentially determine the price action for the next day or more, usually stopping the previous trend. Although people should do their own stats on this.
This is why it is important to not just learn a 'trade' but to learn a method of trading. Most people who rely on charts are looking for 'their trade' in multiple different markets. This is fantastic if you can get it to reliably work on a consistent basis. I used to only look for fades as well. But I had to adapt to different plays in ranges, break-outs, scalps, whatever it is.
Hint: You are much better off applying yourself, and working really hard to just step in and hunt for trades that suit the direction and style of the day, instead of waiting for your 'specific trade' to come along. This will always give you survival and longevity as long as you have appropriate risk/reward measures. For example, hunting only for Fade Trades in the Eurostoxx will make you miss like 50% of the potential trades because it likes to swing between ranges and crack with the Dax.
Totally agree, why learn to drive an auto transmission car when the majority of cars are manuals? Bad analogy probably 
Bonus Hint: You can learn this much faster if you can collaborate with someone else who is hunting for trades and successfully finding them. This is how I learned to take on a few pro-momentum trades instead of constantly looking for fades. I did not have the necessary skill to jump in for it, so my friend shared his trade one day and I grew from there. If you can find someone doing the same thing you will also exponentially grow.
2. For the trades I'm looking for, does the volume support it right now? I can see what the volume is like just by observing 1-minute candles and checking the price action immediately. Do I see people following through on the prices? Are people backing each other up? I have a tool to let me see the footprints, so I can also see if there is much trade-back. There are many traps in the middle of ranges, especially in the Eurostoxx.
Footprint charts are really handy for me on reversals. Later in the session when participation dries up and we've reached as far as we can, sometimes the market will revisit the extreme and one tick fail auction the low/high. I use a contract size minimum of 400 and that just filters out some of the noise of smaller trades. When we revisit those areas, if I'm looking for the reversal I don't want to see any large participation of the other side to show that we're likely to fail at pressing lower/higher in the move. Then setting a target such as IBH/L, previous day high/low or the mid of the session.
Hint: I make money when there's more volume and more whales out there. Does your strategy require the same conditions as me? If it does, then you definitely want to stick to Opens for the quickest money. Trade the opens, and then stop when it quietens down about 1 to 2 hours later. Make a journal, log your trades and prepare for the next session.
Example of the same chart pattern appearing in two days: One moment of the day, Eurostoxx reversed back up on 400-lot buy orders for four prices. That's 1.6k volume to push it 4 ticks. But the previous day around that time (30-minutes into cash), it was doing 1k back and forth over those 4-ticks.
So the same 'chart pattern' formed two days in a row. I took note of this. In one day, if you were wrong, you could exit for a little bit of a loss on the Good Day because it had trade-back. This is because the price action was telling you that there were literally twice as many people who wanted to play the game today.
On the Bad/Deadly day, you had to clip market because it did not trade back once. It was just purely correlating with the Dax and reversed back to the middle of a range, causing a trap.
One day had good price action, the next day had a bad one. The chart told the same story, but the price action and volume told different stories. In the good/safer day, bids and offers were not pulling when they were real, and there were people clipping market over 2-prices. In the bad/quiet day, correlation with the Dax seemed very clunky, no-one was willing to fight it, and fresh orders were not showing their hands (there probably weren't many fresh orders as the volume was low).
On one day, I participated and scalped 2 ticks. On the other day, I just sat on my hands because it looked garbage to me. Maybe there was someone else out there, who didn't even make money on the Good Day but unfortunately got carnage on the reversal in the Bad Day? This is what you need to start adding to your 'Preparation' as the day goes on.
Yesterday was a garbage trend day. I find it incredibly hard to hit the bid/offer and go with momentum as so many times I've been hung at high/low. Yesterday there was very few pullbacks other than a reversal around 9.30PM Aussie time. Looked to parabolic of a pullback to go with and it's never easy trading a EU product into US hours. I'm usually out of the product entirely 2 hours after the cash open.
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These 3 keys of preparation and survival were shown here to demonstrate the level of preparation that goes into consistently winning. You won't here most people talking about this. The first level can be taught, the other two are learned. You get better by talking to someone every day and trying to gauge their level of thinking and strategy. This is what I provide when I begin to mentor my friends.
I did not want to give you a half-a$$ed answer to stroke an ego like many others like to. I know it sounds very absurd to just say "15 seconds of market preparation", hence why I explained it here. There is more to the story as always.
A lot of market preparation comes intuitively and gained from experience over the years. For example, the U.S. Presidential Election is out next Tuesday so I would be very cautious about playing major breaks in U.S. or European markets if the price action does not start off aggressive in the session. Or,
if they do break, I would be very cautious to play pull-backs later on in the session, as I would be expecting the dangerous reversal most of the time with the hindsight artists to say "Well its not going anywhere before the election is it?".
Finally, I have to say that you should always keep trying to apply yourself and those fundamentals of trading. When you go into auto-pilot or background mode trading... your brain just numbs and it becomes clock work. Sure, this is great if you're already making a lot of money consistently every month, but if you're trying to get there, you really need to push above and beyond.
Brilliant, brilliant post mate. So much to learn. Thanks for your contribution!
I think most of your posts were spread trading from start to finish.
