My Daytrading Method

Quote from eminitrader007:

Back to paper-trading for a month:

See how it goes.

Value Range:

ES: 1308-1309
ER: 749-750
NQ: 1685-1687
YM: 13344-13352

Pivots for ES

O+H+L = 1308
H+L+C = 1310

I want YM and at least two other indexes to open higher for a long trade and YM and at least two other to open lower for a short trade.


Reasons to follow......
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This is what I have realised after starting this journal. The market is a multi-dimensional puzzle and as soon as I think that I have solved the puzzle, something seems out of place.

For example, because of the Value-Ranges and where the price opened this morning I was sure that the market would go up today and go up big ie. 8+ points. Right now the market is below my buy-point. What I overlooked was that yesterday the high of NQ and ER did not even come close to their value-range. So even after this big rally on 3/22 after the huge sell-off on 3/21 the NQ and ER still closed way below the value range.

The long-term players are selling and we are seeing the short-term bounce.

Here is my long-term analysis.

The smart money is getting out of the high-beta speculative stocks, buying low-beta blue chips and selling futures to hedge their positions. Once they are mostly out of the speculative stocks, they will start selling the blue-chips. We are seeing a topping formation and the DOW will be last one to make the top.

A nice correction is on its way.
 
Quote from EPrado:

....
Whatever you do..dont fade yourself...because the minute you start doing that, your calls will be right on target and you will end up in a mental hospital....
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That was just a joke:D
 
Quote from eminitrader007:

This is what I have realised after starting this journal. The market is a multi-dimensional puzzle and as soon as I think that I have solved the puzzle, something seems out of place.

For example, because of the Value-Ranges and where the price opened this morning I was sure that the market would go up today and go up big ie. 8+ points. Right now the market is below my buy-point. What I overlooked was that yesterday the high of NQ and ER did not even come close to their value-range. So even after this big rally on 3/22 ---after the huge sell-off on 3/21 the NQ and ER still closed way below the value range.

The long-term players are selling and we are seeing the short-term bounce.

Here is my long-term analysis.

The smart money is getting out of the high-beta speculative stocks, buying low-beta blue chips and selling futures to hedge their positions. Once they are mostly out of the speculative stocks, they will start selling the blue-chips. We are seeing a topping formation and the DOW will be last one to make the top.

A nice correction is on its way.
More...

Taking the long term picture in consideration, I'll be taking short signals only. The risk-reward is not so good to be a long here.

For example, today the buy point was 1310.5, although the market closed at 1312 it was down most of the day and it is painful to see the market down when you're long.

If I get a buy signal, I'll look for long-term resistance to sell and if I get a sell signal, I'll sell at the Value-Range.

Will post the ranges for tomorrow later tonight.
 
Value-Ranges

ES: 1311-1312
ER: 750.2-750.8
NQ: 1681.5-1682
YM: 11346-13352

Market Profile for ES
VAH: 1312.25
POC: 1310.75
VAL: 1308.75

Pivot (for ES): 1311
R1: 1315
R2: 1318.25

The long-term resistance for ES is around 1319. If we open higher then 1312, I'll look to sell around 1319 with stop at 1323. If it opens lower than the value-range 1311 would be the sell-limit price with a stop at 1315.

PS. I got the MP numbers and Pivots from another web-site (courtesy of pitbull) so please do your own DD to verify those numbers.

Bolter, if you are reading this, can you please tell us if that is the number that you have too? Thanks.
 
emini,

FWIW, I have similar VAH, POC, and VAL values for the ES.

An observation...

Your trading plan for tomorrow seems inflexible to me. It appears that you're going to force a short trade regardless what the market does. In your trading plan for tomorrow, have you determined what it would take to change your bias from short to long (i.e., at what point would you determine that shorting the ES is the wrong thing to do)? Why don't you have support levels in your plan? Be careful not to impose your will on the market, instead listen to the market by watching how it trades around key S/R levels using market internals.

IMO, I think it is difficult to say which way the market is trying to go right now, because over the past couple of days it has been going sideways. I think it can breakout in any direction, so I am monitoring the balance area extremes. My suggestion is to look at the Globex data before the market opens to help set your bias and then look at market internals (i.e., Ticks, TRIN, and breadth) and volume during the day. This helps to see how the market is trading around your key reference areas. Remember that Bolter relied heavily on market internals to monitor the market, which helped confirm his bias or suggest that he change his bias. Follow the order flow, not your opinion.
 
emini,

I have the same upper and lower VA for the ES as you have.

I must confess to not having completely read this thread, but I get the impression that you are placing too much stock in MP levels and setting a bias before the market opens without sufficient attention to what's happening intraday. I don't think it's that simple and I think you will get clobbered without additional analysis.

I've posted a chart of yesterday's ES that may provide some further things to think about.

The black and green lines are standard pivot and S1 respectively, the orange line is the previous day's VWAP and the blue lines are the upper and lower VAs.

Examine the bottom two indicators on the chart and the divergences around the potential support and resistance levels that I have marked up. It is really quite striking.

The orange indicator is the Chaikin Oscillator, which is simply the MACD of Accumulation/Distribution. This gives an element of volume analysis.

The purple indicator is the Commodity Channel Index.

Virtually every turning point is marked by the combination of divergence and support/resistance. Of course it is a range bound day, so very suitable to this type of examination, but still quite interesting.
 

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Quote from HispaTrader:

emini,

FWIW, I have similar VAH, POC, and VAL values for the ES.

An observation...

Your trading plan for tomorrow seems inflexible to me. It appears that you're going to force a short trade regardless what the market does. In your trading plan for tomorrow, have you determined what it would take to change your bias from short to long (i.e., at what point would you determine that shorting the ES is the wrong thing to do)? Why don't you have support levels in your plan? Be careful not to impose your will on the market, instead listen to the market by watching how it trades around key S/R levels using market internals.

IMO, I think it is difficult to say which way the market is trying to go right now, because over the past couple of days it has been going sideways. I think it can breakout in any direction, so I am monitoring the balance area extremes. My suggestion is to look at the Globex data before the market opens to help set your bias and then look at market internals (i.e., Ticks, TRIN, and breadth) and volume during the day. This helps to see how the market is trading around your key reference areas. Remember that Bolter relied heavily on market internals to monitor the market, which helped confirm his bias or suggest that he change his bias. Follow the order flow, not your opinion.
More...

I'm not trading my opinions. The reason to take short signals only was based on my observations. The Value-Range has been declining from 3/17 and has been acting as a resistance. You can draw a trendline of the POC and will be able to see the downtrend too.

If we get a short signal, I think 8+ ES points is possible but if we get a long signal even 4 points can be hard aleast at this time. We want to follow the path of least resistance which is obviously down.
 
Quote from dcraig:

emini,

I have the same upper and lower VA for the ES as you have.

I must confess to not having completely read this thread, but I get the impression that you are placing too much stock in MP levels and setting a bias before the market opens without sufficient attention to what's happening intraday. I don't think it's that simple and I think you will get clobbered without additional analysis.

I've posted a chart of yesterday's ES that may provide some further things to think about.

The black and green lines are standard pivot and S1 respectively, the orange line is the previous day's VWAP and the blue lines are the upper and lower VAs.

Examine the bottom two indicators on the chart and the divergences around the potential support and resistance levels that I have marked up. It is really quite striking.

The orange indicator is the Chaikin Oscillator, which is simply the MACD of Accumulation/Distribution. This gives an element of volume analysis.

The purple indicator is the Commodity Channel Index.

Virtually every turning point is marked by the combination of divergence and support/resistance. Of course it is a range bound day, so very suitable to this type of examination, but still quite interesting.
More...

I am using the MP numbers and pivots to confirm only. I use the value-range which is basically MP without the time component. Sometimes they match and sometimes they do not.

I do not use charts and no indicators. Just high, low, open and close and where the majority of the daily volume changed hands.

I'll look at a chart to see whether it made a low before high or something like that but not for other purposes.

I felll that I need to incorporate the long-term value ranges to define S/R and this strategy will work. We'll see.
 
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