Quote from rc5781:
What do you look for in the NQ to tell you about the ES?
It is not so much what I look for in NQ to tell me about ES, it is what I look for in the entire market to tell me about ES. Perhaps you have heard the term, correlation is not causation.
NQ and ES should point in the same direction and are not only highly correlated, but have similar causes in their reason for price action.
Same goes for other instruments that could affect ES like oil, IRs, currency pairs, VIX, sectors, etc. What I look for mostly is for things that make sense, and act with more force when they do make sense to me, and tread with far more caution when it doesn't. It is part art and part science, which is why I do not currently have an automated SIF trading system. The key is not the analysis, as anyone with experience can do it. Imo the key is knowing what to focus on because rarely does the market make sense in entirety, which then leads to paralysis by analysis. Worse, causation is dynamic and not only changes from day to day, but potentially intra-day as well. News is the obvious king of causation in markets.
NQ price action is just the obvious causation that should agree with ES price action, so I mention it more often than the myriad others I look at. That said, ES goes nowhere without NQ.
nitro
Note, "making sense" and causation are two powerful terms in trading. 99% of the traders that I know that are profitable always have a "driver" of the instrument they trade, i.e., causation. MMs are a slight exception to this rule, but even they would benefit from directional price analysis as the frequency of their hedging hugely affects MM profit.
