Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM

[volpri]

In this thread I hope to give traders some ideas and concepts I use trading the instruments mentioned in the thread title. As much as possible I would like to keep on topic. Questions are welcome. I really don't want to get into sparring around and wish to avoid doing so, if possible. As much as I enjoy doing it.

Of course, it will be hindsight charts but the concepts apply to trading live. It is my opinion that concepts can be best studied from static charts. I can’t really show anything from non-existent charts. All I can say is study the charts and practice the concepts maybe on a SIM first. Perhaps you will find the ideas and concepts useful. I day trade using a variety of tactics and techniques depending on the Price Action context for the each day, as Price Action unfolds. Instead of trying to keep the strategies and tactics in sections I will just show charts as I trade them as the day progresses and perhaps mark them up and make comments.

I won’t get into showing or proving that trades are actually taken and producing statements...and such other account proofs. None of that is necessary to teach the concepts. Such proofs only prove my mettle as a trader and usually one thing leads to another and often not everyone can be satisfied and the thread heads down the road of arguing about proofs. And I often come across as arrogant or bragging instead of meek and humble and that seems to bother traders. I will say I don’t personally think the market cares or knows about my ego. The market is what it is and I do not believe it is purposely trying to teach me a lesson and humble me. It cannot, and does not, distinguish between a meek and humble trader and a braggart that is arrogant and full of himself.

To extract profits from the market the only thing that matters is my skill set to do so. The tools, concepts, tactics and techniques I employ and my abilities to employ them correctly, along with my psychological mettle, are what matters and these are the things that are the deciding factors as to whether I am profitable, or not. I do not believe in luck or fate. I believe each of us makes our own way and we leave our own mark.

I believe I am responsible personally for ALL my wins and losses. I cannot and will not blame others..the economy..the Fed...or institutions..including the HFT’s or any other trading programs. The way I see it IT is strictly MY responsibility to figure out “how” to extract profit from the markets in ALL situations and contexts.

When trades are shown on a chart that I post and were taken by me live as price action unfolds, either on a SIM, or one of my real money account, I may, or may not, indicate which to be the case. Some trades will be done on a Live SIM and some will be done with real money. I will not divulge which. SIM is necessary because I will purposely do wrong things on some days to cause losses. Traders often (at least in my personal case learn more from failures than from successes.) I am not going to use real money and lose it purpose just to teach a concept. I think you can understand that. However, if I use an old static chart from my computer to illustrate a point then I will try to state so, if I remember. Not that it should really matter.

Anyway, all are welcome. If you don’t like the above this may not be a thread for you to follow. So, think about it. Please take the time to do so.

Trading has never been easy. It takes study..time ..and practice to learn how. I think I placed my first trade in 1989 or 1990 so I have learned a few things. Much of what I have learned I have learned from others but the hard part was getting it to work for me in a way that fits my personality and adapting what I learned and making it fit into how I love to trade. To be upfront I am a scalper. I love trading that way. By scalping I mean 1 to 8 points in the instruments mentioned in the title of this thread. I do not mean 1 or 2 ticks. However, at times I will BE or grab 1 or 2 ticks if I think my premise for entering a trade is now wrong, or I judged wrongly, and I figure it best to just get out. By day trading I mean to be flat by end of the regular trading hours. Occasionally I may make some trades in the night session but most will take place in RTH.

I am a bit of a maverick. I do not follow most of the standard rules that trading educators have lassoed us traders with. I have just found most of them do not work in the real world of trading even though they sound good, look good and seem logical. So please don’t be shocked if I break many of the rules.

Enough said. Time to get started. A hearty welcome to all!

 

[volpri]

The following charts are from live trading wed 9-25-2019 trading MES
I ended day with 560.00 profit before commissions are deducted.

This day was what is called Small Pullback Bull Trend. These type of trends are some of the strongest. However, they don’t appear to be, by a cursory glance, at the chart. Often the trend is not steep. Bars can be small and they can overlap often for quite a bit before continuing on up. For the most part a day like this is filled with small PB’s with most of them staying above the 20 EMA and often above the 50 SMA. A day like this is often characterized by just a slow grind up the whole session. Very strong up trend but not necessarily very steep. However, a key observation is price staying mostly above the MA’s, especially above the 20 EMA. And it is obvious every attempt by the bears to reverse the PA fails. Most of the PB’s stay above the MA’s

So, what strategy should be used? What tactic should be used? The strategy is to trade with the trend once it is identified. The tactic is to go long and scale in on PB’s. Scaling in can last practically the whole session and exiting near the close or exiting on any strong counter trend that indicates price is reversing. Usually price will drop below the MA’s for quite some time on reversals and not just a dip down then promptly back up.

An alternative tactic is to go long and exit at the top of bull legs. Then go long again at the bottom of PB’s. And just repeating this as long as the TREND LASTS.

The charts are 5 minute charts. The first shows my first two trades. Red triangles are short trades taken and green long trades taken. First, I will show a clean chart of these two trades and then a marked up chart. Price started in a broad channel. Right after open we had a bear trend down in the channel. Then a Break above the bear trend line. Followed by a test of the previous low. Then a move up towards the top of the channel. This becomes a potential reversal up out of the top of the channel. However, since most BO of channels fail I couldn’t make my mind up if this would be a successful BO or if price would simply trade back into the channel. I decided to short 2 contracts at the top of the channel. Then I felt uneasy about that and took another look at the break above the bear trend line that became a MTR (major trend reversal signal). That break broke ABOVE both MA’s and that indicates buying pressure. Price then traded down to test previous low then reversed on a 3 bull bars to the top where I shorted two contracts. It went down a little and I could have made around $50.00 or so but decided to hold. Then I got uneasy. A inside doji followed that bear bar back down. That indicates less selling pressing than what was in the bear bar. Then bam a big bull starts up. I decided to exit my short and reverse and go long 2 contracts. I subsequently added long 2 contracts a clip on pb’s as price began the small pullback bull trend. So, soon I had 10 contracts. Had to go to town so I set my bracket order at a PT exit at a place I figured it would at least make it to. When I got back I added two more contracts long and minutes exited the entire 12 for a profit as we were getting a lot of sideways action even though price was staying above the MA’s, for the most part. You can blow the chart up to see the green triangle entries. I took some more trades that day and will post the charts showing them later.

Scaling into a SMALL PULLBACK BULL TREND AND HOLDING. Holding just over 2 hours.

These charts contain ALL the trades made and not just winning trades that are cherry picked.

Below find a clean chart and after it a marked up chart.

 

[volpri]

Other trades from 9-25 added as day progresses. I am flat after getting back from town. Start back trading scaling in i.e. adding to a profitable position. Why? Relentless SPBTD (small pullback trend day). The tactic is to trade in the directionn of the trend holding and scaling in as trades becomes more profitable. In this case it is a small pullback bull trend day (SPBL). So, basic idea is fade all bear reversal attempts as they generally will all be just minor reversals but the give the opportunity to add.

Channel is tight. All reversals fail. Trend is not steep but relentless. Bull institutions are buying accumulating positions. Slowing and with algos. This is program buying. SPBL trends are sone of the strongest because unlike steep trends that can end quickly these can last the whole session.

Absolutley no reason to short on a narrow channel SPBL trend day. If the channel is broad enough for a min scalp (3 to 6 times the size of min scalp which is 1 point AND average size bar is 3 points then shorting at top of bull legs with LIMIT ORDERS NOT STOP ENTRIES 1 point short scalps may be taken but probably best to not fool with it.

Ok so at this point I am 8 long and holding.

 

[volpri]

Next I added more contracts as time progressed towards the close. The 50 SMA IS TGE INTERMEDIATE trend of the day and if price is staying above it then underlying buying is taking place even if slope is not steep. Remember steep trends can end very quickly. SPBL trends are like watching paint dry so I have to be patient and just add and add on PB’s. See it seems like the DOM is painstakingly slow buying IS taking place. Many traders will complain about no action..no Strong BO’s and they talk themselves out of taking a position in VERY STRONG RELENTLESS TREND.

So now I am long 12 contracts. Notice last add still above BE.

 

[volpri]

Ok as time progressed added 2 more. So now I am at 14 contracts long in MES. REALLY a very small position. But if I had a small account this shows how MES can be traded scaling in as price moves in my favor without averaging down. Want to see the strenght? Count bull bars from last tine price touched 20 EMA. 19 bull bars! How many bear bars? Six! What is stronger 19 or six? Want to identify more strenght? In those 19 bars what is bigger bars bear or bull? Want to see even more strength? In those 19 bars how many sequences of bull bars? Five! How many sequences of bear bar in those 19 bars? Zero! Want to see even MORE strength? How many bars have price staying above the 50 SMA. It is 59 bars!

Seems like paint is drying so...so...slow but trend is actually very strong. Doesn’t look like it by the slope but it is RELENTLESS. BULLS are winning hand over first. Which side you wanna be on?

 

[volpri]

So getting close to the close. Best to look at exiting. So I exit in two increments. 10 and 4.

Total profit. At end of session taking ALL Trades into consideration. $560.00 before deducting comm. One loss after deducting the comm on that trade of ($2.38).

So by scaling in using MES with a small account 560.00 can be made if one can identify the trend for the day (type) and use the proper tactics. Just reverse everything for a SMALL PULLBACK BEAR TREND. (SPBR).

Hope this helps someone. Look for these type of trends and capitalize on them. Maybe practice trading them on a SIM and see how it works out for you. We will usually see one or two of these SPBTD trends per trading week. Think size after getting good at trading them. Instead of 2 contracts a wack maybe 5. Or if larger account may want to practice it with ES. Some serious DQ Money just might be made with ES trading these type of trends. Then sugar plum goes to Dillards not Dollar tree and trader gets breakfast served in bed!

REMEMBER THEY LOOK WEAK ...THINGS MOVE SLOW ...PAINT DRYING SLOW..BUT UNDERNEATH THEY ARE VERY STRONG TRENDS AND CAN LAST THE ENTIRE SESSION.

PS not trading advice. Just showing how I trade this sort of PA.

 

[volpri]

I took some trades this morning and by around 10:30 central time I was done. Traded ES AND MES.

I have something urgent to attend to right now but I took snapshots as the trades progressed. Maybe I can post the snapshots and do some commenting tonight on these trades taken 9-26-2019.

 

[Overnight]

You mentioned a small account somewhere in here.

It looks like at one point your full 14 contract holding was down around $2100, so plus the 11,700 initial margin you're tying up -$13,800 in NLV. Not sure how comfortable some folks would be with that kind of leverage at a non-discount broker like IB, and a "small" account. So for sure with a smallish account you'd need a firm that offers decent day-trading margins.

 

[volpri]

You mentioned a small account somewhere in here.

It looks like at one point your full 14 contract holding was down around $2100, so plus the 11,700 initial margin you're tying up -$13,800 in NLV. Not sure how comfortable some folks would be with that kind of leverage at a non-discount broker like IB, and a "small" account. So for sure with a smallish account you'd need a firm that offers decent day-trading margins.

LOL HOW YOU FIGURE THAT? I was scaling up NOT averaging DOWN. Never once was I in the hole except on that first trade where I lost $2.38 AFTER COMM WERE DEDUCTED. ??? I think you got the narrative wrong here. You ok?

 

[Overnight]

LOL HOW YOU FIGURE THAT? I was scaling up NOT averaging DOWN. Never once was I in the hole except on that first trade where I lost $2.38 AFTER COMM WERE DEDUCTED. ??? I think you got the narrative wrong here. You ok?

I came to that conclusion from this chart...

You were in with 14 contracts long at ~2985. That is your average price, because that is your BE point.

At 9 AM your position was down 30 points.

So 14 positions down 30 points in ES $-2,100. Then you have the Initial margin of $-11,700.

Just going by your chart