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

[volpri]

Thank you very much volpri for my chart review. You summed up my analysis well.
I am working on the PB entry methods and being careful of those breakouts and WAITING for following through and then entry as I know and have heard 80% of breakout fails. Those PB was beautiful setups, I am learning those as well.

Yes, I would love to enter on Sell Stop Below that FT bar, but too much risk for me per trade, I have to wait and be patient.

Since you are trading 1 contract and can’t average and have your risk tolerance you are forced to wait for the PB to enter so you can stay within your risk tolerance. The downside is if there is no PB after your FT bar then you just miss the trade.

Since my risk tolerance is different than yours I would have been short a couple of contracts on the close of that bar you labeled as a FT bar. That way I am poised for the trade. If there is no PB from my entry then right away I am in the money. If there is a PB and there was (as you entered on it) then I would have been averaging down during the PB building my short position. Why would I average down short on the PB? Wouldn’t that be risky? Well I would consider the facts that:

1) price has been in a range over 100 bars. It is likely time that a BO succeeds as 9 or 10 times in the range a BO attempt has failed. It is probably due one.

2) because of the 7 weak PB’s (I labeled them) DURING the last leg down in the range were all weak PB’s ...that means selling pressure. Those weak PB’s are what are called MINOR reversals attempts that failed. After each one the subsequent PB will probably just be a minor reversal also. Therefore, any reversal attempt up from your FT bar will likely also be minor even if it is a deeper one. Understanding this, I would not be afraid to average down short more contracts as priced move against me, after my initial entry at the bottom of your FT bar. So, while you are waiting to enter I am averaging down.

I mention the 7 weak PB’s not as tradeable setups in themselves (although they are) but to point out the inertia factor in the market. I would not be afraid to average down short BECAUSE every previous reversal attempt ended up being a minor PB and price kept going south and then breaks out south of the range. So, ANY PB after that range BO ...well odds are...it will be minor too and not be a reversal because of the previous inertia and in addition, we have a FT bar outside the bottom of the range.

My initial SL would have been about in the middle of the range above the high of that labeled 5th PB. And I would keep shorting adding to my initial short up into, and as high as the top part of the bottom 1/3 of the range. Then I hold. If my stops gets taken on my averaged down position then I double up or even triple up LONG on the first PB into that bottom 1/3 of the range. Then as price moves up towards the top of the middle third of the range I exit after I get my loss back and back in the money or at least BE.


Anyways, this is just a look at how I would have been looking at playing this trade. But you did just fine and exactly what you needed to do taking into consideration your risk tolerance and the fact you aren’t averaging down but trading a single contract.

This said it is harder to trade a single contract than to average down. Why? Because a trader has to be precise in his entries and just take his loss at his SL. And he will have to run tighter SL’s. It is difficult to be precise in entries every time because of the UNCERTAINTY of the markets. If your stop, by needs, has to be close you will get stopped out very often. And win rate will be low so to make it work out you are gonna have to play for bigger moves that give a larger R:R to make up for all those losses suffered from SL’s being hit. In other words, for scalping or as I put it manual HFT, averaging down becomes a PLUS not a negative and has the potential of rendering a higher win rate because every time you average down THE PRICE MOVEMENT to your new profit point becomes smaller in terms of getting back in the money. Of course, that assumes you are averaging down in the correct scenarios. If a trader is trading 1 contract, even if he has a very wide SL, it becomes more difficult to be profitable scalping. Say price goes against you and trades within a few ticks of your very wide SL but does not take you out and begins to go back a little in your favor. The trader still find himself in a predicament because price now has to travel a long ways to get him back in the money. And because it has traveled so far against you the odds are now that perhaps a trend AGAINST your position has actually started, and the little movement back in your favor is just a PB that WILL be followed by price resuming against you again, stopping you out anyway, despite the fact you had a very wide SL.


Averaging down puts price inertia IN YOUR FAVOR. I WILL REPEAT THAT AGAIN as I have never heard any trader state that concept. So, you might say I have coined it. ”Averaging down puts price inertia in your favor to reach a profit level after taking a position.” In all my years of trading I have never heard any guru or trader say what I just said. Most just bellyache about and deride averaging down. Then tell you never move your SL yet maintain a good R:R and a high expectancy and a slew of other mathematical ivory armchair platitudes that are difficult, if not nigh impossible, for the average trader to pull off. So, the trader after 10 years of trying throws his arms up in exasperation resigning himself to be in the majority company of failed day traders per the stats everyone loves to throw around. Oh well...

There is one caveat to my coined phrase. Don’t average down unless previous inertia is already in your favor and the context backs doing so. Then once a trader is averaged in and the market then begins to move in his favor the “second inertia” will likely take price right down thru his latest BE point from his last averaged down position, because momentum has started and now price has less distance that price needs to travel to get thru BE and get him in the money. TO analyze the phenomena just look at my trades on my charts I post. Do I have a high win rate in spite of averaging down? Gurus are now dropping dead like chickens..LOL. Do I usually get at least one point profit on my trades and most of the time much more? Do I get perfect precise entries? I’ll answer that one. NO! Do I need to get perfect precise entries to be profitable? NO! Now I will ask you. Do you? (and I am taking about any trader that reads this) Do I always have a high R:R to be consistently profitable? No! But often I do. Look at my trades.

Again I when I say you in this discourse I am speaking in generic terms alot of the time not to you personally, simplemelike. I ain’t telling or advising anyone to trade this way. I am just telling you folks how I trade. You do what you want to do. May be best to not even listen to me. On the other hand you might want to try Simming the concepts .....just for the fun of it ROFLMAO. I ain’t telling you to do it with your real money. I am saying you might want to try it on a SIM.

 

[SimpleMeLike]

Since you are trading 1 contract and can’t average and have your risk tolerance you are forced to wait for the PB to enter so you can stay within your risk tolerance. The downside is if there is no PB after your FT bar then you just miss the trade.

Since my risk tolerance is different than yours I would have been short a couple of contracts on the close of that bar you labeled as a FT bar. That way I am poised for the trade. If there is no PB from my entry then right away I am in the money. If there is a PB and there was (as you entered on it) then I would have been averaging down during the PB building my short position. Why would I average down short on the PB? Wouldn’t that be risky? Well I would consider the facts that:

1) price has been in a range over 100 bars. It is likely time that a BO succeeds as 9 or 10 times in the range a BO attempt has failed. It is probably due one.

2) because of the 7 weak PB’s (I labeled them) DURING the last leg down in the range were all weak PB’s ...that means selling pressure. Those weak PB’s are what are called MINOR reversals attempts that failed. After each one the subsequent PB will probably just be a minor reversal also. Therefore, any reversal attempt up from your FT bar will likely also be minor even if it is a deeper one. Understanding this, I would not be afraid to average down short more contracts as priced move against me, after my initial entry at the bottom of your FT bar. So, while you are waiting to enter I am averaging down.

I mention the 7 weak PB’s not as tradeable setups in themselves (although they are) but to point out the inertia factor in the market. I would not be afraid to average down short BECAUSE every previous reversal attempt ended up being a minor PB and price kept going south and then breaks out south of the range. So, ANY PB after that range BO ...well odds are...it will be minor too and not be a reversal because of the previous inertia and in addition, we have a FT bar outside the bottom of the range.

My initial SL would have been about in the middle of the range above the high of that labeled 5th PB. And I would keep shorting adding to my initial short up into, and as high as the top part of the bottom 1/3 of the range. Then I hold. If my stops gets taken on my averaged down position then I double up or even triple up LONG on the first PB into that bottom 1/3 of the range. Then as price moves up towards the top of the middle third of the range I exit after I get my loss back and back in the money or at least BE.


Anyways, this is just a look at how I would have been looking at playing this trade. But you did just fine and exactly what you needed to do taking into consideration your risk tolerance and the fact you aren’t averaging down but trading a single contract.

This said it is harder to trade a single contract than to average down. Why? Because a trader has to be precise in his entries and just take his loss at his SL. And he will have to run tighter SL’s. It is difficult to be precise in entries every time because of the UNCERTAINTY of the markets. If your stop, by needs, has to be close you will get stopped out very often. And win rate will be low so to make it work out you are gonna have to play for bigger moves that give a larger R:R to make up for all those losses suffered from SL’s being hit. In other words, for scalping or as I put it manual HFT, averaging down becomes a PLUS not a negative and has the potential of rendering a higher win rate because every time you average down THE PRICE MOVEMENT to your new profit point becomes smaller in terms of getting back in the money. Of course, that assumes you are averaging down in the correct scenarios. If a trader is trading 1 contract, even if he has a very wide SL, it becomes more difficult to be profitable scalping. Say price goes against you and trades within a few ticks of your very wide SL but does not take you out and begins to go back a little in your favor. The trader still find himself in a predicament because price now has to travel a long ways to get him back in the money. And because it has traveled so far against you the odds are now that perhaps a trend AGAINST your position has actually started, and the little movement back in your favor is just a PB that WILL be followed by price resuming against you again, stopping you out anyway, despite the fact you had a very wide SL.


Averaging down puts price inertia IN YOUR FAVOR. I WILL REPEAT THAT AGAIN as I have never heard any trader state that concept. So, you might say I have coined it. ”Averaging down puts price inertia in your favor to reach a profit level after taking a position.” In all my years of trading I have never heard any guru or trader say what I just said. Most just bellyache about and deride averaging down. Then tell you never move your SL yet maintain a good R:R and a high expectancy and a slew of other mathematical ivory armchair platitudes that are difficult, if not nigh impossible, for the average trader to pull off. So, the trader after 10 years of trying throws his arms up in exasperation resigning himself to be in the majority company of failed day traders per the stats everyone loves to throw around. Oh well...

There is one caveat to my coined phrase. Don’t average down unless previous inertia is already in your favor and the context backs doing so. Then once a trader is averaged in and the market then begins to move in his favor the “second inertia” will likely take price right down thru his latest BE point from his last averaged down position, because momentum has started and now price has less distance that price needs to travel to get thru BE and get him in the money. TO analyze the phenomena just look at my trades on my charts I post. Do I have a high win rate in spite of averaging down? Gurus are now dropping dead like chickens..LOL. Do I usually get at least one point profit on my trades and most of the time much more? Do I get perfect precise entries? I’ll answer that one. NO! Do I need to get perfect precise entries to be profitable? NO! Now I will ask you. Do you? (and I am taking about any trader that reads this) Do I always have a high R:R to be consistently profitable? No! But often I do. Look at my trades.

Again I when I say you in this discourse I am speaking in generic terms alot of the time not to you personally, simplemelike. I ain’t telling or advising anyone to trade this way. I am just telling you folks how I trade. You do what you want to do. May be best to not even listen to me. On the other hand you might want to try Simming the concepts .....just for the fun of it ROFLMAO. I ain’t telling you to do it with your real money. I am saying you might want to try it on a SIM.

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volpri,

Hello volpri,

Very good write up. I much appreciate your writings. They are very hopeful and eye opening.
Keep the writings coming. It is good to have a different view of trading then regular old "Keep your winners bigger than losses" "Risk must always equal reward or higher" "scalping is too hard, give up" , .etc. lol, I am sure you heard the rest.

I understand what you are saying. Using limit orders and begging and pleading for a retrace to fill the position is a pain.

Trading 1 contract is a pain in the Foot, back, butt, arm, head, fingers, nose, and eye. I know for sure. Look https://www.tradingview.com/x/JoITlgEK/ I missed a $2000 trade tonight on crude oil, waiting for that precise entry to fit my risk tolerance. Lol red dot was my entry I was waiting for. Blue dot was my signal bars. and orange dot was my stop loss placement. I wanted an entry within 20 ticks after signal bar. The first blue dot , i was afraid to take because support so close with Friday low.

I asked myself recently, is trading one contract holding me back. Then the subconcious said what i have read often is "if you can't make money with one contract, you want make money with 2, or 3, or even more contracts". But my account size is small and I am currently at topsteptrader with $2000 max drawdown. Lately, I have been thinking about going over to the Micro Emini, then I can trade alot of contrats. Then averaging down would make sense. I use wide price actions stops, above a bear leg or below a bull leg.

Trust me, with every breath in my body, I wanted to put my Sell Stop below that FT bar and say "the heck with risk tolerance, this is a high probability win, it has to go down"

I have been knowing about your averaging into sell and buy positions for awhile now, especially your trading range style.

I will give it a try. Thanks

 

[SimpleMeLike]

I want to make a few points about these 10 trades taken today 4-17- 2020. Look again at the two charts above and meditate upon them.

1) Everyday there are many scalping opportunities. Just look at the chart and the trades I took. There are 81 five min bars in the RTH’s session. On most days many 1 to 12 points profitable scalps can be taken, at almost any moment. As a scalper or a manual HFT trader (as I love to call myself) you will ALWAYS have trades to take, everyday. If you miss one, another one will hasten along. If you cut profits short...just don’t fret about it. You can always get back in. And your broker will love you.

2)I never fear averaging down because I know what to do if I am wrong on a trade and get caught on the wrong side with an averaged down trade. I know how to turn a loss around.

3) Stop losses need to initially be in the right place or you will just get whipsawed out, over and over again. It is NEVER alright to take a loss because of a wrong SL placement. A loss should only be taken when one’s premise and reason for taking the trade has been proven wrong by PA and/or by the dynamic I.E. ”the how” the PA is being made. grudgingly...swoosh...etc?? Stop losses should never be carved in stone but they should be fluid and adaptable to dynamic market action. Always be prepared to move Stop losses. I do on almost every trade. Uh oh a non trading guru just had a coronary arrest on that one LOL.

4) My favorite way to take profits on “averaged down trades” is once I have built my position and price gets back to where my initial entry and is a little profitable I am willing to get out and lock in my profits. Every thing is thus paid for on the trade, including commissions. Don’t get greedy. “A bird in the hand is worth two in the bush.” Too many traders get a profit then to their chagrin just sit there and watch it evaporate right in front of their eyes.

5) A manual HFT (don’t you just love the term) must ALWAYS endeavor to maintain a high win rate. This can only happen if one IS NOT GREEDY. While Dozzy’s boyz are scooping up the loaves of bread be satisfied with the crumbs that fall out as they scoop them loaves up. Most traders ain’t got a big enough scooper to be grabbing loafs.

6) You must, know or learn, when averaging down is viable to do and when to refrain from doing it.

7) It is ok to look quickly at other Time Frames or say 24 hr/RTH’s charts but take your trades off ONE TF. You have to stayed focused on one TF or you will get scattered brain and confused.

8) Don’t worry too much about R:R. Uh oh another non-trading guru just killed over with a major heart attack. The only risk that really matters is the actual risk you endured as the trade was unfolding. The initial risk, more often than not is never hit, if it is placed correctly. There will be plenty of time for figuring up R:R AFTER the trading session is over with. And that will and should be based upon what you ACTUALLY endured as the trade was unfolding and not some initial risk you placed that would keep you in a trade or avoid a catastrophe. A general rule is: on averaged down trades try to get at least a little profit on that initial entry as price moves back in your favor after averaging down. That is not always possible, as you may lose on a contract or two, and make money on the rest of the averaged down contracts in the trade, but you are generally going to have a winning trade anyway, so it an’t the end of the world if you jump out with a little loss on your first one or two entries, made on an averaged down trade. Whoa, now that is a sentence!

9) Averaging down points or levels have to be correlated with the volatility and dynamics of the session, as you build your averaged down position. On low volatility days I may average down in one point increments. On days like today I may average in on 2,3,4 point levels from the previous “average in” position in the trade. I have no set rule for this. I just generally, intuitively, make those decision as I see PA’s Dynamic unfolding, the volatility of the day, and where we are located at any price pattern such a a range or channel..etc. I will also vary on the position size of each average in incident within a trade. Sometimes, I will start with 2 contracts then add 2 then 2 more for six total. Other times I will start with 1, add 3 then add 5 if I sense price is stalling and gonna move back in my favor quickly. That loads me up on the back end which gives me more leverage as price turns back in my favor. Smaller movement will be needed for bigger profit kind of thing.

10) Take the time to learn these techniques and for sure practice them alot on SIM. THEY NEED TO BECOME second nature. In the heat of the battle you don’t need to be learning how to quickly get your sword out of the scabbard. Fumbling around and all that BS, thinking the market is gonna wait around for you. Just learn to execute instinctively, precisely as you can, and quickly. Don’t dick around.

11) Realize that on EVERY single 81 of the 5 min bars there are institutional bulls and bulls active, without exception, no matter how small the bar is. Price does not move nary a tick unless an institution wants it to. There is no such thing as noise in the markets. That concept is a myth propagated by gurus that can’t trade.

12) Remember and NEVER forget this. Your money is ONLY at risk when it is in the market. That is the beauty of manual HTF trading. In crashes investors are crushed unless they have really deep pockets to wait it out. As a manual HTF trader it doesn't matter what the market did yesterday..last week...or a month ago. Or even not too much 2 hours ago. I am only interested in what it is doing NOW.

13) Learn price action trading well. It is always the same. Has been for 100’s of years. No one can ever take that from you. You won’t need to buy more trading courses...pay huge fees for mentoring...learn price action, and how to employ these techniques within that framework. Then just mess around ONLY on a SIM just for the fun of it. ROFLMAO.

13) I’ll think of something else to say probably later on. LOL

Well I said I was gonna drive home a point or two in my earlier post...well it grew...what can I say. It is what it is.

WARNING: You can lose ALL your money and more ...plus your shirt and your billfold trading the markets and especially following the things I discuss so I ain’t telling anyone how to trade here. I am telling here, how I trade. All of these posts are for learning purposes, educational purposes, and just plain BS’s around. When I use the word you I am using it in a very generic way and am not talking about YOU the reader. You, (now I am really talking about you here) do whatever you wanna do. It is totally, 100% your decision. I ain’t giving you advice. You may be better off to not even waste your time reading my posts. That is ok.

Thank you very much Volpri,

I enjoy your post. And agree with you.

I definitely agree with you on the Stop loss placement. I hate getting stopped out of a trade because I went cheap on the stop loss.

I agree with the focus on one time frame chart as well. For me, I have no time to be looking at the 1 hour, and daily, news, and the 15 minute chart. Its too much.

Well, I argee with all. especially the sim part and learning price action.

 

[volpri]

Does anyone know the best procedure for removing hard water spots off glass shower door? I took the doors off and outside but can't get vinager to do the job.

 

[volpri]

April 22, 2020 MES 5 min chart

Few trades this morning no more time. Got other things to do today. So, here we are Manual HFT, LOL. Scalps in MES. Mostly 2 to 6 point scalps. I think. Maybe just 2 to 4 point. Don't have time to look. All winners. Some were averaging down. Basically, range trading scalping. Looks like the Day may be shaping up to be a Small Pullback Bull Trend Day (SPBL). Gap up open. Makes low early (bar 10) Then BO above 18th bar. If not a SPBL then will probably morph into a TR day but at 11:33 a.m. still favors SPBL scenario.

SPBL Days are grinding bull program buying. Tactic go long on PB towards 20 EMA. Exit on swing highs or hold and keep adding on subsequent PB's. If latter then exit entire position on what looks like a reversal developing or deeper PB before it eats to much of one's profit up thus locking in profit. Another option for the latter is hold till near close of the RTHs session, if price keeps grinding up. Be aware of possible deeper PB 1:00 to 2:30 chicago time.

First chart is RTH's 5 min and second chart is 24HR 5 min. Both charts show same trades just different PA perspectives.

 

[volpri]

It is 2:30 Chicago time. I am back at the house now. Looks like is was a typical SPBL trend day. I may get another trade in before the close. Just have to see.

 

[volpri]

I did takes a couple of more trades. IT is 2:43 chicago time. This time I took a $450.00 averaged down LONG scalp in the ES. Initial entry 4 contracts. Averaged down 2 more. I also took a scalp in MES. Will show that chart shortly. See, you don't have to have a lot of movement to make some quick money. SPBL trends are grinding but strong.

 

[volpri]

Here is that straight LONG 3 point MES scalp taken just before the about ES scalp. Entry on a PB. First chart RTH's second chart 24 hr.

 

[volpri]

I'm done for the day. All winning trades. Just want to drive home a few points.

1) What causes SPBL trends? Bullish institutions are buying. Every attempt by bearish institutions to push price down and close the opening gap is met with buying by bullish institutions. You got both working the PA but the bulls are winning. They are building up a position. It is program buying. Dozzy might be happy. There are generally maybe 1 or two of these kind of days a month sometimes more often. Of course you can get SPBR (Small Pullback Bear Trends) too. The idea is to sell PB's or rallies back to the 20 EMA. Often SPBR will be steeper trends as FEAR or preservation is stronger than greed.

2) The general idea is to have the courage to execute on the PB's (long on SPBL)and short on SPBR. In the case of SPBL trends it isn't always so easy to go long because it is counter intuitive. It has been grinding up all day long and one gets to thinking ..weak trend..not a steep slope....any minute dues a reversal....However, if price is grinding up and every attempt to reverse it thru PB's is met with buying then bullish institutions are buying and a trader may need to think why this is happening and about how to capitalize on that.

3) Understand SPBL trends are some of the strongest trend there are (in spite of the slope being minor). They can last the entire session like today.

4) While they can last the entire session often there can be a deeper PB from 1:00 to 2:30 chicago time. So be aware of that. You will figure out what to do if that happens.

5) Remember you don't have to just trade BO's. BO's are about 10% of PA. That means as a trader you may be missing out on many trades and opportunities each and every day. For instance, just that one six contract ES scalp made $450.00 (before commissions) in one 5 minute period near the end of the session. You can trade small movements and do quite well. You can trade these smaller movements in channels.. Trading ranges...SPBL and SPBR trends. As a matter of a fact me thinks it is wise to learn to trade the small movements (which many call noise but such a concept is really a myth) as most of the time we are gonna see channels..TR...PB's with lots of small movements within them as opposed to strong BO's.

 

[toby400]

Volpri -I assume you know about Futures whereas I am just learning ( I am used to UK spread betting)- I have looked at sp500 and Was but came across this instrument : EU6M20 Euro FX Globex. have you ever traded it or have an experienced opinion on it?