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

[volpri]

ok I am back. But my I have run back again. Corona virus juice:

If anyone is interested juice 4 or 5 carrots, 5 celery sticks (long ones), 1 peeled Kiwi, a sliver of ginger root, a red bell pepper (at least a 1/2 of one.) Then when done juicing squeeze an entire lime into the mixture. Stir and drink till the goozle cringes. Will activate the immune system the digestive system and perhaps more systems...LOL

 

[volpri]

Here is another trade. 2 contracts straight long scalp. Now at $141.25 Maybe I will get time to explain these trades. It is hard to trade and type. I miss a lot of opportunities. I am showing this trade in both RTH's and 24 hrs.

 

[volpri]

1:47 took a couple of more trades. Will post both RTH's and 24hr chart. Up to this point 4 trades. 2 straight long scalps and 1 averaged down long trade, and 1 averaged down short trade. All profitable. At this point $285.00. I may not have time to take anymore trades today. Got something else to do. Maybe can explain them later. I colored coded the entry and exits for each trade. Happy trading.

 

[volpri]

I did take another 5th trade (yellow lines) a straight long scalp two contracts 3 point scalp. Little late posting it as my son-law came to get a refrigerator as we replaced ours. So that makes 5 trades now. All winners. Now at $315.00

 

[SimpleMeLike]

Hello Volpri,

When you scalp, how do you know when to take the profit? I scalp the ES today for two trades for $100 each, but my stop loss (risk) was big and was hidden above entry signal bar.

I been trading for CL for about 2 years strong now. I did start trading with ES when I first start trading about 4 years ago, but I switch to CL after buying some silly BS indicator system. Ugghhhh.

I notice for ES, it requires wider stops as the average range on bars are high. My stops will have to go above/below signal bar and my reward will equal my risk to keep things simple. Al Brooks states that Risk = Reward means a scalp. Makes sense.

 

[volpri]

Hello Volpri,

I have a question I would like to get your opinion on regarding PB and support and resistance. I believe I am letting the support and resistance some.

Would you agree that all three green arrows are good pull back entries for long?

After you answer, I will tell you why I hesitated on the entries and missed them.

View attachment 225052

Since the chart and your arrows are in the context of a bull leg in a very broad range what I discuss below is in terms of a bull leg or any bull trend. The ideas are the same for a bear leg or bear trend. Just turn everything over.

First we have to ask ourself just what are PB’s and what creates them?

What is a PB? It is a reversal attempt, usually.

What creates PB’s? PB’s are created by two forces and sometimes a combination of both forces acting together. What are these two forces?

1) an attempt by the bears to reverse a previous move bull move

2) profit taking by the bulls

3) a combination of both things.

There are two kinds of reversals.
1) minor reversals.... these are what we call PB’s.
2) larger reversals...these are what we call major reversals or trend reversals

Probabilities:
So, any time you see a bull leg you know there will be PB’s. So, lets puts some probabilities in your favor. Ask is the bull leg steep and tight? Are there gaps (between close of a bar and the close of previous bar or the high of one bar and the high of the previous bar)? Are the bars in the leg large bars?

If yes then and upcoming PB’s are likely to be minor. They will likely just be small bull flags.

Ok if you are looking at a developing PB and trying to decide if it will be minor or major then look at the previous PB’s and the trend. Major PB‘S need 5 large bars or 10 smaller bars to be label as a major PB that could lead to a trend reversal.

So, if you answer yes to the paragraph under probabilities above, AND THE PREVIOUS PB’s have say two or three maybe 4 bars and then the trend resumes the odds are very high that the present developing pullback will be a minor PB (just a bull flag) and the trend will continue. Why? There simply was not enough selling pressure exhibited in the previous PB’s to flip the odds so that the present, developing PB, will be a major reversal. In your case that is exactly what happened. Every PB was small up to your green arrows. That was an immediate indication along with the “probability paragragh fulfillment” and your trend did basically fulfill what is written in that paragraph.

Now there are two ways to trade this. If you determine, by taking into consideration the concepts I just talked about, that the developing present PB is probably going to be a minor there are two ways to trade it.

1) Go long with limit or market orders at the lows of the pb bars as they are being made. Average down as one bar goes lower than the previous bar. Then once the PB ends price only has to travel a small distance and one can scalp out with a profit on all the averaged down contracts. This is my preferred way to trade PB’s that I suspect will be minor, based upon my analysis of the trend leg and previous PB’s as described above.

2) Wait till the PB ends and wait for a bar to resume the trend and when that bar makes a high above the last PB bar enter on a stop order. Basically, entering on an H1. Read in one of my previous post what an H1 is.

Now if the previous PB was a larger one having 5 or so large bars or 10 or so smaller bars then that indicates selling pressure and also indicates that the present PB could be deep and maybe even a major trend reversal.

In your case I would have averaged down on every PB. And scalped 1 to 12 points. In your case on your first PB you had no previous PB to look at but you did have two big bull bars before the PB took place and they had gaps...= urgency = any present PB will probably be minor.

 

[volpri]

Hello Volpri,

When you scalp, how do you know when to take the profit? I scalp the ES today for two trades for $100 each, but my stop loss (risk) was big and was hidden above entry signal bar.

I been trading for CL for about 2 years strong now. I did start trading with ES when I first start trading about 4 years ago, but I switch to CL after buying some silly BS indicator system. Ugghhhh.

I notice for ES, it requires wider stops as the average range on bars are high. My stops will have to go above/below signal bar and my reward will equal my risk to keep things simple. Al Brooks states that Risk = Reward means a scalp. Makes sense.

What was your actual risk? That is the amount price ACTUALLY went against you PLUS 1 tick?

 

[SimpleMeLike]

Since the chart and your arrows are in the context of a bull leg in a very broad range what I discuss below is in terms of a bull leg or any bull trend. The ideas are the same for a bear leg or bear trend. Just turn everything over.

First we have to ask ourself just what are PB’s and what creates them?

What is a PB? It is a reversal attempt, usually.

What creates PB’s? PB’s are created by two forces and sometimes a combination of both forces acting together. What are these two forces?

1) an attempt by the bears to reverse a previous move bull move

2) profit taking by the bulls

3) a combination of both things.

There are two kinds of reversals.
1) minor reversals.... these are what we call PB’s.
2) larger reversals...these are what we call major reversals or trend reversals

Probabilities:
So, any time you see a bull leg you know there will be PB’s. So, lets puts some probabilities in your favor. Ask is the bull leg steep and tight? Are there gaps (between close of a bar and the close of previous bar or the high of one bar and the high of the previous bar)? Are the bars in the leg large bars?

If yes then and upcoming PB’s are likely to be minor. They will likely just be small bull flags.

Ok if you are looking at a developing PB and trying to decide if it will be minor or major then look at the previous PB’s and the trend. Major PB‘S need 5 large bars or 10 smaller bars to be label as a major PB that could lead to a trend reversal.

So, if you answer yes to the paragraph under probabilities above, AND THE PREVIOUS PB’s have say two or three maybe 4 bars and then the trend resumes the odds are very high that the present developing pullback will be a minor PB (just a bull flag) and the trend will continue. Why? There simply was not enough selling pressure exhibited in the previous PB’s to flip the odds so that the present, developing PB, will be a major reversal. In your case that is exactly what happened. Every PB was small up to your green arrows. That was an immediate indication along with the “probability paragragh fulfillment” and your trend did basically fulfill what is written in that paragraph.

Now there are two ways to trade this. If you determine, by taking into consideration the concepts I just talked about, that the developing present PB is probably going to be a minor there are two ways to trade it.

1) Go long with limit or market orders at the lows of the pb bars as they are being made. Average down as one bar goes lower than the previous bar. Then once the PB ends price only has to travel a small distance and one can scalp out with a profit on all the averaged down contracts. This is my preferred way to trade PB’s that I suspect will be minor, based upon my analysis of the trend leg and previous PB’s as described above.

2) Wait till the PB ends and wait for a bar to resume the trend and when that bar makes a high above the last PB bar enter on a stop order. Basically, entering on an H1. Read in one of my previous post what an H1 is.

Now if the previous PB was a larger one having 5 or so large bars or 10 or so smaller bars then that indicates selling pressure and also indicates that the present PB could be deep and maybe even a major trend reversal.

In your case I would have averaged down on every PB. And scalped 1 to 12 points. In your case on your first PB you had no previous PB to look at but you did have two big bull bars before the PB took place and they had gaps...= urgency = any present PB will probably be minor.

Thank you for the thourough write up. I understand it perfectly.
My preferred method of entry for now (to keep things simple a bit) is wait for PB, in this case 2 bear bars, and enter with a Buy Stop order above the first bull bar. Stop loss goes 2 ticks below the lowest of the PB bars or somewhere logical.

I did not take the first PB because resistance of yesterday's low.

Often times I think the resistance and support do more harm than good. Lol . But they help for profit targets.

I acutally went long at close of the 2nd bull bar after breakout of the bear flag near support. I exit for a scalp at resistance (yesterday low of day).

 

[SimpleMeLike]

Watch that 20 ema in bear channels. When price action is floating around in the middle area of the channel you put more odds in your favor to start short on PB to the 20 ema as opposed to shorting on the low of a large bear bar such as where you have your red arrow. While a wider stop loss would have kept you in the trade until the drop down 6 bars later to the bottom of the channel your tolerance for such a wide SL is not palatable. Therefore, to increase your odds of success on a 1 contract you need to take trades when a pullback is close to the 20 EMA when both are running in the middle of the channel if that is where you are going to initiate the trade. So, it I were to trade a one contract no averaging down trade on the BO from the nested sideways range I would try and get in on a PB to the ema. In this case that would be at the DT (or call it triple top if you like) in the PB which is about where my red dot is but 5 bars to the right.

It is easy in the heat of trading to overlook the EMA but remember it is an “ average” and gives you a good sense of where traders are valuing the market at for the moment. So in a bearish phase like a bear channel short entries on PB to the ema are just simply increasing your odds of a successful trade. Whether that ema is at the top or in middle of the channel. Watch the slope of the ema that shows the aggressiveness of price weakness. Pretty steep in this case.

ok let me throw a wrench in the gears. BO of range (yellow lines) on your big red bear bar closing on it’s low. That Top of that BO point, which is the bottom of the range, is also right at the ema. By the time that red bar closes and you Short (your red arrow) the move down has been several points. So, if I had shorted at your arrow (for fear of missing out LOL) I would have to be prepared to average down on any PB back towards the EMA even if the PB was on the same red bar back towards my red dot or 5 bars later. See what I mean? Otherwise, I would have to have a wider SL if I am not gonna average down or I am just gonna get whipsawed out of the market. Or I gotta to wait for a PB near the ema to take my 1 contract trade. The problem with the latter is WHAT IF there is no PB from your red arrow entry point but price just shoots on down to the bottom of the range without you on board. And it could have!

So bottom line, if you are trading 1 contract and have a small set fixed point SL as opposed to a price action SL then you need to wait for a PB from that red arrow entry whether it be on the same bar after the low is made on the red bar or an pb like 5 bars later, before executing your entry. I don’t want to complicate matters but you have to take the play that favors your risk tolerance, while understanding that if there is no PB, from the close of that red bar where your arrow is, then you will just miss out on the trade.

You have to look at it this way. Bear channel. Pretty steep bear EMA. BO south of a nested range. BO point just above the middle of the range. BO bar is big bear bar closing near it’s low. What are the odds that price will trade into the lower half of the range BEFORE it would trade up to the upper half? Pretty high odds. But even at that there is a 40% chance price will stop dead on that red bar and turn up. But the higher odds favor south into the lower half of the channel. BUT YOU HAVE TO BE PREPARED FOR EITHER SCENARIO UNFOLDING. But of course you want to play the higher odds play.

As concerns averaging down I would have no problem moving my initial SL and averaging down short all the way thru the 20 EMA even all the way up to the top of the channel. Why? 75% to 80% of BO attempts out of the top of a fairly steep bear channel WILL fail and price will go back into the channel at least enough for a good scalp. On the other hand a bear channel on 5 min TF is likely just A PB in the form of a bull flag on a 15, 30, 60 min TF if the flag was made on a bull trend on the higher time frames. The likely resolution of a bull flag is what? UP! That is, the Bull trend resumes on the higher TF. So, in this bear channel on the 5 min TF, if price a breaks out of the top, puts a couple or three of bars with lows above the top of the channel, and especially has a PB that holds above the top of the channel (bo point) AND price is riding above the EMA then I am dumping my averaged in position followed by doubling or tripling up and going long.

Thank you for the write up. I appreicate it. I am still reading through it, comprehending the and understanding the logic. So far I agree with everything.

 

[volpri]

Ok in the two charts on post #480 my first trade of the day i did look at both the RTH’s chart and the 24hr chart. Since I missed the 4 bear bar move down from the top of the range on RTH’s which would have been a short it made more sense to trade off the 24hr chart patterns and go long because price had already broken out of a bear channel (which is really a bull flag on a higher TF) and had two legs up. Now notice the 4 bear bar PB to the EMA. Notice prior PB’s in the 2 leg bull BO of the channel. Two are implied PB’s and the last just a two bar PB. Read through my post within last 3 days to understand what an implied PB is.

So, within the two BO legs all tge PB’s are small. Therefore no selling pressure. So, the PB I went long on would likely not turn into a reversal but just be a little deeper PB. Thus I averaged down log 2+2 for 4 contracts and exited 2 bars later with a profit on all 4 PB’s