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

[volpri]

Ok I took two trades this morning 5-29-2020. After I crawled my carcass out of bed between 9:00 and 9:30 and my dear wife brought me a cup of coffee in bed. See, treat momma right i.e. paint when she wants house painted..make sure to take her to Dillards not Dollar General...and she will be good to me. This marital tactic is pretty good I think LOL. Here is the lowdown on trade#1 after I got a few gulps of coffee down:

Trade 1 was a straight scalp and you can see it in my previous post I just made. I short at 3012.25 and covered at 3006.50 for 5.75 points profit. Here was the traders equation calculations. The idea is you want to try and do these calculations before your entry while you see a trade setup on the horizon. That is not always possible if the market is moving fast but once in immediately do it. It will help you set PT and SL to give a positive traders equation. OK lets look at trade#1 and it's contexts and it's equation.

Context larger: Trend been down since around 2 p.m. yesterday's session. Closed weak yesterday.

Immediate context: Opened 5-29 gap down traded up just a little then started down after 5 bars from the open. By bar 9:15 we had a small PB that fails and price continues down on bar 9:20 and 9:25. Then 9:30 bar has a small PB and it also fails. This gives a L2 (i.e. in this case low 2 which is the second time a low goes below the low previous bar after two PB's). I enter on bar 9:40 two bars later figuring we will at least see another push down for a scalp before we will see a significant push up.

TRADERS EQUATION FOR TRADE #1:
Entry 3012.25 short
Initial SL 3017.25 (just above that last PB on bar 9:30)
PT 3008.25
I assign a probability figure of 65%. That means based upon the larger and immediate context my BEST GUESS is that price has a 65% chance of reaching my target of 3008.25 BEFORE it will reach my SL of 3017.25.

So:

65% times 4 (points PT) = 260
35% times 5 (SL points) =175
260 is greater than 175 so I have a positive traders equation that gives me a mathematical edge. This is the initial structure. The math is good.

How did it pan out dynamically.

The trade initially went against me 1.25 to 3013.50. I add one tick (in case I decided to exit there instead of my SL and that additional one tick is to make sure I would have gotten out at 3013.50). So now my actual risk is 1.50

Ok so dynamically price heads down and reaches my PT but I move it because of the dynamic way price is going. I exit on the same bar I entered at 3006.50 (with an additional profit of 1.75 pts over my initial PT). Not wanting to press the trade any further I exit taking a profit of 5.75 points as opposed to my initial PT of 4 points). Math was in my favor. Time to grab the profits! The market is being a little nice to me but it can be very perverse too reversing quickly so I gotta beat the HFT's and algo scumbags. I have one up on them now so I am grabbing it!

Three bars later they (they...the scumbags push back) and 6 bars later they got me at BE on that big bull bar. Only they don't cause I got out! ROFLMAO!

Ok to wrap up this analysis what is my R:R (reward to risk) I made 5.75 points and risked 1.5 points actual risk.

R:R 3:83 to 1

I will make an analysis of the second trade for today 5-29 later. Gotta eat breakfast. I doubt I will trade anymore today unless I can sneak the laptop in the room where I am painting without the dear wife knowing about it and make her think I am painting while I am trading..ROFLMAO. I might use the technique of deception but I am tired and do not feel the best so I may just not trade. We will see.

Anyway, bottom line, use the traders equation for the initial structure to give you a mathematical advantage and make adjustments on the fly to PT and even SL as the trade unfolds. But keep that Math in your favor, if at all possible. ON the second trade (which was the averaged down trade) I let the math get against me too much and had more than one opportunity to exit when it was in my favor. GREED prevailed. However, I got lucky and made it out of the trade without losing too much hair (pulling it out LOL) but do you really want to trade on luck or on math?

Anyway, I will point out the errors on the averaged down trade in another post later. Maybe you can learn something from it to avoid suffering losses in your SIM trading! I ain't telling you to trade the way I do. That is up to you. I suggest SIM! LOL Whatever you do with these techniques is up entirely up to YOU! I give no advice for trading. Just showing how I do it. And not charging to do so. It is FREE.

 

[volpri]

I gotta paint but will, later today,tonight, or over weekend post the comments for three trades of 5-28

And for the averaged down 2nd trade for 5-29

 

[volpri]

I was able to sneak in a third trade as wife got busy listening to a video. And I took a break from painting. The perfect time ROFL. It was a 3 point scalp. It is the last trade on the chart posted here. Here are the figures:

Enter 3035.25 Long
initial PT 3038.35
initial SL 3030
So...
70% x 3 (potential PT)
30% x 5.25 (initial SL
210>157.50 so POSITIVE TRADERS EQUATION

Dynamically, it went against me to 3033 before it went in my favor. Add one tick so 3033.25. So ACR (actual risk suffered) is 2 points
R:R 1.5 to 1 so still mathematically an ok trade.

Why did I take it? Well the immediate context bullish had closed opening gap. My best guess was I could get a 3 point scalp before it would go against me 5.25 points.

And I was correct!

Oh no wife is not looking at the video anymore. Gotta run! ROFLMAO!

See how you do magic? Serial killer trades LOL. The opportunities abounded after my first two trades but I had to paint. Priorities you know, had to paint. Got to keep the wife happy. I am getting hungry for supper. Need some good cooking. She is VERY good at cooking.

 

[volpri]

See why I went ahead and grabbed them profits on that third long trade while them HFT and algo boys were twiddling their thumbs. I rather just grab them profits with my "edge" and not wait a bunch of bars to make a profit. LOL I had rather wait for it to get closer to 20 EMA and enter again on a 4th trade.

See, locking in them profits. Confusing them computers! Not really LOL. Just my attempt at some humor. I’m feeling giddy for some reason. Earlier I was tired. Back to painting.

 

[volpri]

Looks like a missed a 4th trade going long near that 20 ema. Too busy typing previous post. Back to painting. ..if I can.....

 

[volpri]

Well the day is over with boys and girls. I only made 3 trades today. Here they are on the end of day chart. Got real lucky (although I don't believe in luck) on trade 2. Nevertheless, I can't say it was skill on trade two ROFLMAO. More than likely the market just felt sorry for me! Don't you believe that BS! All 3 trades were winners. While I only made 3 trades the opportunity was there for probably 20 or more trades. But it is what it is when you have other things to do besides trading. Next week will come more opportunities.

While investors are tossing and turning, sweating, praying and a hoping, while they try to sleep at night I am flat. Or they might be rejoicing dancing with the wife IF they got lucky!

Now just remember this. It is EASIER to tell what the weather will likely be tomorrow based upon the last few days of weather, and the weather radar, than to postulate what it will like be 6 months from now. Especially, in a fast moving and changing world. With all the perverse algo's and HFT's taking their pot shot at it too. So you investors just keep investorizing. I will day trade and scalp not caring if the market goes up or down. It just doesn't matter to me. And I will take some of your investorsized money and put it in my account.

I will tonight, or over the weekend, revisit the 3 trades of 5-28 and make comments and I will discuss the "lucky" number two trade made today. Hope you enjoyed the magic show. It was short with only 3 tricks but profitable.

Have a great weekend.

Volpri

 

[Evgeniy]

Well the day is over with boys and girls. I only made 3 trades today. Here they are on the end of day chart. Got real lucky (although I don't believe in luck) on trade 2. Nevertheless, I can't say it was skill on trade two ROFLMAO. More than likely the market just felt sorry for me! Don't you believe that BS! All 3 trades were winners. While I only made 3 trades the opportunity was there for probably 20 or more trades. But it is what it is when you have other things to do besides trading. Next week will come more opportunities.

While investors are tossing and turning, sweating, praying and a hoping, while they try to sleep at night I am flat. Or they might be rejoicing dancing with the wife IF they got lucky!

Now just remember this. It is EASIER to tell what the weather will likely be tomorrow based upon the last few days of weather, and the weather radar, than to postulate what it will like be 6 months from now. Especially, in a fast moving and changing world. With all the perverse algo's and HFT's taking their pot shot at it too. So you investors just keep investorizing. I will day trade and scalp not caring if the market goes up or down. It just doesn't matter to me. And I will take some of your investorsized money and put it in my account.

I will tonight, or over the weekend, revisit the 3 trades of 5-28 and make comments and I will discuss the "lucky" number two trade made today. Hope you enjoyed the magic show. It was short with only 3 tricks but profitable.

Have a great weekend.

Volpri

View attachment 229181

Good afternoon!
Please tell me, by what principle did you average the second deal (what are the decision-making factors and why with this step)? Thank.

 

[volpri]

Good afternoon!
Please tell me, by what principle did you average the second deal (what are the decision-making factors and why with this step)? Thank.

I will discuss this trade #2 made Friday, an “averaging down
trade” over the weekend.

 

[volpri]

Lets revisit the three trades of 5-28-2020. I took 3 trades that day. I will repost the NECESSARY charts that were posted on 5-28 to make it easier to follow along as I make comments. Here I will call them charts 1-4 even they may have been label differently in my post on 5-28 The first and second trades were both shorts. Each trade was a straight 3 point scalp. The last trade was a long scalp and captured 2 points So total points for that day were 8. The instrument was MES.

I will give the traders equation for each trade. But first lets look at the contexts.

On the 5 min RTH’s chart we see The previous days 5-27 was an uptrend in the form of a SPBL trend starting on the 9:50 bar of 5-27 all the way to the close of the 5-27 session. SPBL trends are some of the strongest trends, unlike BO’s or spikes which can end and reverse very quickly, or just morph into a channel then a range that has alot of overlapping PA. SPBL trends just keep grinding up and up. This is none other than institutions relentlessly buying. Every PB is bought. Price is staying above the 20 EMA. So, this is the larger context on a RTH’s 5 min chart for all three of 5-28’s trades.

Now lets look at the larger context from a 5 min 24 hour chart perspective. I will often look at the 5 min RTH’s chart AND the 24 hour chart during the first hour or two of a session’s open. Why? Because it often shows the setups in a different way or helps to confirm some setups on the RTH’s chart.

So, whats the larger context on the 24 hour chart? Now look at the second chart below.


gap up open on 5-28. It opened above 5-27’s close. By the open of the 8:30 bar (i.e. the open of 5-28) price had already been in a rather broad channel. And it is trading in the top 1/4 of the bear channel. Remember in bear channels you want to short in the top 1/3 or top 1/4 (if more conservative) of the bear channel and cover as it moves towards the middle or bottom of the channel. So, looking at the 24 hour chart shorting right at the open of 5-28. there was a good scalp. However, with my carcass still in bed I was nowhere around to take this trade. I didn’t show up until nearly an hour later. “You snooze you lose” Applies here. So does the “early bird gets the worm” But at my age you come to realize there will be plenty of worms throughout the session so no big deal missing out on the first 2 or 3 worms. On that 8:35 bar I could have reversed and gone long at the bottom of the bear channel had I not still been snoring so to speak.

Now this is important. By time we get to my first trade price is in the top 1/4 of the bear channel on the 24 hour chart. So, from the 24 hr chart perspective would be looking to short. From the larger context on the first chart i.e. the RTH’s 5 min chart I would be looking to go bullish. Is there a contradiction here? No, not at all as we have only considered the larger context for the most part, especially on the RTH’s chart.

Now lets look at the more immediate context on both charts:

24hour:

Since 1:20 a.m. price has gone big down, then big up, then big down, and finally big up. But a few bars before getting to my first entry We see on that 9:10 bar that after that last big push up that bar closes with a big tail on top=selling but the close was still in the top 1/4 of the bear channel. That is followed by a big bear bar (9:15) closing in the middle of the bear channel. That is immediately followed by a bull bar closing back in in the top 1/4 of the channel. In addition, the last 8 or 9 bars before my 9:20 entry bar while up and down are largely overlapping bars. Bear bar (8:35) then bull bar, then bear bar, then bull bar, then two bear Doji bars (basically doji’s are 1 bar trading ranges... if you dial down to smaller TF you will see the range), then a bull bar, followed by a bull doji bar ( remember one bar TR), then a big bear bar (9:15). That 9:15 bar is followed by a bull bar that retraces up to the top 1/4 of the bear channel. On top of all this price as been meandering above and below both the 20 EMA and the 50 SMA for the last 30 bars. All of this taken together means, that for the immediate context on the 24 hour chart, both bulls and the bears are active. And that until we get a successful BO of the bear channel, top or bottom, it is likely that price up continue doing what is has been doing (inertia) until that BO occurs and the market cycle or phase changes. Therefore, considering the immediate context, from the 24 hr chart perspective, shorting in the top 1/4 of the channel is the tactic to use and that is where price was at when I shorted my first trade.

Now lets look at the immediate context of the RTH’s 5 min chart:
Open 5-28 gap up. That Gap is closed quickly on the first bar which also closes in the 1/4 bottom of the bar’s range. That is followed by another bear bar then bull bar, then largely overlapping bull bear bars ....a sideways move but not yet a traditional range as it has not reached 20 bars of sideways move. Now look at the pattern that the sideways move is forming. It is a triangle. We see a range (but not yet a range) in gray box is forming and price is up in the 1/4 top of that evolving range. But since it is also a triangle we got up and down movement working it’s way into a BO mode. That BO can be north or it can be south. By my third trade it was obvious the BO was north and this thirteen bar (since the open) triangle was just a bull flag with price continuation from the previous day’s 5-27 SPBL TREND.

So, why did I short my first two trades and go long on my last trade?

First trade in top 1/4 of bear channel on the 24 hour charts with LOTS of evidence of both bull and bear activity in that channel. Plus as concerns the 24 hour chart odds favor a BO attempt north will fail within 5 bars and price will go back down into the channel at least a little. So the 24 hour larger, and immediate context, is saying ok to short. The RTH’s is a bull flag in the form of a symmetrical triangle in the immediate context but a bull flag in the larger context. Price tends to go up to the top of the triangle and then back down to the bottom until we get near or to an apex and then price breaks out one way or the other. At the point of entry on my first trade, and also my second trad, an apex had not yet been reached. So, considering both IMMEDIATE contexts, i.e. the 24 hour chart, and the RTH’s chart, I feel the odds slightly favor I can short and get scalp on my first two trades before we get a BO north. I just cannot follow it too far because of the larger context, especially on the RTH’s chart.

Now a word about my third trade. Concerning the immediate context of BOTH charts. On the third trade we broke above the bear channel. Odds favor such a BO will fail and price will go back into the channel within 5 bars. But a trader needs to remember that a bear channel really a bull flag on a larger time frames AND odds favor a successful BO when it occurs will be north. Of course on the RTH’s my third entry was long and it too was on a BO of the triangle but also on the developing range (that was not yet a range as it lacked what?...20 bars). However, the fact of it being a BO on both charts was indicative to me that we might see more up action. At least enough for a scalp even if it traded back into the channel on the 24 hour chart within 5 bars. Still I could likely get a scalp. And on the RTH’s chart it indicates the bull flag is over and the trend up from the previous session of 5-27 will continue. But at the time of my entry and exit on that third trade I did not know if the BO would fail or succeed so I opted to grab me a scalp while the grabbing was good. Plus it was my last trade for the day I had other things to do.

Look at the third chart. As we can see from the point of the last trade I made the subsequent action ended up being a SPBL trend from the open. The tactic there to use is to buy the PB’s exit on rallies And repeat or just keep adding on PB’s and exit near the end of the session.

In 4th chart below labeled as chart 5 (In an earlier post) in this 24 hour Chart we can see how prices moves in MM’s (measured moves) once the BO of the bear channels proves to be successful. The dark gray lines are the larger MM based on height or wideness of the bear channel. The magenta MM is the smaller MM based on the BO point of the top of the channel to the first major PB then extrapolated upwards. At the end of the MM you can see sone profit taking in PB’s with or without bear bars and or sideways moves. Successful BO can often give 2 or more legs up for intraday swing trading.

Now to the Traders Equation for each trade on 5-28

TRADE #1 Short
Entry 3041.50
Initial SL 3044 (2.5 pts)
Initial PT 3038.50 (3 pts)
Exit 3038.50

Profit made 3 points.

So, I assigned 60% probability that considering the larger and immediate context on both charts that pricE would reach my PT before it would reach my SL. Therefore:

60%x3=180
40%x 2.5 = 100
180 > than 100 so a positive traders equation and it worked out perfectly. I had no adverse move from my entry so it was a high probability short. Remember, do not follow high probability too far except under certain circumstances such as strong BO. Grab that money and get out. A dove in the hand is worth 2 in the bush. Look at the last chart (a 1 minute chart) in this post and look at trade one and you can see I had no adverse movement. So, ACR i.e. actual risk was “0”.

So, Good R:R



Trade #2 Short
Entry 3043.25
Initial SL 3045 (1.75)
Initial PT 3040.25
Exit 3040.25

Profit made 3 points.

I assigned 60% to probability.
60x3=180
40x1.75 = 70
180>than 70 so a positive traders equation.
No adverse movement (look at 1 min chart) so ACR (actual risk “0”)

Again good R:R


Trade #3 Long Scalp on a possible successful BO
Entry 3045.50
Initial SL 3044
Initial PT 3047.50 (2 points)
Exit 3047.50

I assign 75% probability for traders equation since this is an attempted BO.

75%x2 = 150
25x1.5 = 37.50
150>37.50 so a positive traders equation. Why wouldn’t I hold it longer? Well it was an attempted BO of a bear channel on the 24 Chart and BO of a bull flag on RTH’s. But I had no guarantee it would end up being a successful BO instead of going back into the bear channel within 5 bars. That is, it had not yet proven out to be a successful BO and also I had other things to do so I grabbed my 2 points. I had a tick of adverse movement So add 1 tick to that to make it 2 ticks. So, ACR 2 ticks. The fifth chart is a one min chart that show the ACR or adverse movement against me after entering the trade before I exited it in my favor.


Again decent R:

To summarize: As they say in real estate (location, location, location). So, in trading it is context, context, context. Setups can be practically identical but the context in which they are found are different and a trader will see different results. Since all setups (candlestick setups...etc) and all price patterns (wedges..triangles..etc) can be successful and they can also fail many traders give up on them. The problem usually is the trader did not look at the setup and or the price pattern within the confines of the larger and immediate contexts. You can’t just follow a setup or pattern. Context makes the difference! And use the traders equation to put the odds in your favor. So this is how I trade.

 

[volpri]

Indicators to some degree gauge current pressures and may or may not have much predictive value. Price patterns (such as wedges..triangles...flags) develop BECAUSE OF the pressures. They can have some predictive value. For instance, in a strong bull trend a PB is caused by two things. Profit taking from the bulls that had taken a position early in the trend and by bears trying to reverse the BO/bull trend, whichever (bulls and bears), or both together, and it is likely both. A cursory glance at previous PB’s (size and duration within the SAME trend) before a resumption of the bull trend, is indicative of the odds of the present PB being a major or a minor PB. And the angle of the bull trend. If each previous PB is getting larger in terms of distance in points and getting larger in terms of sideways to down distance IN BARS i.e. more bars then price is likely working it’s way into a range. And a range requires a different set of skills and techniques to trade it reliably.

No price pattern is random. It happens and forms because of the pressures in the market during it’s formation and up to when we can recognize and “see”the pattern. There is no noise in the market. If it moves one tick there is a reason for it. We may not know nor ever know the reason but be assured there is a reason. Then there are the unknowables. We cannot know beforehand when deep pockets will step in with alot of pressure. That can be suddenly or gradually. Either way it will eventually show up in the chart. This “when” and “how” is the uncertainty factor of the markets. As traders we have to understand we operate in a sea of uncertainty. Rip tide...sharks...etc but we can see which direction the waves are coming from, where they will likely hit, and how big they are so their distance traveled inland can be somewhat ascertained. Trading will never be exact but math can help determine probabilities of a trade being successful or not. Thus the use of the Traders Equation

So, as traders our primary task is to determine the pressures operating in the markets. To do this we can look at the contexts of PA the larger, and the more immediate. We can look at price patterns being formed. We can look at individual bars. We can look at the dynamics of how each bar was formed (i.e. for instance two bear bars same height. One was formed fast and and furious with price jumping around back and forth. The other was slow and just before the close sailed south.) We can look at indicators. In terms of indicators I generally look at sone MA’s and 50% PB areas, not much else.

It is important to realize the markets have inertia, as well as pressures. The size or quantity of the pressure creates the extent of the inertia. So once a move starts it generally will continue at least for a bit more. For instance, a bull BO will continue until profit taking happens and bears enter trying to reverse it. Then if new bulls, that missed out on the first entry, are stronger than the bears trying to make it fail, the pause will just be a bull flag and the trend will continue. If the bears prevail then we will likely see a reversal.