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

volpri said:
.... However, mathematically and psychologically there is a rationale for considering the 50% pb which, by the way, is not a fib number...
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Then again neither are 38.2% or 61.8%.

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 ...

But all three are ratios.
 
volpri said:
While there was an L2 short around EMA look at the context since the open on a RTH chart. Sideways from open, then south and closes the opening gap. Looks like weakness and it is. However on bar 9:50 the bulls push back and begin to reverse the push down by the bears. So how many bull bars in that reversal? There are seven. And 3 sets of two bars in sequence. Really only two bear bars, 10:35 and bar 10:50, and no bear bars in sequence From bottom to top of the reversal. Bar 10:10 and bar 10:25 while bears are really dojis.

Ok how many PB’s in that bull move that started on Bar 10:00? Bars 10:10 and bars 10:25 while technically they are not a PB’s on this 5 min chart they are pauses or implied PB’s. By that I mean on a smaller TF you would see an actual PB. An actual PB in a bull trend is when in a pb the low of a bar goes below the low of the previous bar. While this doesn't happen on the 5 minute chart for bars 10:10 and 10:25 it does on the 1 minute chart and I am attaching a 1 min chart to show it. The only REAL pb on the 5 min chart in that bull reversal up is bar 10:30 a Bar 10:35.


Now implied PB’s are MINOR PB’s or pauses. A little profit taking happens there. Always judge the strength of any up coming pb’s by previous pb’s. All the previous PB’s were minor. Where you shorted was based upon a 50 pb of the previous bear leg. However, you also need to look at that bull reversal leg and judge the strength of it. That will help tell you if you should go long or short at the 50% pb. You don’t just short because there is an L2 near the 50% PB and near the 20 ema. You have to consider the strength of BOTH legs. Therefore, the PB you got short on was actually a PB to get long on. Why? Previous strength of the bull leg. It reversed the bear leg, push price up above the 20 ema, on all minor PB’s so the deeper PB is probably going to fail as a reversal, in spite of there being an L2 entry.

ALWAYS GAUGE THE PROBABILITY OF A PB BEING A REVERSAL, OR JUST FAILING, BY THE PREVIOUS PB’S AND THE PREVIOUS LEG.

In this case your 50% PB was simply a bear flag that failed to continue the bear trend. And the attempt for price to resume the previous bear leg failed and became a deeper PB in the bull leg to actually go long on. In others words, you went short on a bull flag.

Look at all previous PB's in the previous leg. That will help determine if you are going to short or go long. Hope this helps. There is a lot to learn in PA. It takes times. Don’t despair. It takes time to learn the nuances of price action. There are so many. Just always be asking: what just happened on previous bar? Previous 5 bars? Previous 10 - 20 bars...etc. That is immediate context. Who is stronger bulls or bears? Should I be going long or short? What is the probability price will reach my PT if I take a position before it would hit my SL on that position.

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Thank you so much Volpri for this detailed response. I will read and respond after I leave work. Thank you sir.
 
I won’t be posting any of todays trades if I do any trading. However, I want to visit again Mondays trades to show what I call the “compounding effect”. It is one of the prime reasons I jump in and out, over and over again, even on an established trend in one direction. It is one of the reasons I cut profits short. It is one of the reasons I average down. If I can make more money by jumping in and out, locking in profits, than by sitting tight in an established trend then commissions are a small price to pay. This compounding effect is something I learned years ago from a trader called J.M. Hurst. I don’t think he called it that but he explained it in ways I could grasp it.
 
A word to say about 5 minute charts, 15 minute charts, 30 minute charts...etc. I often mention seeing the footprints institutions are leaving “in the sand“ so to speak as they trade. I mentioned they cannot hide what they do, or better said, they cannot hide their effect on the markets, as sooner or later, it will all show up on the chart. We can see all that we need, as small traders, to extract profits from price movement. They do see info we don’t see and don’t have the means to see. And they can hide orders, at least that is what I hear from the grapevine..LOL However, if anything be hid from us mere mortals their gargantuan “big foot” footprints cannot be hid and they WILL show up in the snow. The abominable snowmen of folklore, in the trading world, can be spotted as they go about the daily activities running in the forest of what is called the markets. Us little crickets best watch out for the Yeti and know where and when they are running.

Now stop and think about it. It is ludicrous and even hilarious to picture institutions having rooms full of traders all hunkered down glaring at computer screens with 5 minute charts..or 15 minute...charts etc creating bull and bear bars...dojis etc. MOST ARE NOT DOING THIS. I just want to ROFL when I picture this in my mind.

In my ramblings I talk of individual bars, bull and bear pressures, contexts in the markets, and other such things, and usually do so within the context of 5 min charts. These are descriptive terms to explain price action. Bulls and bears....pauses..profit taking...exhaustion moves...measured moves...and the myriad of chart patterns such as wedges...triangles...flags ...retracements...etc.

Look, institutions such as funds, are just buying and selling. Filling orders from investors etc. Hft’s are doing their thing. Banks are doing their thing. All this buying and selling creates pressures, patterns, bull and bear bars. Their activities draw the charts out. In that sense they cannot hide what they do. Have you ever spotted a bear algo working the markets?

The effects that institutions have on price movement show up in all TIME FRAMES. Monthly..weekly..daily..intraday...I just use 5 minute charts because it gives me enough good scalping opportunities (10 to 30) AND it is usually sufficient time to structure a trade around “what” is happening in the markets at the moment. A trader can use 15 or 30 minute charts as well if that suits him.

So, when I say “the bears are winning on the last 3 bars on the 5 minute chart” it is only descriptive of “how” the pressures of institutions, with all their buying and selling, are showing up on that 5 min chart. The same can be said for any TF, even monthly. Charts are a graphical representation of the active pressures in the markets. These pressures, for the most part, are created by institutions. The analyzing of these pressure can be across various TF’s. The 5 min chart just suits my style of scalping.

But don’t think for a second institutions are hunkered down staring at 5 min charts and drawing lines and patterns on those charts. That is comical. They are just buying and selling, for whatever reason. But all their buying and selling draws the charts in whatever TF. It is we crickets who are analyzing the Yeti’s footprints and measuring the size and distance of their stride and the indentations of their weight in the snow, as we try to determine the direction they are traveling and the speed of their movement.
 
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volpri said:
While there was an L2 short around EMA look at the context since the open on a RTH chart. Sideways from open, then south and closes the opening gap. Looks like weakness and it is. However on bar 9:50 the bulls push back and begin to reverse the push down by the bears. So how many bull bars in that reversal? There are seven. And 3 sets of two bars in sequence. Really only two bear bars, 10:35 and bar 10:50, and no bear bars in sequence From bottom to top of the reversal. Bar 10:10 and bar 10:25 while bears are really dojis.

Ok how many PB’s in that bull move that started on Bar 10:00? Bars 10:10 and bars 10:25 while technically they are not a PB’s on this 5 min chart they are pauses or implied PB’s. By that I mean on a smaller TF you would see an actual PB. An actual PB in a bull trend is when in a pb the low of a bar goes below the low of the previous bar. While this doesn't happen on the 5 minute chart for bars 10:10 and 10:25 it does on the 1 minute chart and I am attaching a 1 min chart to show it. The only REAL pb on the 5 min chart in that bull reversal up is bar 10:30 a Bar 10:35.


Now implied PB’s are MINOR PB’s or pauses. A little profit taking happens there. Always judge the strength of any up coming pb’s by previous pb’s. All the previous PB’s were minor. Where you shorted was based upon a 50 pb of the previous bear leg. However, you also need to look at that bull reversal leg and judge the strength of it. That will help tell you if you should go long or short at the 50% pb. You don’t just short because there is an L2 near the 50% PB and near the 20 ema. You have to consider the strength of BOTH legs. Therefore, the PB you got short on was actually a PB to get long on. Why? Previous strength of the bull leg. It reversed the bear leg, push price up above the 20 ema, on all minor PB’s so the deeper PB is probably going to fail as a reversal, in spite of there being an L2 entry.

ALWAYS GAUGE THE PROBABILITY OF A PB BEING A REVERSAL, OR JUST FAILING, BY THE PREVIOUS PB’S AND THE PREVIOUS LEG.

In this case your 50% PB was simply a bear flag that failed to continue the bear trend. And the attempt for price to resume the previous bear leg failed and became a deeper PB in the bull leg to actually go long on. In others words, you went short on a bull flag.

Look at all previous PB's in the previous leg. That will help determine if you are going to short or go long. Hope this helps. There is a lot to learn in PA. It takes times. Don’t despair. It takes time to learn the nuances of price action. There are so many. Just always be asking: what just happened on previous bar? Previous 5 bars? Previous 10 - 20 bars...etc. That is immediate context. Who is stronger bulls or bears? Should I be going long or short? What is the probability price will reach my PT if I take a position before it would hit my SL on that position.

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Thank you so much for this. This is a very good comment
you wrote regarding PB in relations to strength and risk and proability, but most importantly context.

Thank you soooooo much.
 
volpri said:
Look at all previous PB's in the previous leg. That will help determine if you are going to short or go long. Hope this helps. There is a lot to learn in PA. It takes times. Don’t despair. It takes time to learn the nuances of price action. There are so many. Just always be asking: what just happened on previous bar? Previous 5 bars? Previous 10 - 20 bars...etc. That is immediate context. Who is stronger bulls or bears? Should I be going long or short? What is the probability price will reach my PT if I take a position before it would hit my SL on that position.
More...

Thank you for this. This keeps me confident and keep on pushing on. It is fun indeed.

These are all valid questions to ask through out the day. I understand
 
volpri said:
I won’t be posting any of todays trades if I do any trading. However, I want to visit again Mondays trades to show what I call the “compounding effect”. It is one of the prime reasons I jump in and out, over and over again, even on an established trend in one direction. It is one of the reasons I cut profits short. It is one of the reasons I average down. If I can make more money by jumping in and out, locking in profits, than by sitting tight in an established trend then commissions are a small price to pay. This compounding effect is something I learned years ago from a trader called J.M. Hurst. I don’t think he called it that but he explained it in ways I could grasp it.
More...
Thank you. I look forward to it.
 
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