What makes Bama evil?
Techniques for Day Trading the ES, NQ, YM, MES, MNQ, and MYM
- Thread starter volpri
- Start date
I watched enough Brooks this weekend to be dangerous to myself. Trading SIM and trading the M2K micro contract of the RTY.
Also watching the ES.
So far, so good. I have a lot to watch still, but the Market Cycle stuff that you posted about recently is gold knowledge, in my opinion.
I'm a non-daytrader, so take it for what its worth.
The market cycle
The market cycle should always be a context one wants to identify before attempting to trade. It determines the tools one will use.
Good Morning Volpri,
Thank you so much for the post. Great read. And I agree with everything you said. Thanks
When trading the ES and you getting a lot of sideways movement. Up/down you might want to trade the pressure as they play out in the sideways movement BEFORE and even AFTER the PA becomes a TR as defined by Brooks. Especially, when that sideways movement is narrow and not broad and slow and not fast.
You might want to watch Brooks video on buying/selling pressure. Then trade what I call "price probes" as the pressures play out. You got bears trying to force a bear BO of the sideways moves and bulls trying to force a bull BO of the sideways moves. The movements are back and forth. A TR as defined by Brooks is around 20 bars sideways movement. But as price is evolving into a 20 bar TR we get pressures at play, and they can be capitalized upon.
The pressures are the cause of this price probing. Like an auction but different in the sense that in an auction the item is going off at the best price the auctioneer can drum up. But in this case, the auctioneer becomes the pressures at play and one is capitalizing on the pressures by fading the last movement the auctioneer managed to drum up. So, a trader is looking to capitalize as PA fills the gaps created by the auction, 1 to 3 bars back. PRICE WILL EVENTUALLY MOVE WHERE MORE TRANSACTIONS TAKE PLACE. Otherwise, we won't have a market. But in the meantime Bears and bulls will probe.
For longs basically you want to see price go below a previous low (maybe 1 to 3 bars back) and closer to bottom of the sideways movement the better (but can be accomplished in the middle area of the sideways move) then look at going long on say 2 contracts. Then exit 1 contract on 1 pt profit and the second one at 2pts. However, if the dynamic of the price probe is real slow a trader may just want to capture 1 point in both contracts and be done with that particular trade. If the dynamic is fast enough he may want to capture even 3 or 4 points on the latter exit. I mention starting here with 2 contracts but that is assuming a small account. The principles applies if starting with 20 contracts and exiting 10 at 1 pt and the last 10 at 2 pts.
For shorts just flip the concepts around.
These entries and exits usually have to be done with limit orders as the sideways movement is slow and TR movement is narrow and not as if in a broad TR.
Basically one is trading TR BEHAVIOR BEFORE price becomes a TR as defined by Brooks however, the concepts can also be applied in PA once it becomes an actual TR. Other TR techniques as as fading the outer edges....etc are additional tactics. This capitalizing on "price probes" can even in PB's as a PB is simply a small trading range, or trading range behavior.
This technique is basically capitalizing on price probes as price goes back and forth searching for, or trying to create, a BO possibility.
Just practice this stuff on a SIM. It takes a while to learn to execute it as a trader has to learn to ready the dynamics as price probes to avoid entering and exiting too early or too late.
You might want to watch Brooks video on buying/selling pressure. Then trade what I call "price probes" as the pressures play out. You got bears trying to force a bear BO of the sideways moves and bulls trying to force a bull BO of the sideways moves. The movements are back and forth. A TR as defined by Brooks is around 20 bars sideways movement. But as price is evolving into a 20 bar TR we get pressures at play, and they can be capitalized upon.
The pressures are the cause of this price probing. Like an auction but different in the sense that in an auction the item is going off at the best price the auctioneer can drum up. But in this case, the auctioneer becomes the pressures at play and one is capitalizing on the pressures by fading the last movement the auctioneer managed to drum up. So, a trader is looking to capitalize as PA fills the gaps created by the auction, 1 to 3 bars back. PRICE WILL EVENTUALLY MOVE WHERE MORE TRANSACTIONS TAKE PLACE. Otherwise, we won't have a market. But in the meantime Bears and bulls will probe.
For longs basically you want to see price go below a previous low (maybe 1 to 3 bars back) and closer to bottom of the sideways movement the better (but can be accomplished in the middle area of the sideways move) then look at going long on say 2 contracts. Then exit 1 contract on 1 pt profit and the second one at 2pts. However, if the dynamic of the price probe is real slow a trader may just want to capture 1 point in both contracts and be done with that particular trade. If the dynamic is fast enough he may want to capture even 3 or 4 points on the latter exit. I mention starting here with 2 contracts but that is assuming a small account. The principles applies if starting with 20 contracts and exiting 10 at 1 pt and the last 10 at 2 pts.
For shorts just flip the concepts around.
These entries and exits usually have to be done with limit orders as the sideways movement is slow and TR movement is narrow and not as if in a broad TR.
Basically one is trading TR BEHAVIOR BEFORE price becomes a TR as defined by Brooks however, the concepts can also be applied in PA once it becomes an actual TR. Other TR techniques as as fading the outer edges....etc are additional tactics. This capitalizing on "price probes" can even in PB's as a PB is simply a small trading range, or trading range behavior.
This technique is basically capitalizing on price probes as price goes back and forth searching for, or trying to create, a BO possibility.
Just practice this stuff on a SIM. It takes a while to learn to execute it as a trader has to learn to ready the dynamics as price probes to avoid entering and exiting too early or too late.
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Here is a trade that illustrates what I am talking about in terms of price probing in slow moving markets. This was a trade taken a few moments ago.
We had a little PA TR behavior. This is a 5 min chart. MES.
We had a little TR behavior before 20 bars of sideways movement was reached.
A couple of bars prior to the first bar on the left were also in the PA TR behavior just not shown. So counting the bars we got 5 bars (from that doji with red gap under it) Then two additional bear bars to arrive at my entry bar. So 7 bars TR behavior by my entry bar. I enter long on a position on the second bear bar after the drawn in gap. I am betting that red gap will be filled. The dotted line is from the red gap to the green entry triangle.
Notice I am going long on a general sloping trend up and price is near the bottom of the sideways movement. That just puts a few more odds in my favor. It cannot yet be defined as a TR (takes 20 bars to do that) but it is TR behavior. By that I mean overlapping bars. Bull ...bear...doji (dojis are one bar TR's) ..etc. In other words, small price probing north and south. There is a difference in TR behavior and actual TR. The former can end anytime before TR is reached. The latter, if reached, tends to continue for a while.
So, this trade is in the TR behavior arena, Price is moving slow. Bars are not large. I capitalize on price probes north and south using fill the gap techniques.
The red gap (signified by the vertical red rectangle) is the gap I want to see filled. So, I am long and exit 1/2 position on first red triangle 1 point profit and the other 1/2 of the position at 2 points profit on the second red triangle.
I did get a little adverse movement before the profitable exits but that is not uncommon.
The entry and exits done with limit orders.
Hopefully this illustrates the concepts. You may want to practice on a SIM. It is important to learn to identify the dynamic of the moves to decide is one is going for 1 point profit on the entire position or 1 pt on 1/2 and the other half at 2 pts profit.
We had a little PA TR behavior. This is a 5 min chart. MES.
We had a little TR behavior before 20 bars of sideways movement was reached.
A couple of bars prior to the first bar on the left were also in the PA TR behavior just not shown. So counting the bars we got 5 bars (from that doji with red gap under it) Then two additional bear bars to arrive at my entry bar. So 7 bars TR behavior by my entry bar. I enter long on a position on the second bear bar after the drawn in gap. I am betting that red gap will be filled. The dotted line is from the red gap to the green entry triangle.
Notice I am going long on a general sloping trend up and price is near the bottom of the sideways movement. That just puts a few more odds in my favor. It cannot yet be defined as a TR (takes 20 bars to do that) but it is TR behavior. By that I mean overlapping bars. Bull ...bear...doji (dojis are one bar TR's) ..etc. In other words, small price probing north and south. There is a difference in TR behavior and actual TR. The former can end anytime before TR is reached. The latter, if reached, tends to continue for a while.
So, this trade is in the TR behavior arena, Price is moving slow. Bars are not large. I capitalize on price probes north and south using fill the gap techniques.
The red gap (signified by the vertical red rectangle) is the gap I want to see filled. So, I am long and exit 1/2 position on first red triangle 1 point profit and the other 1/2 of the position at 2 points profit on the second red triangle.
I did get a little adverse movement before the profitable exits but that is not uncommon.
The entry and exits done with limit orders.
Hopefully this illustrates the concepts. You may want to practice on a SIM. It is important to learn to identify the dynamic of the moves to decide is one is going for 1 point profit on the entire position or 1 pt on 1/2 and the other half at 2 pts profit.
Insights like that is not written in the book..
Only experience..
Hello Volpri,
Whenever I tried scalping my risk was bigger than reward. Guess what happens?
Losses will come. After about 3-5 losses in a roll, the drawdown.
For example, lets say a trader is risking $100 (2 points) to make $50 (1 point) scalping the ES. After 4 losses in a row for whatever reason (mistake, just a loss), the trader is down $400. This mean the trader now needs 8 wins in a roll just to breakeven.
Scalping sounds lovely, until that drawdown comes.
Have you ever been in such drawdown before and how do you overcome it?
As @themickey would say, that there is some "hard yakka".
Why do that? Trade hundreds of dollars. Not beer money. Why not?