A Professional Approach to Trading Futures

[steven46]

This was especially fun

Again we had people from our first class
This time they seemed to be in synch with
both the preparation and the initial assessment
of the market. It helped that the price action was
obvious

1) As mentioned (several times) the markets are assumed to be
"forward looking" meaning the data as regards US/China tariffs
is "baked in".

2) Also the Markets discount the volatile news about
US domestic issues.

3) Finally, economic news is relatively neutral, so at the open, up we go

As before, same tools, same method of analysis, and yes, same result

Good luck

 

[steven46]

and we are done for the day, as the skew turns negative

This is a repetitive pattern (Legs 1-2-3 with institutional
algos kicking in to take at least partial profit on leg 3)

I have other obligations to attend to

Good luck

 

[steven46]

Here is today's session. On the left side, a simplified screen that seems to work
well for retail traders. On the right side, the screen that I was taught to use.
Entries and exits occur at approximately the same time.

Struggling traders. This is what my day is like. I trade for a limited
period of time. WHY? Because I know my system gets me in, and out
with high odds of success (+/- 68% this month) and limited risk of loss.
THIS is unusual. The success of this system depends on several things

1) Disciplined preparation and execution
2) Consistent management once the position is filled (you have to stay in to win
AND when you are wrong, it is about identifying your mistake ASAP and exiting)
3) Maintaining emotional control

Now, I have covered all the bases. Struggling traders, if you have any common sense
re-read the previous posts. I cannot cover all the subject matter in this forum. (why should I?)
I know from experience that doing reasonable things in a disciplined way WORKS.

To Moderators of this forum, I will check in periodically to see if there are further questions
that I am willing to answer. Otherwise I will stop and move on with my life. I might like to
train more people, however please note......this is not a money maker for me. Its the opposite.
responding to questions during the session takes my attention away from my primary responsibility
(my business). Unlike others, I do not sell a trading course, I do not sell indicators. AND to
illustrate the difference, I tell students that while they can come to me at any time if they have problems
I do NOT want them in my class for more than four (4) to perhaps five (5) months maximum. I think
that is a reasonable amount of time for a person to receive high level training. If after that period of time
a person isn't able to function in the markets with confidence, they should look at other alternatives
I have mentioned previously a book by Charles Ellis ("Winning the Losers Game"), it outlines a very reasonable
option for folks who simply don't have this particular skill set.

Good luck

 

[steven46]

Hello and Thanks Trader333

Today was unusual, in that it represents what commercial traders call
a "Roundtrip", which is +10 on the upside, then +10 to the downside

This happens when the economic news drives the initial (pre-open market
up artificially, then as the NY market opens, the algos kick in driving the
market back down. I use Ninjatrader's system and have my orders in place
prior to the NY Session open, so it is all automated. I monitor and can close
out quickly if my thesis is wrong.

Readers may notice that on my screen I have both 10 min and 5 min charts
The trader who taught me, used this setup to catch the premarket order first
(trading it manually) above the red line, then he would place limit orders for
the short side below the red line, and simply monitor the position.

Done for the day

Good luck

 

[steven46]

Hello

This is about gaps, how to read them, and how to use them to identify "trapped volume"

Most retail traders do not know the importance of identifying trapped volume. Once you can
do this, you have an edge that (in my opinion) will last forever. The attached chart illustrates
several principles

1) Institutions are constantly manipulating price, in a way that creates the impression that price
is ready to reverse

2) At specific price points, they activate resting orders (this is called "stop hunting") above or below
an existing range. During these times they also create or add to, existing positions in order to
fuel a continuation move.

3) Once you can identify these moves, it becomes clear, WHEN to wait and when to act, in order
to participate in the bigger (swing) moves that generate significant profit AND when that happens
you can have confidence to hold a position, so that you can overcome periodic inevitable losses
and create a sustainable income.

Takes three (3) steps

1) Identify the price action
2) Identify the gaps (the primary gap type to identify is a "Body Gap"
3) Project your entry up or down (institutions need
a minimum profit per time period/week, month, quarter)

 

[steven46]

Hello London Traders

Today we had several fellow traders and friends on a Zoom call. We started an hour prior to the open
and we tried something new (for me). We looked at London Session, marking the chart to show the range
(open, high, low) and then we worked together to create "consensus scenarios" (long, short, sideways).
As luck would have it, we had what is known as an "inside day" and that lends itself to a very common
scenario, where institutions try (successfully) to trap volume. In this instance, volume was trapped on the sell side
at the open. This is simple to see and the majority (we had 5 professionals on the Zoom call) agreed that it was likely
that the initial move down would activate resting orders (stops) THEN buy volume would likely come in to create a
reversal candle at 2:55 London time. For those of us with experience, the rest was obvious.

As regards Retail traders, it is important to understand the importance of skilled analysis. If a trader takes the time
to learn how to think about the markets, about how institutions manipulate each other (especially at the open), then
the process of sorting out WHEN to enter becomes (as mentioned earlier) "obvious". We teach this and we ask
struggling traders to give this approach a chance. Once they do, it is amazing how quickly they go from losing
to winning.

Done for the day, and

Good luck

 

[steven46]

Hello London

I was going to start with "As luck would have it" however this has nothing to do with luck
and everything to do with experience, preparation and skill. We began (as we always do)
by reviewing our Economic Calendar, where we found that tomorrow, CPI will be released
This provides us with a way to forecast the most likely price path for the next several days.

For today's London Session, we knew that the market would likely see significant volatility
the result of which is institutions taking the market down in order to "trap volume" on the
short side. This is the 2nd and last example of this behavior that we will post. As we have
said, we teach traders how to frame this, and how to make money trading it.

One has to ask how many of these examples a person would need to see before they realize
the potential.

Good luck

 

[steven46]

Hello Traders

This will be example 3, showing how institutions "trap" traders in order to move
markets in the desired direction

Traders should know that computer programs monitor price action and when certain
"behaviors" occur, they trigger automated buying or selling. The markets are reacting to
world news as well as regional economic news. Specifically,

1) The top tier financial institutions believe that President Trump's tariff threats are largely
meaningless (he is bluffing) and wants to obtain leverage by threatening the world with
monetary penalties. Because these tariffs would have a negative effect on his own population
he continues to back down.
2) The US economy continues to be resilient, with reasonably strong spending and big companies
continuing to operate without having to lay off personnel (yet)
3) Economic news has been reflective of a strong economy, however as we know, that can change
As of now the top tier banks are forecasting only "measured effects" from possible tariffs

Our charts confirm (so far) that the markets are forward looking and positive and they do this
by staying above certain "Key References", one of which is the 5DMA (I show my students how
to display this on any time frame). As they see the market test this reference point, they have only
to watch and see what the response is, then they look for a place to get long. I am tempted to say
that it is "simple", but of course it takes more than that to trade it. As mentioned previously, we
look for this scenario to take shape prior to the open of each session. We show traders how to frame
this activity and (finally) we show them the importance of "timing". Automated buys and sells enter
the market as the institutions signal each other by activating buying or selling "spikes". Its not how much
they buy or sell but how quickly the orders are entered, that triggers continuation (trend). If a human
trader is watching their screen and they see this, it is relatively easy to recognize and jump on board.

Finally and perhaps most importantly, once you see how this works, not only do you know when
to enter, but you also know that you should HOLD your position, because it is likely to trend for at least +10
Why? because institutions need to get at least +10 pts to make it "worth the risk". If you look back at my
posts, you will note that I am almost always holding for at least +10

I understand that scalping is easier psychologically, but the bottom line is that for retail traders, you simply
will not be able to create a sustainable business that way. The important take away is to trade less frequently
to hold trades longer, to be willing to close out trades at breakeven or at a small loss until you hit a +10 winner.

Good Luck

 

[steven46]

And here is Example 4 (Trapped Traders). This time in the context
of a trading range.

Whether to trade that range is controversial. In my opinion
Retail traders should NOT, because generally they do not have
the skills and/or the money to do so profitably.

We established this trading range early (as it should be) then
Readers should be able see the entries based on a simple premise, and that is
that the market is ranging rather than trending BECAUSE of pending
economic news, to be be released just prior to the open of the next NY Session
The important take away is that this was predictable if a trader knew how
develop "context". This is why we prepare by reviewing an Economic Calendar

Readers interested in improving their skills can go back
in time and review previous charts and you will see similar price action
prior to the release of high impact economic data.

My final comment would be to ask " how easy would it be to trade this
if you knew that this (trading range price action) was likely?". This is why
professionals can trade it confidently, while amateurs get chopped up.

Good luck