A Professional Approach to Trading Futures

[steven46]

Here is a sample of our Weekly Discovery Process

We identify and evaluate high impact events as follows

1) Earning for Meta, Microsoft, Amazon & Apple are scheduled. Each one can have
significant effect on the markets. We look at the timing in terms of opportunity
and we have an algo that kicks in, allowing us to place trades after earnings are
released.
2) Federal Reserve will set rates. Again we use an algo process, that kicks in after the
decision is made
3) The "PCE" (Personal Consumption") considered by the FED to be critically important,
is scheduled to be released soon and that will have a potentially significant impact
on markets (as regards the decision to lower or maintain interest rates)
4) Jobs data will be released
5) Trumps tariffs deadline on Aug 1st

The general process is as follows

On a Saturday or Sunday, we start by planning each weekday starting with the 1) timing of
any significant earnings reports. This week Meta, Microsoft are reporting on Wednesday
and the others on Thursday (all after the close). We expect that Apple will beat estimates
because customers are buying product NOW to try to avoid having to pay a higher price
when tariffs kick in. The net effect could be a move higher for Apple (one example)

Interest Rate Decision is announced on Wednesday. We expect rates to stay the same

PCE is expected to show a rise of 2.3% to perhaps 2.6%. We expect those numbers to be exceeded
creating a possible opportunity on the short side.

Finally we expect the American president to announce trade deals and other items in an attempt
to distract from his problem with the Epstein files, and with the activation of tariffs. The net effect
is likely to be negative for the markets. We are planning for a possible retracement lower on the 30th July

Good luck

 

[steven46]

The retracement occurred during the London Session.
At the open of the NY session we saw the usual trading range
price action.
The 15 min system allowed us to slow down and monitor
for a single trade that could be held to a minimum of +5
The logic was simple. At this low, the market was overextended
This is what we define as a trade based on the first hour range
Now we wait for another setup during this 2nd hour of trading

Good Luck

 

[steven46]

US Fed Interest Rate Decision tomorrow and so
this is an unusual NY Session
We use a "Timed Entry" Algo that has worked
successfully over the years (and again today)
producing +10

Using 15 min candles makes entry much easier to see

Good Luck

 

[steven46]

And the 2nd entry, again it is based on an Algo
that I have used for several years.

As mentioned in a previous post, this system usually
provides two (2) trades and they tend to be swing trades
with profit target of +10

I usually leave a runner in place in case the position continues
In this case I did not, preferring to take profits and reduce risk
of "Sweeps". For those unfamiliar with the term, it is when an automated
program trade "sweeps the deck" buying or selling all available inventory
and it produces a very quick move (we saw one today). If you are on the
wrong side, there is no way to avoid a loss.

Good luck

 

[steven46]

Hello UK Traders

Today is "Fed Day" and for this event, we use a slightly different
system that we do not disclose, but do teach to our students
What we can say about it is as follows

1) It is a trading range system
2) It uses a single setup
3) It requires specific context and is very accurate
when executed with discipline.

As with our 15 minute system, we look for two (2)
winning trades and then we stop. The trade entries
are time specific (entries within a timing window)

We will attach one (1) chart and it will show two (2)
Ema's. It will NOT show a third indicator that I use for
confirmation

Good luck

 

[steven46]

I thought I would post this

Notice the attempt to breakout to the upside
and the timing (the Fed Announcement is pending
shortly). This is happening at a time when "informed"
participants are likely to position themselves in advance
of the news.

It would suggest that the Fed will lower rates slightly

Lets see what happens

Good luck

 

[steven46]

Normally we would fold our tent after the 2nd successful trade
and that is what we did today.
Coming back to the screen after lunch time (local USA time)
we noticed that President Trump had commented publicly about
the positive effects of his policies thus far (apparently the man is
practicing to be a stand up comedian after his term runs out)
and so monitored for a final trade opportunity at the end of the
session. We can disclose that this final hour trade occurs as the
result of a MOC order imbalance. Today that imbalance was on
the long side and was substantial, providing a low risk/big reward
entry as the institutions came in to buy at the close of the bar
The imbalance was in excess of 50,000 contracts. We have referred
to this previously. Professionals call it a "layup" and it resulted in
an extra 30 pts approximately

 

[steven46]

Hello UK traders

Here we are a day after the Fed Announcement and the market is
responding to the approach of more tariffs. As seen in the attached
charts, all is not well. Remember that the markets are "forward looking"
and what they see ahead is inflation as the tariffs kick in for many countries
and (for those unfamiliar with the logic) the damage to the US will be
substantial as consumers are forced to either pay more for imported products
or go without. Coffee for example, in our stores has gone up from about $8
to more than $11.

We took the obvious short entry and because of the timing, it was held to +10
The risk was reasonable and we will be very careful from this point forward,
monitoring until the end of session when the MOC orders come in. Based on
that data we will make a decision as to whether to trade the close or wait until
the next session.

Good luck

 

[steven46]

This news came in over the wire a few minutes ago

We show the immediate impact, as President Trump extends
timing of tariffs on good from Mexico for another 90 days
We should see a tradeable move based on this news

 

[steven46]

Here is the follow up to the previous announcement
of delay of tariffs on goods from Mexico

Notice that the market ran up +10 right away and like clockwork
traders took profits. Over the years we have seen this kind of response
many times.

We did not trade this (not possible to trade it and post) but wanted to
show it for those interested. As part of our class we show struggling traders
how to monitor news effectively using "key words" (just as the institutions do)
and this is how we would (under normal conditions) learn of tradeable events
hitting the news wires.

Postscript

We will post the setup for our new monitoring service. There are many, and we
are selective about it, using only one (1) keyword that we believe will be of high
impact to the market we trade (Attachment below)

 

[steven46]

And here is another update regarding the tariff news "event"

As can be seen, this news event trade is continuing and is now
approaching +20 pts

Important (in our opinion) to notice that Trump indicated that this
"deadline" would not be changed, and then suddenly he reverses
course. This is (as we are all seeing) simply the way this man operates
given this behavior we have good (valuable) insight as to how to trade
his "policies" going forward

 

[steven46]

Hello UK Traders

Today was an unusual "Gift" day. We knew that tariffs were
prominent in the minds of traders and that today's economic
news would likely trigger expansion of volatility. The ability to make
money in this environment is based in part on experience, and in part
on skill and the ability to anticipate and interpret the economic news
"as it is released". Interested readers can refer to the previous posts
where we show how traders can monitor news events. Anticipating and
interpreting them is quite another thing.

Going in to the NY we have everything needed to be ready to act.

1) Look at the London Session. It foretells the possible "trend day down" based on
the likelihood of negative economic news just prior to the NY session open
2) When the news events "dropped" the volatility increased significantly as
traders "sold the close" (using Market Orders).
3) Also we saw that there were very few limit order traders at work

On a day like this the strategy is simple.

Identify the opportunity and create the plan (previous evening)
Monitor the previous (London) Session
Confirm the scenario prior to the NY session as economic
news hits the tap.
Join the party as institutions and commercial traders enter
using Market Orders.
HOLD as long as each successive bar closes below the midpoint
of the previous.

Good luck

 

[steven46]

Hello UK Traders

We stayed up to trade the London Session of the S&P Futures
and got quite a ride

The 15 min system continues to work well. We anchored our
VWAP at the open, and we saw a "2nd entry" confirmed by
a positive skew (red line). Aggressive traders could have added
on the "1st Cross" (the 9ema crosses above the Anchored VWAP)

The "Timed Exit" is a matter of experience. We know that institutions
often take profits at that time, and so we look to exit depending on
how the market acts. The decision is made for us, when we see the
"wick" at the top of the high bar.

We assume continuation at the NY session open, so we will get
a short nap and return to trade it.

With small adjustments this system will work for DAX or Footsie
and in future we will be demonstrating it in those markets.

 

[steven46]

Hello London Traders

Today we traded both sessions. Generally speaking this is not
a good idea. Trading without sufficient sleep means that you
are compromised (similar to a person drinking and driving).
We won't be doing this again soon

The attached chart shows two (2) examples and the system works
as usual on both equally well, if the operator maintains discipline
and focus

Our preferred setups are based on price action (above/below an EMA
and what we call a "1st Cross), after we see this basic setup, an algo is
triggered and we enter depending on the status of the last bar in the algo

Today as usual this worked and we are closing our book of business with 18.5 pts
net of expenses. Today we traded five (5) contracts.

Good luck

 

[steven46]

Hello Traders

I think the best thing I can do for struggling traders is to provide something
they can use. What you see attached below is my full screen. From this screen
a trader could monitor, evaluate, and then make decisions. Its just one (1) example
I provide a couple of alternatives so that students can choose the one that suites
their style.

On the left side, a daily chart, and the most recent price action is called "trading range"
meaning the candles overlap (until Thursday), when we see a break to the upside,
followed by a pullback. Professionals call the breakout a "high 1" and it is often the case
that institutions will take the other side of that break to the upside. As you can
see that is what happened. The result is a "doji" candle indicating indecision.

On the right side, we see a 15 min chart and there is much more detail to observe
We can see the London Session, and I have marked what I call the "Overnight Drift"
which is the tendency for price to drift higher (at specific times). Again this is exactly
what happened. Then at about 10am to 11am London time, institutions took profit
and prepared to distribute the "inventory", selling it back down during the NY session

It's that simple. Professionals have a quaint way of describing it as either "pump & dump"
or the reverse "dump & pump". The institutions that control the markets have two (2)
goals, 1) to trap traders on the wrong side of the move, which makes it necessary
for them to chase move, fueling its continuation, AND 2) to realize their short time
frame profit goals, usually about 50 pts.

We have been training a few retail traders, to think along these lines, in order to be able
to predict market direction and the duration of moves. We like to "bottom line" this as
follows

1) Learn to see the context
2) Learn to identify direction
3) Learn to find a high probability entry
4) Learn how to determine the strength of the move (swing or scalp)
5) Finally, the way you get paid is determined by HOW (and when) you exit