A Professional Approach to Trading Futures

[steven46]

Hello Traders

This chart is quite important because it provides the basic rules we follow
in order to profitably trade the open (also known as the "IB" or "Initial Balance")

The skill needed is not native to everyone. In fact most people simply do not know
how to organize themselves, what to focus on, and how to structure their thought
processes so that they can 1) identify tradeable opportunities and just as importantly
2) avoid "traps" and "trading range" opens.

The attached chart shows the previous NY session of the S&P 500 Futures, and we show
a chart with 2 minute candles, because this time frame provides the "granularity" needed
to identify developing, tradeable patterns. The chart is marked up to show "Step1".

In our class, we go over this because this skill (the ability to direct your attention to the most
important data before and after the formal open of any market) is hard to obtain, and unless
the retail trader learns it, IF THEY TRADE THE OPEN, ODDS ARE THEY ARE GOING TO LOSE.
WHY? BECAUSE IT IS DESIGNED THAT WAY. TO CONFUSE, TO TRAP, AND TO STRAND TRADERS
ON THE WRONG SIDE.

Good Luck

 

[steven46]

Hello London & Euro traders
It is now approximately 10:20am

Attached below you will find our new Weekly Cycle Markup for the week of
Dec 1st. As seen on this chart, we were in a trending environment previously
and on "Pivot" Wednesday, we transitioned to Trading Range behavior. This
may signal a change (increase) in volatility due to the release of adverse economic
news in the weeks to come. If that is correct, short time frame strategies such as
Mean Reversion and shorter hold times for trades. More to come on this as the next
NY session opens (in about 4 hours)

 

[steven46]

And a chart showing the London Session of the S&P 500 Futures
Open and first trade opportunity.

As seen on that chart, price moved steadily lower during Asia and
when it tested the previous NY session low, buy volume came in
to defend. Once again sellers trapped at that test. From our point
of view this is obvious and may continue for a few more days depending
on pending economic news as follows;

Key economic news for December 2, 2025:

• OECD Economic Outlook: The Organization for Economic Co-operation and Development (OECD) will publish its latest analysis and projections for the global economy.
• US Federal Reserve Chair Jerome Powell Testimony & JOLTs Report: Federal Reserve Chair Jerome Powell is scheduled to give testimony, and the Job Openings and Labor Turnover Survey (JOLTs) report is due for release, which will provide insights into the labor market.
• US Consumer Price Index (CPI): The US will release the CPI for November.
• Bank of England Meeting: The Bank of England will hold a meeting.
• European Central Bank (ECB) Meeting: The Eurozone's ECB will hold a meeting.

In our opinion, the "Market Moving" news may originate from the CPI, and Fed Chairman Powell's comments
In our class, we talk about how to time entries based on the market's reaction to news

Good Luck

 

[steven46]

Hello TuscanSun

Thanks for posting
Unfortunately I just saw your post and do not have time to reply in detail
however my recent posts do offer comments relating to direction and bias.
As mentioned so far, it looks (on my charts) as though buyers are in control
and that would mean that the big institutions are interested in propping the
market up for at least a little while longer. Some of this is seasonal "Window Dressing"
and is not sustainable. More to come in future when I start to LiveStream my trading

Good luck

 

[steven46]

Here is an update as regards the trade setup we showed earlier

As can be seen, price continued higher to eventually test what we call a
"Trend Origin". This important feature is also known as a "hold up" price
and is a place where traders (who are in the money") will take profit.
Professionals know this and depending on the context, will take the other side
of that previous long trade hoping to scalp a few points, with the possibility
that it may even reverse. The evaluation process is simple, you "scan left" to
Identify the trend origin bar (usually the 2nd bar from the absolute high or low)
in a larger trend move. At a test of this bar, you evaluate the context as follows

1) Do "in the money" traders have at least 10 or 20 pts profit
2) Do you see volume changing to reflect traders taking the other side of the trade
3) Does the CVD agree

Good luck

 

[steven46]

And this update is called "Trap or Trade"
because it shows you how the market can trap you
if you don't have a backtested setup that has an edge

Readers of the previous post will remember that we identified
the "Trend Origin" as a place where traders may elect to take the
other side of the obvious trend, hoping to scalp a few points with
the possibility that the trend might reverse. There is also the possibility
that this might be a "bear trap", where shorts are lured in to enter
and when price tests the 9ema, buyers come back in to "trap" them
as price resumes its original direction. Our backtested setup requires
that price closes above, then below, or there is "no trade". Nothing is
perfect of course, but this works quite well to keep the trader from
being trapped.

Good luck

 

[steven46]

Hello London & Euro Traders
Here in California it is 7:55pm and in London 3:55am

We attach a weekly update chart markup, that shows the previous week (of Nov 24th)
AND the new week (starting Dec 1st). Traders interested in this approach may want to
refer to previous posts to see those weekly charts

We have added a "note" to the bottom of this chart that "says it all". Read and try to understand
the value this provides. The message is simple. The basis for a trading edge is the realization that
that institutions that control the markets, do so by employing "repetitive behaviors" one of which
is known as "volume trapping". I have marked a few of the places where that can be seen on this
chart. Skilled professionals learn to anticipate these "retests" AND they learn how to trade them.
After that it is all about managing risk and optimizing profit. This is what I was taught and what I
teach to others. If I can learn it so can you.

Good Luck

 

[TuscanSun]

Hello TuscanSun

Thanks for posting
Unfortunately I just saw your post and do not have time to reply in detail
however my recent posts do offer comments relating to direction and bias.
As mentioned so far, it looks (on my charts) as though buyers are in control
and that would mean that the big institutions are interested in propping the
market up for at least a little while longer. Some of this is seasonal "Window Dressing"
and is not sustainable. More to come in future when I start to LiveStream my trading

Good luck

Thank you, Steven, for your detailed analysis which I found very helpful and will study your previous post to learn more about direction and bias.

 

[steven46]

Hello London & Euro Traders

Here is a trade setup I could not resist
As with every setup I don't know how it will
play out but I did take a small profit. So I am good
either way.

The markup is pretty simple

 

[steven46]

And here is the update just minutes later
after the first half hour of London session

As you can see, price reversed to take me out
(with a small scalp).

This to me is quite valuable in terms of trading education
Suggest interested traders refer back to my previous posts
where I outlined the "repetitive behavior" of previous sessions
as follows

1) Sell volume drives the Market lower, giving the impression that
there could be a trend (continuation), then Buy volume enters to
trap shorts. What a surprise

2) Obvious question is "Why do we take the trade?" and for me
the answer to this rhetorical question is "Why not"? Remember that
our analysis of the behavior is that it STARTS with a move lower.
So that initial move is predictable (statistically that setup has an edge)
The "mistake" (on my part), was to post here instead of taking
the reversal (which if you think about it was also predictable) right?
This of course is the problem with posting, I cannot do both at least not
very well it seems.

That's it for me

Good luck

 

[TuscanSun]

Thank you, Steven, for sharing your expertise to explain the real time situation! I have two questions: did you use 23:00 PST(2:00am EST and UTC 7:00am) to place the anchored VWAP and I used the same time 2:00am EST but the lines showed different chart, or it is because we have different settings? It is great to learn from you about real time price action. I am based in Sydney Australia AEDT time zone (UTC +11).

 

[steven46]

Yes I did use 2300 hours (my local time). I do that because it provides me with extra
data for this session

I have not had time to look carefully at your chart, but superficially it did look a bit
different than mine.

Attaching a 15 chart below to provide a summary of London Session Price Action
up to the current time. One should probably not be surprised that (once again)
during this session, there were three (3) attempts to move the market lower and
each time, buy volume came in to prevent that.

Look carefully at this chart. It shows the start of the new week and the trading range
behavior that followed. No real earthshaking surprise, same pattern (initial move down
and then buyers appear). Could be traded profitably long or short. Think about it this way
This behavior has been going on for a while now. The sooner you figure it out, the more
opportunity you have to profit.

Good luck

 

[steven46]

Need to make one (1) more important point before I fold my tent
for the session

I notice a lot of traders starting to follow this thread. I think its only
natural that some would think that they can make money by simply
buying the pullbacks. I strongly caution folks, do not become complacent
or intellectually lazy. This behavior is going to change, transitioning to
something else and when it does, folks who blindly take trades thinking
they have an "ATM" machine will sustain losses.

Each weekend I prepare carefully by analyzing the previous week's price
action. I always assume that the market can do ANYTHING at anytime.
Be careful. Be responsible for your actions. Think carefully before entering
trades. I always suggest struggling traders begin by trading simulated accounts.
and keeping a journal. Don't trade real money until you have proven you can
manage the risks.

Good luck

 

[steven46]

Good Day London & Euro Traders
It is currently 10:36 am in The City

Interestingly I could not log on to this website (at all) throughout the day yesterday. Hmmm

High Impact Economic News is scheduled for release as follows

• Core PCE Price Index: This inflation figure was delayed and is now scheduled for release today. It is considered a significant indicator of inflation trends in the U.S. and is closely watched by investors.
• Market Impact: The release is particularly important because recent delays in other economic data releases have made it one of the few signals available to gauge the market's direction before a key Federal Reserve meeting. Analysts suggest the data could cause a significant rally or selloff in the market.

I believe this new will be reported later today (check your "Economic Calendars". Skilled traders prepare for these events in the following ways

1) Anticipation. Because of the delay, the markets are uncertain about this news and that is why the previous NY Session exhibited "Trading Range
behavior.
2) The "Whisper" about this news is negative, This means that traders are expecting a move lower initially, then because it may influence the US FED
to lower rates, the market may reverse at some point after the release. Buy algos would be activated at some point after 3pm. These considerations
are going to be part of my trading plan

For Today, my plan includes the following

Bias Uncertain
Direction = Initially a Trading Range, trendless until the new is released and the market reacts

Previous price action has been primarily "Trading Range", with traders using "mean reversion" techniques to make profits (both long & short)

This is what worked yesterday and should continue to work today until the news is released

1) Scalping the open using a 1 min chart to obtain a quick profit
2) Waiting for price to display trending behavior, then, using a 3 min or (preferably 5 min chart) entering with the trend as price enters the VWAP
envelope
3) Entering with the intraday trend on tests (see my previous charts for examples) of the Anchored VWAP Envelope

Good Luck

 

[steven46]

Here is my 3 min chart of the London Session highlighting the primary entries

I like 3 min candles because they provide "granularity" necessary to identify
1-2-3 entries (my preferred setup). It is critically important for traders to understand the
logic first, before trying to trade this. In a nutshell it is as follow

1) At the open, we look for the market to display directionality up or down
2) IF the market attempts to move up or down twice and fails, this is known to traders
as a high odds, "2nd entry" in the opposite direction. The attached chart shows that
logic working well as usual.
3) It is not unusual for this first "move" to set the tone for the rest of the session, meaning
that traders will keep on selling it down as long "as long as it works".


I also keep a 5 or 15 min chart on my screen to show the broad strokes

 

[steven46]

For Interested Traders, here is my opinion as regards the upcoming PCE release

Please note that it is the final piece of the puzzle that the US Fed will consider prior to
deciding whether to cut interest rates and is therefore quite important.


Market implications for traders

• A print of 0.2% MoM would likely align with current market expectations and solidify the view of an upcoming Fed rate cut.
• A "whisper" print of 0.1% MoM would be a positive surprise for Treasury bulls and potentially accelerate the Fed's rate-cutting timeline.
• A much stronger-than-expected print could disrupt the market, as it would challenge the narrative of easing inflation and potentially delay the Fed's planned rate cuts.

We should know whether I am right shortly

 

[steven46]

Here is the preliminary move as "informed traders" enter "Blind" in anticipation
of the economic news

As you can see, they are currently in the money. Attention to pending economic news
was a part of my training, and is part of what I train others to do. Interested traders
should notice that you do not hear anything about this from others posting on this
or any other website for that matter. THIS (learning what professionals call "Market Logic")
is how a trader can develop a significant edge (that doesn't change over time and
can be taken away from you).

Good luck

 

[steven46]

and a 2nd entry reversal as institutions make money both long & short

NY session about to start so I will have to return to offer a further comment about
this
---------------------

Attaching another chart so interested traders can see the reversal on both a 2 min and
3 min time frame.

As see in that chart, at the open, price exhibits trading range as expected, then it tries to
move lower but fails, and in the process creates a 1-2-3 reversal to the upside

 

[steven46]

Normally I create this "Markup" on during a weekend day to review the trades
taken and to evaluate price action

I did not trade the whole session, but wanted to show interested readers how I
framed the market, including the initial setup that happened to catch the first "Swing"

As can be seen, the chart shows the early price action creating a double bottom, then
as it breaks out, creating a 1-2-3 long entry setup.

At the high, we see a classic trend reversal as price creates a high, then retests that high
and fails. Once that trend reversal is identified, it is easy to trade the "higher low" that
follows

Interested traders can either use a "replay" function, or simply take a 3 x 5 card and hold it
up in front of the screen and go bar by bar, practicing until they can identify developing patterns
accurately.

Good Luck

 

[steven46]

And here is the Weekly Markup showing the strategy used by institutions
to move the market lower (this time during the London Session), then
reverse it higher, trapping sell volume, during the NY session.

The chart shows the previous MOC (market on close) imbalance which was
significant at 108,000 contracts, placed there by institutions so that when
that inventory was tested, they would defend by buying and moving the market
higher, making a lot of money in the process

The fact that the test happened at the previous Monday high is called "confluence"
It makes it easier for them to move the market in the direction needed.

On that chart interested readers can review the numbered sequence of events.
Also there are previous posts where we state that this strategy (selling the market
lower, then reversing, to trap sellers), has been happening for quite a while.
and is probably going to continue, next week.

One of the benefits of the Weekly Chart (if the trader learns how to maintain and evaluate it)
is that you can see this developing and plan how to trade it. Traders who don't make the effort
are just guessing, and that's why they lose.

My recommendation to use a 3 x 5 card and move it one (1) bar at a time until you can identify
these patterns is still (in my opinion) an excellent way to train yourself to see this

Good luck