A Professional Approach to Trading Futures

[steven46]

No Inquiries as to how to anticipate a possible breakout?

The answer to that question is simply (the end of the IB period)
Institutional algos activated by time of day, look for this opportunity to
trap volume. With all the resting orders under the trading range, it is
relatively easy to wait, until enough orders show up on the books, then
at the end of the IB, break to the downside (in this case)

Good luck

 

[steven46]

Hello Traders

Here in California it is almost 9pm and we have completed our
"homework". We will post a version of our Weekly Markup that
illustrates the Institutional process of "trapping volume".

The larger context for this is shown by a fixed range Volume Profile
anchored Monday of the previous week. We direct your attention to
Monday of the current week. Notice how price reacts when it tests
the Previous Week's Value Area Low, not once but on consecutive
tests (Monday, Tuesday, AND again today.

As we have said previously, it is common practice for Institutions to
act at specific times (prices) in order to "Trap Volume". Notice that we
do not use the phrase "Trapped Buyers or Sellers", why? Because the
majority of this volume is automated.

For Skilled Professionals, the challenge is to identify this framework
in time to make use of it. Once you see it, obviously you "go with" it
Entering as close to the origin of the move as possible, holding on
as long as possible, or as long as your risk metrics will allow.

We are near the end of the week, and no one has engaged to know
more about this process. For those who use TradingView, we suggest
extending a Fixed Range Volume Profile to each of the next sessions
and ask yourself what comes next?

Learning to answer that question is the primary goal of our class.

Good luck

 

[steven46]

Here is that chart with Volume Profile extended
and the question is put to everyone
What comes next?

 

[steven46]

and our chart showing the transition to London Session

As can be seen, the answer to the question lies
with what happens during the London Session
It will provide clues whether price will move up to
test the overhead "References" (Value Area Low, and
Anchored VWAP from previous session, OR perhaps
break to the down side

Based on what happens during the London Session
we will create reasonable plans to trade the US session
(as usual)

Good Luck

 

[steven46]

London Session Trades after the transition (previous post)

For those interested in the US session, it looks as though
Institutions are going to move the market up to test previous
Key References (again refer to the previous)

 

[steven46]

Good Morning or (in 10 minutes) Good Afternoon London & Euro Traders
where it is currently11:50am

Here is our preliminary comment regarding High Impact Economic News
------------------------------

Our primary focus for this morning is the November Consumer Price Index (CPI), to be released at 8:30 AM ET.
This report is critical because it is the first major inflation data released following the recent US government shutdown,
ending a period where the market was effectively "flying blind" on price trends. Further comment as follows

• Consumer Price Index (YoY): Consensus: 3.1% | Previous: 3.0%
• CPI (MoM): Consensus: 0.3%
• Initial Jobless Claims: Forecast: 225,000 (Improvement from 236k)
• Philly Fed Manufacturing: Forecast: 2.0 (Rebound to Expansion)

"Whisper" & Analysis

The Data Gap Risk: Because the US government shutdown disrupted data collection (causing gaps in October reporting),
volatility is expected to be higher than usual. The "Whisper" worry is that inflation may be stickier than the 3.1% forecast
suggests, potentially complicated by early tariff impacts.

*Market Sentiment: S&P 500 futures are trading higher (+0.4%) this morning, largely driven by strong earnings from Micron (MU), which has reinvigorated the AI trade and offset some pre-data anxiety.
------------------------------------------

Trading Plan Scenarios

Bull Case: If CPI arrives at 3.1% or lower, expect the "Santa Claus Rally" to resume with force, as it confirms the Fed can continue cutting rates.
In our opinion, it looks as though "informed" participants believe this is likely.

Bear Case: Conversely a "Hot" print (>3.2%) could trigger a sharp selloff, as it would validate fears that tariffs are reigniting inflation and forcing the Fed to pause. In my opinion this is about a 30% percent possibility, Although the impact would be significant if it were to materialize.

-------------------------------------------

Tomorrow (Friday)

Quadruple Witching: regardless of today's close, tomorrow (Dec 19) is a quarterly expiration event for futures and options.
Expect massive volume and erratic price action, especially in the final hour of trading. We suggest that
Retail traders observe only. For those with experience, we would be watching for a spike move (on Open) lasting
about 15 minutes, followed by a strong reversal as institutions use money to move markets toward positions
that will put them "in the money" as regards hedged (options) positions. While we do not have the time
to explain in detail, skilled professionals already know which side of the market institutions are on in terms
of hedged positions, and so they will wait for them to make the "first move" then jump on the train with them
Again a skilled person can find all the information (if they know where to look) on the CBOE website and it
is part of the education we provide in order to teach traders how to obtain a tradable edge in the Markets.

Good Luck

 

[steven46]

Here is an update on the Long Trade Entries
shown in the prior posts above

Apparently those entries have hit their overhead targets
and those traders have +20 and will likely exit in this area
to protect profit

 

[steven46]

and here is the reaction to the release of the Economic New we
talked about previously. We will trade this using the "Rule of 4"
setup (also referred to previously).

Good luck

 

[steven46]

And this is the data sent to my attention

As can be seen, inflation was above expectation and
it is assumed that the odds of another interest rate
cut increase, thus the move higher

For those who take this professional seriously, this is
an element that needs to be understood, and (at some point)
made part of a reasonable trading plan.

Good luck

 

[steven46]

Good Afternoon London & Euro Traders

I assume that most of you are "without a clue" as to
how to handle a "Trading Range Open". We attach
a chart showing our preferred strategy for this condition

Step 1 Identify bias (As mentioned in previous posts, look
at the way London Session trades. Obviously to the upside
Step 2 Identify the reaction after release of High Impact Economic
News (also to the upside)
Step 3 Watch the first few candles and mark your "Bookends". We
have used this technique for years and it is reliable. Referring
to the chart below, see the side by side candles. We draw a horizontal
line extending from each (one at the high, one at the low) to define
the early range

Now we are ready to trade. as shown on the chart, the final step is to observe
a "move" from one side of the range to the other. It has to be in the preferred
direction (after all that work, it better be, right?)
Watch the first, then wait patiently for the next opportunity at the same price level
Enter the trade with a reasonable stop loss in place. Monitor the price action and hold
as long as the position stays above your entry. Profit targets are overhead (we discuss in
our class). Success is about preparation, and the ability to execute (and to manage your
emotions). If you have been on the losing end for a while, you will want to get out quickly
with small profit. That's understandable. Repetition and watching a skilled trader execute
correctly is what you need

Good luck

 

[steven46]

and here is an update as this one broke strongly to the upside

If you compare the timing to the posts you will see that I am posting
this BEFORE it happens.

Ultimately this was a +40 pt move, equivalent to +2,000 USD/contract
(if you held it). Even if you only took +10 it was a nice profitable trade
and then you move on to the next opportunity

The question I would put to all of you is "Do you see what is in front
of you". Do you want to continue to make widgets, or sell office supplies
or whatever else you do for a living, OR would you like to create a sustainable
business or maybe just a consistent 2nd income.

Good luck