How to Scalp the ES Emini: A Day Traders Delight

By trader7757, 12 January, 2010, No Comment

There are a variety of day trading styles that traders use, some with fantastic success, others with less than satisfactory results.  My style of day trading, scalping, is a direct reflection of my personality, experience and emotional disposition. ES Emini day traders who scalp typically stay in trades for five minutes or less, or longer, if need be.

My views on the way the market functions precludes me from building long term commitments to a given market direction.   Market prognostication is an inexact science, at best, and most economists and day traders have a miserable track record of predicting the future direction of market movement.  So, I don’t even try.  I suspect I would be as poor at predicting futures market direction as the experts.

As a adherent to parts of chaos theory, I believe there is a level of randomness to the market, which makes it less than predictable in the long term.  I do believe that certain means can be employed, and probabilities analyzed, that will allow a day trader to get an thought of what the market may do in the next ten minutes, though.  Chaos theory is about tiny patterns, called fractals, that exist in a far larger random pattern.  I take advantage of those smaller patterns and try to pull two or three points (on both the long or small side of a position), and then exit with my tiny prize.  Of way, if I find myself in a continuing trend, I may push my profit limits higher to take advantage of the trend.   By and large, though, I am looking for two or three points.

A casual glance at any intraday chart will show an undulating wave pattern that is the basis for scalping.  I try to identify the starting point of a wave and exit the trade when the small spurt of momentum stops.  Of way, there are days when the market trends in one direction, not often, and on those days I may take a position and hold until my comfort level erodes and I am ready to take a profit.

When you are in a winning day trade, you never lose money by exiting the trade.  Sure, possibly the trade angled upwards another two points and you did not participate in that price action, but I am still content with my three points.

Never let a winning trade become a losing trade.  Take that to the bank because it is a common mix by a legion of traders.

On the ES Emini contact I set my stops positively tight, usually a 12 tick bracket and never adjust my stop lower to accommodate a lousy trade.  If I am incorrect, I am incorrect.  My goal is to find another trade that is profitable.

I don’t hold trades overnight, and I don’t set up trades and walk away.  The scalping style requires constant attention to the day trade at hand, and this requirement makes it an unpopular choice for traders who don’t care to spend a lot of time at the computer.  You will be spending time watching charts looking for trades, and once you are in a trade it is vital to monitor the trade.

In baseball terms, scalpers are singles hitters.  Not anything more.   We may hit an occasional home run, but the is the exception, not the rule.  The goal of a scalper is to extra tiny chunks 5-8 times a day from the market.

NYSE Ticks: How to Trade this Key Indicator

By trader7757, 11 January, 2010, No Comment

Pure oscillator traders are missing out on one of the most interesting and useful tool on the market.  The NYSE Ticks can show you a world of information about the number of stocks that are increasing vs stocks that are declining.  If you understand how to use this valuable information you may feel like you have hit the mother lode of trading information.  The NYSE Ticks (TradeStation symbol $TICK) are a compilation of the if the markets buying and selling activity, but you must develop some useful filters for sorting out this information and applying it to your trading style.

If you have read any of the articles I have written, you know that I working very hard at staying out of trades that originate in a loose term called “market noise.”  I like to trade break-outs and break-downs, and avoid initiating trades in the market noise, which is generally the normal backing and filling action the market offers.  To be sure, market noise dominates the daily market, nearly 70% of the price action is market noise, and it takes patience and self-discipline to stay out of the market noise.

For me, any action that occurs between +450 and -450 on the $TICK is market noise and does not warrant my attention.  I should point out the the NYSE Ticks are not dissimilar from an oscillator to read, that is to say there are threshold points at which the market breaks out of the market noise, and I start paying close attention.  Most traders who are not familiar with the $TICK charts should have little problem interpreting the information, but have to have a handle on the information before we can truly trade.  At what levels should I enter a trade?  At what levels should I exit a trade?

If you are in a trade and the $TICK starts to turn against you some, say up to +250 on a short trade, are you going to be ready to bail?  Remember what I said in paragraph 3?  Anything between +450 and -450 is market noise, and a +250 reading on the NYSE Ticks is just that, market noise.  Even in a breakdown, there is going to be backing and filling and these two factors are a simple part of trading.

On the other hand, if the NYSE Ticks hit +600, I am going to notice and prepare a plan of action.  The $TICK is one of two indicators I have an alarm set, and that alarm will sound when the market bashes into +600 or -600.  The $TICK is one of the few indicators I have absolute rules that are not debated in my mind.  That is to say, when the market pierces the +800 or -800 and I am in a trade in the opposite direction, I exit immediately.  No thinking.  No rationalizing, I get out.  Period.  Why?  Readings of +800 or -800 are extreme, and if the action hasn’t been reflected in the price action, it will be soon.  Exit now.  Isn’t that a handy way to exit a trade that isn’t working properly?

I really like to fade heavy movement in one direction.  What does that mean?  If the ticks reach +1000 or -1000 I am looking to take a trade in the opposite direction.  I have a set of criterion I use to enter the trade which are fairly complicated and a little advanced for the scope of this article, but suffice it to say that when the market gets hit with the heavy buying/selling pressure it takes to reach these levels, you can look for the market to consider reversing field.

While many traders confine themselves to the realm of oscillators the NYSE Tick is some real time information that is not reinterpreted through a mathematical formula, or hypothetical like pivots or the Fibonacci sequence.  This is real data that will give you a glimpse into the markets, and few traders avail themselves the opportunity to do so.  The NYSE Ticks are always a part of my trading, and sometimes the most reliable.  Remember how to interpret the data displayed and you can profit from $TICK, and not rely upon a perennially lagging indicator to make your trading decisions.  The NYSE Tick will give you an understanding of you chart that may have been lacking.

In summary, the $TICK provide a wealth of knowledge about the aggregate stocks rising vs the aggregate stocks falling, and we have to interpret that readings of the indicator to make sense of them.  Market price action between +450 and -450 is noise, and should be ignored, regardless of the implications you think you might see.  If I am in a trade and the market reaches +800 or -800 and I am in a trade opposite those numbers, I immediately exit.  No thinking about it.  Anytime the ticks registers +1000 or -1000 the market is ripe to change direction, as this kind of buying/selling pressure is unlikely to continue.  And finally, NYSE Ticks indicator is unfiltered market information, no formulas like the oscillators, no hypotheticals like pivots or the Fibonacci sequence, the NYSE Ticks is the market as it is, and you can profit by learning this indicator.

The Truth About Trading

By trader7757, 6 January, 2010, No Comment

The stock market is possibly the greatest competition in existence. Every dollar is in a contest where there is always a winner and always a loser. A giant game with trillions in currency floating as zeros and ones staged in a virtual playground filled with some of the most calculating, intelligent minds in the world.

Read More →

ES Emini Day Trading: Pivot-Fed Announcements-Commentary

By trader7757, 5 January, 2010, No Comment

Pivot Point for 1-4-10

1140.41  R2
1134.58  R1
1123.91  Pivot Point
1118.08  S1
1107.41  S2

Fed and Fed Agency Announcements

Redbook
[Bullet8:55 AM ET
Factory Orders
[Report][Bullet10:00 AM ET

4-Week Bill Auction
[Bullet11:30 AM ET

The Market started off the new  year in euphoric fashion.  It was a nice day to trade.  I started calculating the Pivots by hand again because I noticed some differences in S and R points and realized I wasn’t calculated them for 5PM.  Some of the automatic pivot point calculators online go from midnight to midnight.  I can’t stand the pivots from midnight to midnight, so I am back to doing it the proper way.

ES Emini Trading: Why Not You

By trader7757, 4 January, 2010, No Comment

The newspaper have for years written enumerable article about stocks busts, market crashes and the economic calamities that face stock investors.  It makes good news, and adds to the negative image of investing in equities and the market in general.

But those calamities are problems that face long term investors.  You know, the buy and hold guys.   For years, the general line of thinking was to buy a stock and hold onto for years and reap the rewards in your retirement years.  Of course, the dynamic nature of the stock has, to a certain extent, changed that line of thinking.

Of course, there are still the hordes of mutual fund holders who have invested untold billions in these investment vehicles.  I have a low opinion of mutual funds, as an investor cannot exit a fund until the end of the day.  Additionally, very few fund managers even come close to matching the indexes they are supposed to be imitating.  Why pay exorbitant fees for substandard performance?  I will never understand it, but there are trillions of dollars still invested in these investment vehicles.

However, recent changes in investment structuring from the Chicago Mercantile Exchange has made investment for primary income a very attainable goal.  Several product lines are aimed directly at the consumer market and priced well within the average budget.   The are called e-mini’s and are investments that are traded during the day, and seldom held overnight.  No worrying about the stock market here, you are in complete control of your investment future.

I don’t want to give you the impression that these investment are like ATM machines that simply spit out money all day, but with proper training and practice a trader can easily earn $500 a day or more and not hold any positions over night.  Of course, most individuals have never given serious consideration to investing in the markets, which many consider relegated to Wall Street experts.  But nothing could be farther from the truth.

There are many courses, some home study, that are reasonably priced that will give you more than the pre-requisite knowledge you need to be an effective trader.  Thousands of people, from housewives to businessman, have turned to trading and greatly increased their income and improved their lifestyle.

The secret is training.  It is very important that a trader spends time learning the slightly illogical movements of the market.  Again, with proper knowledge this illogical movement becomes second nature to understand.

The benefits to trading for a living are many fold:

1.  More time with your family and children.
2.  No more boss, your self-discipline is the key to success.
3.  Time for leisure activities and enjoying the fine things in life.
4.  You control your income.  You have the skill to make money, and nobody can take that away from you, fire you, or change your job.  More than anything, once you learn to trade, you can become completely in control of your lifestyle.
So, I propose that you consider exploring the benefits of trading and see if it suits you.  It’s not for everyone, but it’s wonderful for a lot more people, especially if they have the knowledge of what is possible in trading right from your home.  You are your own boss, and master of you own lifestyle.  No more corporate mentality to deal with.

ES Emini Trading: Pivot-Fed Announcements-Commentary

By trader7757, 30 December, 2009, No Comment
Daily Pivots for day following 29-Dec-2009
Classic Woodie Camarilla DeMark
R4 1147.58 1142.67 1126.15
R3 1139.58 1134.67 1123.95
R2 1131.58 1131.58 1123.22
R1 1126.67 1126.67 1122.48 1125.13
PP 1123.58 1123.58 1123.58 1122.81
S1 1118.67 1118.67 1121.02 1117.13
S2 1115.58 1115.58 1120.28
S3 1107.58 1110.67 1119.55
S4 1099.58 1102.67 1117.35

Fed and Fed Agency Announcements

Chicago PMI
[Report][djStar]9:45 AM ET

Farm Prices
[Bullet3:00 PM ET

Consensus Analysis

Chicago PMI
Released on 12/30/2009 9:45:00 AM For Dec, 2008
Prior Consensus Consensus Range
Business Barometer Index – Level 56.1 54.9 52.8  to 57.0

Market Consensus Before Announcement
The Chicago PMI rose nearly 2 points in November to 56.1 to indicate a month-to-month increase in the pace of overall business activity in the area. New orders rose 1.4 points to a very strong 62.8, a plus-60 level that, because of its strength, will be hard to match in the coming months. Prices paid showed a mild month-to-month increase at 52.6.

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ES Emini Day Trading: Pivot-Fed Announcements

By trader7757, 28 December, 2009, No Comment
ESH0
For 12/25/2009
How To Use
Symbol R1 R2 Pivot S1 S2
ESH0 1124.25 1126.50 1120.25 1118.00 1114.00

Fed and Fed Agency Announcements

Money Supply
[Bullet4:30 PM ET

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to trading success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

All the Best to You and Your Families…

By trader7757, 24 December, 2009, No Comment
Happy Holidays

Happy Holidays

What a great time of year to sit back and forget for a few days the worries of the market and focus on the really important things in life:  family, friends and happiness.

Wishing you and yours and warm and Merry Christmas

The Fractal Futures Trader Blog

ES Emini Day Trading: Pivot-Fed Announcements-Commentary

By trader7757, 24 December, 2009, No Comment
ESH0
For 12/24/2009
How To Use
Symbol R1 R2 Pivot S1 S2
ESH0 1119.92 1124.33 1115.58 1111.17 1106.83

Fed and Fed Agency Announcements

Most of the CME Markets close at noon today for the Christmas Break, expect trading this morning to be light as many traders take the entire day off.

Jobless Claims
[Report][djStar]8:30 AM ET

NYSE Early Close – 1:00 ET

SIFMA Rec. Early Close 2:00 ET

Money Supply
[Bullet4:30 PM ET

Relevant Consensus Analysis

Durable Goods Orders
Released on 12/24/2009 8:30:00 AM For November, 2009
Prior Consensus Consensus Range Actual
New Orders – M/M change -0.6 % 0.5 % -1.0 % to 1.5 % 0.2 %
New Orders – Yr/Yr Change -11.9 % -7.8 %
Ex-transportation – M/M -1.3 % 2.0 %
Ex-transportation – Yr/Yr -11.3 % -6.9 %

Highlights
Boeing orders slipped in November but the rest of durables orders look good. New orders for durable goods in November rebounded 0.2 percent after a 0.6 percent decline in October. The boost in November came in below the consensus forecast for a 0.5 percent increase. Excluding the transportation component, new durables orders posted a 2.0 percent gain, following a 0.7 percent drop in October. The weakness in transportation was a huge drop in civilian aircraft orders.

The November rebound in new orders was broad-based outside of transportation. Sizeable gains were seen in communication equipment, up 4.0 percent, computers & electronics, up 3.7 percent; machinery, up 3.5 percent; and electrical equipment, up 3.2 percent. Also posting gains were primary metals and fabricated metals.

Transportation fell 5.5 percent after slipping 0.2 percent in October. Within transportation, nondefense aircraft dropped 32.6 percent in November; defense aircraft fell 3.2 percent; and motor vehicles slipped 0.2 percent.

The outlook for capital goods spending is improving at the core level-although it may be foreign spending more than domestic investment. However, headline new orders for nondefense capital goods fell 1.9 percent in November after an increase of 0.8 percent the previous month. The weakness was in the volatile aircraft component. Excluding aircraft, new orders for nondefense capital goods rebounded 2.9 percent after a 2.0 percent dip in October. These numbers reflect orders from both foreign and U.S. businesses.

Year-on-year, overall new orders for durable goods improved to minus 7.8 percent in November from minus 11.7 percent the month before. Excluding transportation, new durables orders increased to minus 6.9 percent from down 10.5 percent in October.

Overall, today’s durables report shows manufacturing still on a gradual uptrend. Growth in this sector is leading the economy but at a moderate pace.

Equities might be disappointed in the shortfall from expectation other than jobless claims fell more sharply than projected. Equities will likely rise on that report. However, Treasury yields were marginally lower on the two releases.

Jobless Claims
Released on 12/24/2009 8:30:00 AM For wk12/19, 2009
Prior Consensus Consensus Range Actual
New Claims – Level 480 K 470 K 450 K to 475 K 452 K

Highlights
The brightest spot on the economic calendar continues to be initial jobless claims which fell a very substantial 28,000 in the Dec. 19 week to 452,000 — a dip that the Labor Department describes as a part of “long-term trend” of improvement. The four-week average continues to come down, now at 465,250 for a 2,750 decrease. Continuing claims also continue to come down, 127,000 lower in the Dec. 12 week to 5.076 million. Trends for both initial and continuing claims show sizable improvement from November in what will raise talk of a possible gain for December payrolls.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to trading success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

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