Daytrading Edge - Analysis & Trading Ideas for ES, CL, GC & 6E

Project11 · May 3, 2019, 5:20am

Hi all,

After participating a little while on Optimus’ forum and after noticing how hard @Mod-MattZ and his team works to provide the best technology, feeds and trading infrastructure I decided to go ahead and try to post my views of the markets and share some of the trading technology products I use daily in order to discover an edge in the markets.

I just wanted to say that anything I post related to the markets is of my own opinion and biases and should NOT be construed in ANY way as financial advice nor a solicitation to buy/sell or sell short any futures or options contracts. I am a trader who makes a living at this and feel that we could all benefit from picking up a strictly trading-related dialogue and as such learn from one another.

I hope this feed grows and that a few traders could join in the conversation because with the immense market’s liquidity there are countless of opportunities daily to find potentially strong risk/reward trades and providing one has a strong day-to-day semi mechanical approach I personally believe that Trading for a Living is a craft and an art that can be mastered with enough time, practical guidance and practice.

I will just start by creating a simple
3 SECTION FORMAT:

VIEW OF TODAY’S MARKET CONDITION
In this section I would review the market type we are/were in;
a. CHOPPY,
b. MOMENTUM,
c. BREAKAWAY,
d. FUNDAMENTAL such as FOMC or Major News Events could override technical setups

This analysis would lay down the foundation for selecting potentially the useful strategy/approach to trade the markets we have in front of us for the day, instead of trying to force an approach that is not
best suited for the current market’ environment.
DAYTRADING SET-UPs
Here, I would go over the best trades I could find through the day and analyze the set-ups,
from the technical, risk/reward perspective and how they fit in with the overall market condition

2.1 SHORT TERM SCALPING Setups
(3min - 30min time frames)
These potential trade ideas are generally suitable for traders who feel that their edge comes from being in-&-out of the markets faster and who don’t like to turn small profitable trades into loses. This comes with higher trading activity, potentially more commissions and is not suitable for every trader. I personally have started trading as a scalper in the equities markets in the mid 90’s and have since came a full circle. So I still like scalping but there is also the second very valid daytrading approach below:

2.2 INTRADAY MOMENTUM Setups
(30min - 4 Hours time frames)
With these types of trades, one must be able to more or less accurately call the day’s sentiment and be able to gauge the supply and demand forces shifts in the underlying market one is trading, being able to be patient with an entry which almost NEVER is perfect and once the trade hopefully starts working (but always staying insured by a smart protective stop loss) these type of trades could workout in trader’s favor if one is able to sit on their hands and withstand the market’s ebbs & flows on the way up or down to the trade’s targets. This my friends is one of the hardest thing to do in trading and it doesn’t get much easier even after 20 years
RISK MANAGEMENT & PSYCHOLOGY
Here I would share something from the psychology department, as it is so crucial to keep our head straight and keep perspective while trading and I will never stop preaching the importance of money management, risk control and all those “boring” yet crucial subjects which if embraced could save us from those costly, painful and totally avoidable mistakes.
Yes, we all make them and I personally blew up a few accounts and lost money in my career.
Yes, it hurts, but today I feel it was absolutely necessary to learn some of the most valuable lessons.

INSTRUMENTS I LIKE TRADING:
Each instrument has its own dynamics and there are differences in how they move and trade
so it pays off to learn their personalities.
The Markets I like trading and would consider analyzing and discussing are;

ES - Emini S&P500,
CL - CrudeOil Futures,
GC - Gold Futures
6E - EuroFX Futures

For technology products - I like to use:

GAIN/OEC Trader - for options execution and some futures, datafeed, IWeb access, iMobile access, DDE Excel auto-functionality for analysis and some auto-execution

SierraChart - for futures execution, charts, DOMs, VolumeProfiles, OrderFlow Analysis, Historical charts and tick data

Bookmap - for OrderFlow analysis, Volume Analysis, Visual Liquidity Pools, up-to-second Support & Resistance areas

OptimusNews - The product helps me to stay on top and be aware of any major fundamental reports coming up across any markets & currencies which at times can override and skew even the most solid technical set-up, it also allows me to understand the overall market flavor and not rely on CNBC or other busy news feeds.

I hope I can bring value to the forum and would hope to pick up a conversation with other like-minded traders. Please be patient as I am a trader first and hopefully I can figure out a format that I could share some of my insights and with time maybe come up with a beat and a format that could help other traders.

I will try to post at least 2 times a week at first and see how it goes.
Any words, comments, suggestions or feedback would be much appreciated so that I could create a format that makes sense and is helpful as I don’t need to post if it doesn’t help traders.
I am content with my trading and sharing is only a way to grow myself.

Best Regards,

Project11

Risk Disclaimer:
Trading futures and options involves substantial risk of loss and is not suitable for all investors.
You must be aware of the risks and be willing to accept them in order to invest in the futures markets.
This post is for educational and informational purpose only and this is neither a solicitation nor an offer to buy/sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this post. You are subject to lose all or more of your original investment. Don’t trade with money you can’t afford to lose or money that, if lost, would affect your current lifestyle.
The past performance of any trading system or methodology is not necessarily indicative of future results.

Project11 · May 10, 2019, 5:18pm

VIEW OF TODAY’S MARKET CONDITION

Trader Comments:
Today we are looking at a potentially very volatile markets due to Trade Tariffs imposition and continued US-CHINA trade talks.

FUNDAMENTAL (NEWS) OF THE DAY
Although there is lack of schedule fundamental news releases for the US Markets today, aside from the Crude Oil Inventories figures at 10:00AM EST, the technical setups suggest to trade with caution.

The global markets showed a sign of increased volatility and the VIX reading climbed to a high of 23.38 yesterday. It suggests generally increased volatility across major markets so I am considering generally less risk/less size per trade to compensate for potentially larger stops while maintaining similar $ risk per trade.

Risk Disclaimer: Past performance is not indicative of future results.

Further, I noticed that my clearing firm (FCM) has increased the margins for ES, NQ, YM and RTY this morning in anticipation of major price swings hence it gives more clues as to more volatile and cautionary trading approach in general.

Watching for potential Crude Oil @/CL Trades after 10:00AM EST today

DAYTRADING SET-UPs

/ES ----------------------------------------------------------------------------------------------------------------------

/ES MARKET CONDITIONS

@9:45am EST
CHOPPYCONDITION
(Best To Fade Breakouts & use Mean Reversion Strategies)

Risk Disclaimer: Past performance is not indicative of future results.

@10:15am EST
POTENTIAL MOMENTUM CONDITION
(Best To Buy/Sell Breakouts)

Risk Disclaimer: Past performance is not indicative of future results.

SHORT TERM SCALPING Setup
(3min - 30min time frames)

@9:49-9:50am EST

Potential SHORT BIAS for /ES MOMENTUM SETUP based on Market Setup
and Lots of Volume Accumulation above 2866.50 Levels

STOPS could be placed around or above Volume accumulation around 2866.50 to 2867.50’

TARGET 1 Around 2858

Risk Disclaimer: Past performance is not indicative of future results.

INTRADAY MOMENTUM Setup
(30min - 4 Hours time frames)

@9:49-9:50am EST

Potential SHORT BIAS for /ES MOMENTUM SETUP based on Market Setup
and Lots of Volume Accumulation above 2866.50 Levels

STOPS could be placed around or above Volume accumulation around 2866.5’

TARGET 1 Around 2850
TARGET 2 Around 2841.50

Risk Disclaimer: Past performance is not indicative of future results.

RISK MANAGEMENT & PSYCHOLOGY

With increased market volatility comes increased risk, faster markets and hence a chance to make more mistakes or over trade. It’s best to observe the markets and focus on best setups only. Those come with patient waiting. Throughout my career I found out that it’s far better to wait for best setups to form and take less but higher quality trades rather then shoot from the hip and hope the trade will work out. It’s easier said then done, because constant price movement can make a trader “tired of waiting” and the FOMO (the fear of missing out) is very present and very hard to manage. But it’s statistically better to wait and even miss most of the mediocre trades but be ready and fully engaged when the best potential market setups appears. With higher volatility comes more price range hence more chance for profit but the risk must be managed at all times and never leave any trades without an active outstanding stop. Although in fast markets even stops can experience slippage, it is one of the best protective tools traders posses.

Typical Risk-Reward on a trade I like is at least 2.5:1 (Reward:Risk).
Today’s /ES Setup allowed for:
2.5:1 on the Scalping Setup
and
5:1 and 8:1 on the Momentum Setup.

Note: Keep in mind that although some trades, during a very volatile environment like the one today, could produce a very high (rare) 5:1+ of Win:Loss ratios, in the long run, consistently profitable traders usually average around 2:1 to 2.5:1, because there are many days and trades that could generate more loss, there are trading errors and many other mechanical factors that cause the actual long term average ratio to average down.

Having realistic profit target is also important and it is easier to wait for the market to trade through our targets once we actually place them and those are waiting on the exchange order book then having a mental target in mind while watching the DOM moving up and down.
It is too easy to panic and just place a quick exit way before the logical and statistically more sound target by keeping those active in the markets and just sit on our hands and watch the markets ebbs and flow.

Risk Disclaimer:
Trading futures and options involves substantial risk of loss and is not suitable for all investors.
You must be aware of the risks and be willing to accept them in order to invest in the futures markets.
This post is for educational and informational purpose only and this is neither a solicitation nor an offer to buy/sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this post. You are subject to lose all or more of your original investment. Don’t trade with money you can’t afford to lose or money that, if lost, would affect your current lifestyle.
The past performance of any trading system or methodology is not necessarily indicative of future results. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

Gatnom · May 10, 2019, 6:03pm

@Project11

Wow this is awesome. Thanks for your guidance and the extensive writeup. Very helpful

Project11 · May 10, 2019, 7:01pm

@Gatnom,
Absolutely. I hope more traders join in on this thread soon, so we can pick up a solid trading-based conversation.

I am still figuring out the best format so in the next few weeks I will keep changing the format/layout of my journal but ultimately, it’s about the market conditions and potential trade setups

Everything else is theory, practice and nonsense.
As @Mod-MattZ mentioned in his last video, the less decisions the trader can take the more clear and mechanical trading could become. The trick is for each trader to find out the most suitable strategy to fit each trader’s personal bias/style and to match the right strategy with the current market/instrument conditions. One would be best to consider fading breakouts in choppy markets and buy/short breakouts in momentum market conditions. Paying attention to that could really optimize the trader’s performance (imho).

The secret is really in the waiting for the best setup + volume accumulation based stop + current volatility based targets.

…the rest is again… the Waiting Game. I have days when I end up just watching the markets tick by tick and Not taking the trade. Yes, I do miss ton of trades but I like statistical advantage if possible.

Happy Trading,

P11Trader

Risk Disclaimer:
Trading futures and options involves substantial risk of loss and is not suitable for all investors.
You must be aware of the risks and be willing to accept them in order to invest in the futures markets.
This post is for educational and informational purpose only and this is neither a solicitation nor an offer to buy/sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this post. You are subject to lose all or more of your original investment. Don’t trade with money you can’t afford to lose or money that, if lost, would affect your current lifestyle.
The past performance of any trading system or methodology is not necessarily indicative of future results. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

Project11 · May 11, 2019, 2:34am

CRUDE OIL /CL---------------------------------------------------

After 10am EST Crude Oil Inventories I was looking at potential trades today.
Since there was no big reaction to the numbers, and no big volume or price breakout
appeared, I was considering a Fade trade in the Crude contract. Since there was no reaction to the fundamental news and it is Friday closing of the session, only a quick scalp appears to make the most sense, imho.

I found an opportunity around 10:18am EST backed by Solid Volume printing on the offers on my @SierraChart charts.
I also observed 2 areas of Volume Support Accumulation as evidenced by @Bruce volume analysis below and exit target was close to 2.5:1 and good exit appeared once more volume started accumulating on the offers around 61.97’s.

Risk Disclaimer: Past performance is not indicative of future results.

It wasn’t a big trade idea but I spotted it and wanted to share.

Happy Trading,

Project11Trader

Risk Disclaimer:
Trading futures and options involves substantial risk of loss and is not suitable for all investors.
You must be aware of the risks and be willing to accept them in order to invest in the futures markets.
This post is for educational and informational purpose only and this is neither a solicitation nor an offer to buy/sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this post. You are subject to lose all or more of your original investment. Don’t trade with money you can’t afford to lose or money that, if lost, would affect your current lifestyle.
The past performance of any trading system or methodology is not necessarily indicative of future results. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

Project11 · May 13, 2019, 2:48pm

Potential /ES LONG BIAS @ 10:07-10:08am EST
SETUP based on @Bruce_Bookmap Volume Accumulation below 2818’ Levels
STOPS ~ 2813-2814.50
TARGET 1 ~ 2822.75
TARGET 2 ~ 2826

Risk Disclaimer: Past Performance is not indicative of future results

Risk Disclaimer:
Trading futures and options involves substantial risk of loss and is not suitable for all investors.
You must be aware of the risks and be willing to accept them in order to invest in the futures markets.
This post is for educational and informational purpose only and this is neither a solicitation nor an offer to buy/sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this post. You are subject to lose all or more of your original investment. Don’t trade with money you can’t afford to lose or money that, if lost, would affect your current lifestyle.
The past performance of any trading system or methodology is not necessarily indicative of future results. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.

Project11 · May 14, 2019, 2:22pm

Potential SHORT BIAS @ 9:46am EST
Based on Iceberg Order & Large Volume Trading ~ 2830.75-32.75’ Levels

Potential STOPS ~ 2833.5-34.50’
TARGET 1 ~ 2827’
TARGET 2 ~ 2823’

@Bookmap @SierraChart @OrderFlow @Daytrading @EminiS&P

Risk Disclaimer: Past Performance is not indicative of future results

Kadwan · August 24, 2019, 9:28pm

I just recently discovered your posts and they are great. It’s a shame more folks haven’t joined in. Curious as to what you analysis was of Friday’s /ES session. It was quite a day!