re: Intra day S&P 500
1 trade a day is all you need, frankly. If you master taking the best shot in a liquid market like ES you can just take on bigger and bigger positions as you feel comfortable.
This is what I have realised. The flip side to this though is the validity of the method and it's longetivity as trading less frequently means less certainty in the statistical significance. As it is discretionary it makes it even more complex. I am slightly but not debilitatingly paranoid about my edge disappearing. I know for the hit rate that a series of 3-4 losers is unlikely so this is what I have in the back of my mind to make me re-evaluate.
I like your trading style, are you by chance a fan of futurestrader71? Your method has a lot in common with his.
Edit: I didn't read your first post, I see you are a fan of his. Good thing too, he knows what he's talking about.
It's probably a bit simpler to describe me as being a fan of auction market theory. Classic Market Profile analysis gives me the general market context I am operating in, especially having some context on who is generally in control (buyers or sellers). Dalton's book 'Mind over Markets' was like a revelation when I read it for the first time.
FT71 and noBSTrading (John Grady) is probably what I do for the practicalities of executing the intraday trades. I use the concept of the Naked VPOC's from FT71 as they are areas of liquidity that the market frequently returns to. I do like FT71's style but I don't always agree with his analysis of conditions these days. You are right though, he is a phenomenally good trader.
I think if I try and describe what I generally watching for, they fall into 4 categories:
1) The finish of the opening swing and catching this reversal. This is a very early play and it is normally accompanied on T&S with a complete absence of activity at that level (i.e. no counter-party wants to trade at this level) or you see the VPOC shift to this level (DOM reloading a level all the time) which tells me that buyers have shut off sellers(go long) or sellers have shut off buyers (go short). As it is early in the proceedings, the market then auctions back in the other direction.
2) Tests of key levels that form the low or the high in the first 0-90mins after the open (reversal again). These are generally reversal to the mean type trades with the target either being the VPOC or the other extreme of the range again. These reversals can be from the ONH, ONL, RTH-H, RTH-L, RTH-Open, etc, etc - basically some level you know is important to somebody right now. If I feel confident about the way T&S/DOM looks on the first test of these levels, I take the shot then. If it looks suspicious, I will wait for later in the session for the re-test.
3) On an OD/OTD/ORR kind of day, you don't really want to be trying to take a reversal, especially when the first 30m candle is v.long and has a strong directional conviction. I normally wait for a consolidaton/pullback and go with the trend.
4) Sometimes you can see accumulation for a breakout occurring through a level being blocked off and auction rotations moving progressively up. I will get positioned prior to the breakout and sell into the people who play the other side of the BO. This is a very late trade for me and happens infrequently.
So they are all fairly simple set-ups for want of a better phrase. The key to recognising them is screen-time and knowing when one opportunity has gone and another is presenting itself.
The most common cause of trade failure for me is when I take (1), it fails and then it actually becomes (2). I then have to make an executive decision on whether to hold the poor initial trade location or cut out. This post is a good example of this:
Failure to hold opening swing high
If there is a key level suitably close to the top/bottom of the opening swing then I will hold and assume a reversion to mean will occur. If it is too far away, I will bail and call it a day. How I define 'too far' depends on my conviction in the circumstances and this is tempered by all sorts of things like (i) did it open in or out of range, (ii) is this looking like I am the wrong side of an OD/OTD/ORR day type, (iii) are there any signs of OTF activitity, (iv) is delta giving me any useful information, (v) is there consistency in larger orders coming through on T&S, (vi) is the DOM thick/thin/odd, (vii) where is the VPOC in relation to where price is now, etc, etc
