A Professional Approach to Trading Futures

[steven46]

Today is Jan 10, 2025

We post our standard Markup showing the larger context (daily candles)
on the right side, and hourly candles on the left side.

For the daily chart, we see what looks like a potential reversal, based on
the liquidation (activation of resting orders below the previous "weak low")
We also note that the skew (red line) is in close proximity to the VWAP (Black
Dots), and that signifies a symmetrical market, meaning that the odds of a
move up or down are about 50/50 (currently). In our experience what this
means is that the market is waiting for economic news (Ave Hourly Earnings
and Unemployment). In addition, this morning the American People will get
to see the person they elected to be President, sentenced as a convicted felon.
A remarkable display of cultural decline.

Going forward it is our job to create scenarios so that we can trade this next
US Session. As usual, we have already reviewed previous historical charts
(Dec 6th for Ave Hourly Earnings, Non-Farm payrolls & Unemployment Rate)
We attach that chart below so that readers can see how that played out. Notice
that the initial reaction was significant, then at the open, the Market created a
strong green candle. Professionals view that "risk event" as an opportunity for
a scalp, and were able to obtain +5 and +10 if they stayed in the trade. We are
NOT suggesting that this session will be the same, only that there is a tendency
for repetition IF the data is similar.

Good luck

 

[steven46]

Hello Traders

There is an interesting lesson that can be learned from today's ES Market

The previous post contained two charts, The first was Dec 6th, and the point
was to show how the market reacted to previous economic data.. The pattern
was simple. At the release of data (prior to US session open) price reacted strongly
one (1) hour later the US session opens and it reacts similarly

Today the US session displayed interesting symmetry. At the release of data, the market
reacted strongly in the opposite direction (this is called a "tell") because it foretells the
the probable direction of price when the US session opens. Sure enough, the US session
opened and continued lower.

The reason I ask students to review prior charts is to obtain some idea of what to expect
IF the release of data is similar. In truth, it is equally important to understand the context
which in this instance, changed. Skilled traders look at both, in order to anticipate how the
market might react AND in order to create reasonable scenarios (price reacting both higher
and lower).

In this case, the market reacted to data that was SO positive, it created the impression that there
would likely be FEWER rate cuts in 2025 (according to the "FedWatch tool" traders rely on). This
caused the market to move lower. Was there a way to anticipate this? Well if you work for a top
tier institution and/or have access to the best analysts, yes. But if like most of us, you do not have
that resource available, what can you do? Simple, go back to the "Tell" (The initial candle after the
release of data). That candle (1:30pm London time) will often let you know (a full hour in advance),
which direction the market will take when the next session opens.

 

[steven46]

Hello Traders

Got up a bit early to look for continuation entries (short)
and found this

Just a scalp however I like these because odds of success
are high AND they are so predictable

Good luck

 

[steven46]

Difficult to do this (post) and manage trades properly

I am out here, probably early, but wanted to preserve
my scalp. I entered on a limit order, filled at 32.25
and am out at 25 for +7pts

As mentioned previously I trade units of three (3)

Nothing more until the US session opens (a little more
than one hour from now).

 

[steven46]

Finally, this reversal occurred just after my exit
as buy orders came in to lift the offer. Strong
move suggests higher prices at the open if we
can get above the VWAP

Whatever the case, we will adapt accordingly

Good luck

 

[steven46]

and here is the larger context for my decision
to short the market prior to the US session open

1) Break of Structure Fails in the overnight (Asia-London)
Session
2) Multiple test/fails on the smaller time frame
3) Statistical Skew concurs

When structure, price action and skew agree, odds
favor the move lower.

I expect this to be a busy day, so I won't be posting again
during the US session.

Good luck