The Daily Market Forecast... entry edge.
Wednesday’s Blog Results: You did well! The suggested long level ran 18 points on the first touch and 18.25 on the second (see chart). Team Members saw the breakout afterward that ran for 24.25 points to the next volume level (see chart).
Today’s Trading Tip: Entry “edge.”
The chart above has a few good trading tips. The strategy followed is called Volume Profile. Signals for entry both long and short, reversal and breakout, come from high volume price levels.
The entry rules are simple (follow on the chart):
- Reversal: Always enter at the first or “inside” line of the price level. Price reverses from within 1 point of that entry 31% of the time. If you’re waiting for a late entry to minimize risk you’re missing plenty of winning trades. Either accept the risk or lower your position size.
- Reversal: The second touch worked fine. Notice that price went deeper into the level. Second touches are fine but less effective. After a solid winner you may consider passing on the lower probability trade.
- Breakout: Always let price breakout at least 3 ticks from the “outside” line of the price level. Allow one candle to close on the breakout. Place a limit order AT the outside line to catch the retracement entry. You will miss some fast breakouts with this method but the evidence shows you’ll save more by avoiding the false breakouts or “fakeouts.”
- Reversal: Stopped out. You’ll notice that price level is called “tertiary.” This means it was still high volume, but not so nearly as much. You might be thinking that is why the trade failed. The evidence tells us that is not the case. It was simply a losing trade.
You probably have more questions. Get them answered. Join me in our weekly trade review session where you can ask questions, meet our team of traders, and watch us analyze EVERY trade setup from the prior week. Click the link below.
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4628 stop 4633.75 (5.75 risk).
Long Level: Buy 4494.75 stop 4490.00 (4.75 risk).
Trade Well,
Mike Siewruk
P.S. Join us every Saturday morning @ 10:00 ET for our weekly LookBack (5) trade review session. Every trade for the week is analyzed. Now open to the public. Meet the team. Ask questions. Register here for the December 4th session.