The Daily Market Forecast... know the weather report
Thursday’s Blog Results: Price chopped sideways between volume levels with no trades triggering.
Today’s Trading Tip: Know the weather report.
The “weather” in this case is the condition of the market you’re trading.
Yesterday was slow for the S&P using Volume Profile. Other days there can be a dozen or more triggers. We can’t always predict the future, but we can frequently come close. Knowing whether the day will likely be wide or narrow range is very useful.
Here’s why: If you’re looking for a big move and the “forecast” is for a narrow day you’d be better off taking quicker profits. Conversely, if you’re in a trade that has room to run and the “forecast” is for a wide day you’ll have the confidence to let it run.
Here's two tools that will help you forecast the “weather:”
- Daily Average True Range (ATR) with a default lookback of 14 days. This is a simple measure of recent volatility. The higher the ATR the more volatile the market. Plot it on a chart and look for trend. The other use for ATR is trade-specific. Capture the Daily ATR in your trade log. You can return when the sample size is large enough to measure your performance based on the ATR and ATR trend. Keep a record in your trade log of ALL trades your strategy triggered, not just the trades you chose/entered. Your database will be accurate and grow faster.
- Globex Range is the measure from high to low of the chart between 6:00 PM ET and 9:30 AM ET the next day. The wider the Globex session the more likely the day session will be wide (and vice versa). Here’s a secret… once the Globex range gets too wide you’ll likely see a narrow range day. You’ll only know what “too wide” is by capturing this information for all your trades and reviewing.
If you want more details on using and interpreting these tools, join us tomorrow in our LookBack (5) session. Bring your questions. Get answers. Click here to register.
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4708.00 stop 4713.75 (5.75 risk). Same as yesterday.
Long Level: Buy 4633.25 stop 4627.50 (5.75 risk). Same as yesterday.
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 11th session.