The Daily Market Forecast... Lesson Day

Today’s Lesson: Why volume levels work.

Normally when you insert a volume indicator/study on your price chart it appears on the bottom in histogram format. This shows you the volume during the time interval of your chart (5-minute, 60-minute, daily, etc.). This can be useful as dramatic changes in volume may affect price.

If you’re day-trading futures contracts the volume you’re better off using is volume at price (see the chart above). Notice that the majority of transactions occurred at very specific price ranges. These tend to be fantastic reversal and breakout levels.

The key to any trading strategy is to get the “math” in your favor. In other words, the combination of your win/loss percentages (trades) and your average win/loss (dollars) needs to be in your favor. This means you need to manage the risk very well. By using a fine-tuned volume-at-price tool you can laser-focus on great setups with smaller risk. We use tick data for the ultimate granularity.

For Tue 211005 (Plenty can change by the open, be aware.)

Globex Review: Volume Profile during the Globex has been consistent lately. Last night 2 takeable trades; a small loser and a 10+ point runner.

Day Session Analysis: Sentiment is modestly bullish with minor dip buying. Stats suggest shorts will perform better. Taking trades in either direction. Tuesday (both sessions combined) garnered 20% of all the gains over the past 5 years in dollars. Reversals and Breakouts are about even.  Trading ES/CL/GC using BB Rev with MORE new filters (download the new Edge). Looking for SPXW credit spread ladder opportunities.

S&P 500 Futures CPL: 4279.75/4285.75 We’re trading ABOVE the CPL (short edge below, long edge above) and WITHIN the equilibrium 4302/4307.75 (open below = short edge, open above = long edge).

 

The World Index: (+100/-100) REVERSES from -25 to +25 in a bullish-leaning world (shorts outperform longs). China closed for holiday.

Catalysts: International Trade @ 8:30. ISM Services Index @ 10:00. Another Chinese developer joins Evergrande in the “default” ring. FB whistle-blower testifies.

Trends: 60 min UP, daily DOWN (shorts outperform longs).

Inside day: Win/Stop% about the same, longs delivered 40% more profit. Opening around +0.40%. $TRIN XMA 0.85. Long term outlook is “hold” still.

Globex: The range of 41 (possibly wider by the open) suggests a day session range around 55 points on a RISING ATR of 62.90. Prior forecast around 61 points, actual 77.

Trade Well,

Mike Siewruk

P.S. For a free “mini-course” packed full of lessons on HOW to trade the Blog… Watch this video.