Light prep this morning as the market has gone to sleep this week. I will look for sideways action and potential contraction today. There is no immediate significant support below until 1113.50 which is a long way down in this volatility. I will watch for an AM contraction and stand aside until something clear sets up. Once price clears this area and gets moving I will play the continuations off the move out. August trading can be slow and I will not try to force any action.
Hi Brian - Nice job on standing aside yesterday rather than risk money in a tough market. Something I am working at improving myself. To give me some guidelines can you talk about what signals you look for when to stay out and also if you have an average number of days per month that you either stay out completely or trade very very lightly? That would help give me some context of what I should be aiming for as I improve. Thanks mate.
ReplyDeleteHello. Thanks for your comment. Here are some things I look for.
ReplyDeleteThere are 2 things I look at...structure and feel.
Understanding market structure will allow you to premise for contractions but there is no way to know for sure. I also utilize my feel. By that I mean what is the pace of the movement? Is it mushy or sluggish?
If you watch the action for long enough you can tell what mood it is in. That does not help much.
I could write about this for hours but here is a brief overview that might help. Watch for these things:
1. Price has extended its previous range's high and low the day before and has come back inside the range.
2. Market is opening mid range with no gap.
3. Specifically on the ES the first few 2 minute volume bars are less than 8000 followed be decreasing volume.
4. Price established an inside high followed by an inside low (or vice versa)
5. Look at the market depth on your DOM. If the bids and offers are all way higher than usual, a grind is likely. I look for depth of 1200+ 5 ticks above and below. When it gets to stacked 2000+, price is going nowhere.
6. This month particularly, the fact that everybody is on vacation. Price has no conviction and many of the best traders or taking time off thus the game players are having a field day with the retailers.
Some of that may not make sense. Feel free to ask a follow up.