Recently, I was on the phone with one of my students going over our methodology as the market unfolded in real time. I thought I’d share the notes I wrote down for that day…to teach you how to look at the market as it is unfolding in real time after the opening. My purpose in reprinting this write up for you is to teach you how to keep notes and stay focused while trading. At this point, the concepts I want you to get out of this article is not to specifically go over all the details of each trade setup…but, I want to teach you how to think and react to the market as it is unfolding in real time. I thought this write up would be the most productive way to answer the questions I got about trading in a relatively tight range-bound day.
I dedicate a special website at AskNateBrooks.com for people to ask questions where I focus on replying to questions submitted by dedicated entrepreneurs like yourself or people who are searching for a way to get themselves above all this financial crisis issues. Today, my goal is to simply help you figure out how to begin to look at the market as it is unfolding in real time.
Please feel free to call me at 512-748-4237, after taking some time going through this site’s materials, if you have sincere interest in changing your financial future with our Trade and Grow Rich Program. This is my real phone number and I am willing to help you build a financial wall around yourself and your family. Our focus at www.natebrooks.com is to mentor and coach people(novice and professional traders) to achieve success rather quickly with The Nate Brooks System to Trade and Grow Rich with a Harvard MBA.
I still do my private, one-on-one, mentoring sessions with clients that prefer interacting with me on a one-on-one basis. For those students I recommend that you start at the top right of this website and start reading the information, after reading through the materials that I provide for you on this site, as a service to you, then please feel free to pick up the phone and dial 512-748-4237 to speak to me if you have an interest in private mentoring.
ES Emini Market Opens with a Gap Up of approximately 7 points
The market opens up at 934 with a 7 point Gap UP. For my students, I never recommend that they just automatically take a trade to close the gap. I am aware of the many statistics that indicate the various percentages of the market filling the gap…etc. However, it is criminal to teach students to just take these gap trades as automatic trades because the risk to the person taking the trade is too great because if you do take the Opening Gap trade setup, you will have to have a very “wide” protective stop, which if it is hit, you will lose a lot of money. For what it is worth, the market went about 9 points away from closing the gap so all the people who took the gap trade…most likely got stopped out with a big loss of money.
To make these notes simple for the readers of this article…I will refer to the three charts that I am using as my Trend Chart, Entry Chart and my Gap Chart.
I notice the gap is below the opening price action on my Gap Chart. My Trend Chart is telling me that I should be looking for longs…if this is true, this means the gap will NOT be filled immediately after the open. This means…Be Patient…you need to see how the market unfolds…the first 12 to 15 minutes the market price action is sideways…all of the sudden, the market price action shoot up fast from the range…do NOT jump in on this price action because with a fast move like this, the market can reverse fairly quickly in the opposite direction…the market continues up and stops just short of the R2 for the day. There is a long wick on a Candlestick Closing Reversal Bar.
The market went up and back down to the Opening Price in 45 minutes. I did not take a trade because the market looks like it is now shifting to rotational market, based on what I am seeing on the Trend Chart per our trend rules…however, I notice that IF the market breaks the opening price going back down…that this is a great opportunity to see if the market wants to extend itself in the direction of the gap, at this time. I wait until the price breaks the opening price by 3 ticks, looking at the Gap Chart and I enter the trade with the intention of going to 50% of the width of the gap…and expecting the price to not go past the Value Area High at 929 to the short side. I take this trade setup and it hit all three of my targets which were set at 7, 14 and 15 ticks respectively for each one-third of the position….Net 36 ticks for the three contracts used for that trade setup.
Now, the trend of the Intraday market is Down…therefore, I am looking for short trade setups on my Entry Chart. I am take one trade setup for short targets of 3 ticks and 5 ticks for a 2 contract position size…it is now 9:30 am Central and I have two trades…with this second trading netting 8 ticks for two contract position size.
The market reverses at the 61.8% point from yesterday’s low to today’s high…the Fibonacci traders are now going long…while our students are still looking for shorts based on our methodology…so we do NOT take the trade long…we are still waiting for our short setup…that comes at 9:48 am to go short per our rules…thank you Fibonacci traders…because with our methodology…these traders are, many times, on the other side of our transaction. On this trade setup we hit 7, 14 and 21 ticks and we are still looking for short trades and it is now 10:15 am Central…so this is our third trade and we hit 42 ticks.
We have a nice Trend established on the Trend Chart so that now, after 11:15 am, I am now looking for long trade setups on my Entry Chart…at 11:35 am my trade triggers long using 2 positions and I hit my 3 and 5 tick targets…that is now trade number 4 and another 8 ticks.
Right around this time, about 10 minutes later, I noticed a Hidden Divergence Trade Setup showing up on the Trend Chart. So, here what I do as soon as I notice the Hidden Divergence Trade Setup:
- I draw the trendline on price and the trendline on my indicator because I need to confirm the correct slopes of those two lines to determine the directional move of the trade setup. I do this and in this case, the price should be going back down… even though I should be still looking for longs based on the Trend Chart. But, here’s what I know, when I see hidden divergence, this trade setup seems to work a great percentage of the time so I will take this trade setup…I hit 8 ticks for 3 contracts and a net of 24 ticks on this trade.
- Now, after I have confirmed the Hidden Divergence, and in this case, I have determined that the HD will yield a short trade, I then draw a trend line from the low of the day to the next pivot low and extend it…looking price action to break that trendline as the entry chart. I also draw a line on one of the momentum indicators so I can determine the exact time that things shift directions.
- There are two entries for HD…the first is the initial breakdown and the second is the first pullback to the price trendline that I just drew in point number 2.
Here’s how traders get tricked…many times there is a trade setup forming “with the trend” and at the same time another one “against the trend”. You must determine what rules you will use to make the decision. So, for example, here’s what I found in the case of HD trade setups…if you take the first initial trade breakdown, return to the price trend trade, you take that with short targets and reduced position size. If you wait for the return to the first pullback to the price trendline, that was just broken, then you can take that trade with relatively longer targets and your normal position size.
I use the Ninja Trader Charting and Execution platform and I have two strategies pre-programmed in the ATM Strategy section of the Execution portion…one for when I believe the trade setup looks good but, it has a lot of resistance to get through…with this I trade in 2 lot position sizes with shorter targets. The second one is for when I believe the trade setup looks good but, there appears to be some distance to the next major resistance area…with this I trade my normal 3 lot position size with my longer targets.
So, one of the decisions I make each time before entering into a trade is which ATM Strategy will I use when executing the trade and then, I place that as my selection before entering a trade. I have a one page checklist that I have right by my computer that goes through the steps I need to do each time I execute a trade setup. On this checklist, I have the rules that I will use when I have a possibility of conflicting trade signals. With our system, we trade only in the direction that the Trend Chart tells us to trade in…however, sometimes, when the Intraday price action is shifting from down to up or up to down, you must WAIT for the Price Action to SHOW you which way it will move at that Make or Break Number…whenever I take a trade like this…regardless…I use the shorter targets and reduced position size for the first trade setup.
Let’s add up these Net Ticks… 36 + 8 + 42 + 8 + 24 equals 118 ticks @$12.50 per tick. You do the math for yourself…but, no matter how you slice it…this would have been a decent trading for anyone. With a decent trading methodology, you can make money trading…yes…even in a tight range.
More importantly, if you started writing out your notes each day…in a manner that makes sense to you…you can begin to create a written document that can be useful to you when you study your trades during the day or whenever you take the time to review your trades. The better you document your trades, the better trader you will become.
Trade and Grow Rich Trading System…has been designed…so the Trend IS Your Friend
The Trade and Grow Rich Trading System was designed integrating the confluence of three independent trend trading methodologies based on three completely different longer term, intermediate term and shorter term trading criteria which accounts for the various timeframes that influence Intraday trading setups. What this means to traders is this…all the trade setups in our system have been designed and developed AFTER you know the combined directional influence of the major factors that influence the trend while trading on an Intraday basis.
In short, another way of stating this is that this system was first designed to make the trend your friend…and then, for you to take trade setups that make sense based on already knowing the combined directional influence of the major factors that influence the trend, while trading on an Intraday basis.
Our students have the confidence to take their trade setups, without second guessing themselves, knowing that the odds are extremely high they are taking their trades in the correct direction. This is a major advantage (an edge over other traders) when trading on an Intraday basis.
One of the keys to trading with our system is that we have a specific trade setup called the Anaconda Trade Setup which acts as our main filter to determine the primary directional influence of the longer term timeframes on the upcoming Intraday trading session. As part of our every day preparation, we look for the directional influence of the most recent Anaconda Trade Setup. With this information, we are able to determine path of least resistance for Trend trades and we will also know what is now considered a CounterTrend trade. Aligning our trades with the most recent active Anaconda Trade Setup, gives our traders an edge in the marketplace.
I teach the details of this methodology only to the students who complete our entire mentoring training program. I want them to have the edge when trading on an Intraday trading basis.
The bottom line for you, or anyone for that matter is this…if you want to get great results…you have got to make different decisions…you have to “do the deal”…you have to “do the disciplines”…you have to focus on disciplines of “being and doing” things the right way…you can’t be lazy…you have to pick yourself up off the couch and put yourself back on the court of life…you have to get in the game and start doing something…getting into action…stop being scared…go for possibility in your life…because anything is possible for those who believe and get into action and commit to themselves that they will make New Decisions and Get New Results!
Do you realize that you don’t have to settle for less? Do you realize that NOW is the best time to take advantage of learning the skills needed that can make your financially independent? Have you taken a moment to see the fear in people older than you…you know… the ones who still have to work at Walmart at age 72 or the ones working as waitperson’s at your local restaurants? You don’t have to have any specific trading knowledge right now…we can teach you from scratch… you don’t have to be afraid. Do you realize…that you can do something about your situation…and that’s right now? It takes courage to change your life…but, the first step right now is fairly straight-forward…simply pick up the phone and dial 512-748-4237 and I’ll help you get your questions answered with straight-forward answers that should help you whether or not we work together.
Trading is the best “one person” business in the world. Go to www.natebrooks.com to start learning how to take control of your finances and your life. If you have any other questions, please feel free to submit your questions to www.asknatebrooks.com, I will be happy to provide you with the answers to your questions.