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Time Bandits. A Simple Trading Plan for the E mini Dow YM
The number of posts isn't a problem, its your journal - do what helps you. You might consider a daily recap though so you can collect your thoughts and review the posts/trades you made throughout the day.
I don't know what happened but the quality is horrible. I've made several other with much better results.
Just uploaded the last video for today and it looks a lot better than the other 2. I'll try to get Friday's trading up on Tuesday morning.
I'm going to vary the format from videos to pics and posts. Soon I'll have a pdf file of the whole system available for download.
I'll start breaking down the Daily Set Up on Tuesday. The videos cover the daily set up as well.
I'm looking for 10 ticks for the 1 Target (half of the position) and 20 – 50 ticks (what the market will give)
on the 2nd Target.
On Monday (beginning on the week)
I draw a trading range from the high and the low of the past 10 trading days.
I use thickest Red for the High and thickest Green for the low.
Count the up and down days. Where are we in relation to the high and low?
Up 2, dn 3 and up 5 with large candlestick body on the 10th day.
YMM1: We are still inside the 10 day range but trading at the high of the range.
Draw the high and low for the previous week. I use thin red and green bars. Use what works for you.
The previous weeks high often acts as support and the low as resistance for the first few days of trading
in the new week. Remove the line once they are no longer useful.
Daily: draw the open, high, and low of the overnight session. Blue for the Open and thin gray for the high and low.
The Open is my overnight line in the sand.
Look at the overnight session for the YMM1 on 6/1/2011. The short term trend is away from the open but is still higher than the low on Tuesday 5/31.
Draw a trend line from the low of Mondays overnight session to Tuesday's low and extend to this mornings overnight low.
The YM has consolidated at the trend line suggesting it might reverse after some profit taking here.
Watch the opening closely for early indication of a short term direction.
Daily: draw the previous days high and low. Thicker gray line.
Daily: draw the (RTH) day sessions Open. Choose any color. I use yellow.
Where is Price in relationship to the Weekly Open, the Daily Open and the Overnight Open?
I draw a thinner Red line at the opening for the week. This is my line in the sand for the week.
Where is the YM trading in relationship to the Weekly Open? Trading away is short term trending.
Trading that creates a even pattern of returning to the Weekly Open is generally trading sideways.
Sideways action where the YM trades in a range is where I make the highest percentage of successful trades.
Price in relationship to the Weekly Open, the Daily Open and the Overnight Open?
Wednesday's (06/01/11) YM trading was a classic example of using price and it's relationship to Weekly, Overnight and Daily open to determine the Daily trend. The Overnight Open was 12573 followed by the Weekly Open of 12544 and the Daily Open at 12520. All three were clustered in a 50 tick range near the 10 Day high. The Overnight High was just off the ON Open and traded under the Weekly Open into the Daily Open. The trend line from Tuesday's ON low through Tuesday's low extending into Wednesday's ON consolidation just before the Daily Open suggested the market might reverse the downward trend at the Open. But the YM started trading lower from the open and the ISM Manufacturing number was out at 10, so we needed to wait. Bad ISM number took the Indexes lower.
Price: I use candlestick formations and patterns to identify successful trades.
Every morning at 10:00 I look at the 30 minute bar (mb) for the YM, ES, TF and NQ to help determine the Daily Trend. My best trading happens when the markets are trading sideways. This offers me several opportunities to trade. The 30mb were clearly heading lower. YM, ES and TF all formed large body down bars (mb) and the NQ made a Tombstone Doji. See the second photo.
Now I needed to fine the best place to enter this market short. The 78% Fibonacci provided a perfect entry. I was going to introduce how I use Fibonacci Retracements (FR) much later in this thread but the market is making this happen sooner. I'm not much of a Fibonacci guy, although I look at the numbers daily. It's more for general reference and confirming previous support/resistance levels and pivot points. What I do know is this. Once the 78% Fibonacci Support or Resistance is broken, the markets will trade to the 127% Fibonacci number 75 to 85% of the time.
78% 12440 to 127% 12355. This signal is so reliable it is time to “load up the boat”. Trade Large.
At 10:22 place a Sell order @ 12440. Filled at 10:26. 1st Target @ 12430 (10 ticks) filled at 10:29
2nd Target covered @ 12405 (35 tick from entry)
At 11:34 filled Short @ 12410. 1st Target 10 ticks lower at 12400. 2nd Target 12370 for 40 ticks.
Here is the Classic Tweezer Bottom off the 10 Day Low
The YM traded lower to the 10 Day low at 12225
at 9:49 on higher volume. The Buy Signal was formed on the 9:49 512 bar @ 12240
Good trade but I was later to the game and did not get home in time for the 1st Time Zone
The Classic Double Top
Here the YM traded off the 10 Day Low back to the Overnight Open and this morning's Open in the 2nd Time Zone
of 10:00 to 10:30. The Signal came at the second attempt higher at the ON and Daily Open with the large Bearish engulfing 512 bar. At 10:43 placed Sell @ 12265 and filled at 10:50
I use Candlestick formation to exit my trades as well. Cover my 2nd position @ 12200 for 65 tick on the formation
of the 11:39 512 bar.
1600 tick chart (not shown) formed a better candlestick formation
then the 11:49 and 11:51 bar did on 512 bars.
Long @ 12200 1st Target @ 12210 10 ticks 2nd Target covered 12240 for 40 tick
The 12:36 and 12:42 512 bar confirmed the YM higher.
