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Happy Birthday To Me - My ES Trading Plan

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Happy Birthday To Me - My ES Trading Plan

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  #1 (permalink)
Los Angeles
Posts: 19 since Jan 2011
Thanks: 2 given, 27 received

Today is my birthday! I'm feeling generous today, so here is my entire trading plan laid out in it's full glory. This is not a joke. Enjoy!

Most of this is a cross post from another forum. I was shocked Shocked SHOCKED I tell you, when divulging my "secret" plan didn't ruin my edge in the ES. In fact, my setups seem to be working better in 2015 than any of the months / years that I have been profitable.


First off, a bit of disclosure… I do NOT make a living trading. I am an engineer and I love my job. My wife and I have a small child in the house, and I have scaled back the amount of time I am spending trading significantly. I do plan to return to form once the baby gets older, but I’m not in a rush. I’m not looking to be some sort of giant big swinging d*ck on the ES. I enjoy my level of involvement as it is, and I have no interest (at this time) in taking it further.

That being said, I made 310% trading the ES in 2013. I made just over 100% trading it in 2014. As of 2015, I am up 36% due to the fact that I have only been able to make live trades about once a week. I’ve had to flatten a lot of trades because my family needs me in the mornings.

I trade 1-3 contracts on the ES usually. I’ve dabbled with 6 but don’t do it regularly. I traded 20 contracts once, and the trade didn’t even go a SINGLE tick in my favor. I was humbled pretty quickly on that one, lol.

I just wanted to share this with you so that nobody thinks I’m trying to come off as some sort of know-it-all monster in the ES. I’m just a small time guy that takes a bit here or there when I can. This trading guideline works for me, I’m sure it won’t work for many of you. For every guy that sees value in what I’m doing, I’m sure there are going to be 5 that think I’m talking out of my butt. Okay here goes:

1. Trading is between 6:38 and 8:45 a.m. PST.

a. All new entries should be taken within this time window. NOTHING EARLIER THAN 6:38.

b. It is OK to manage an existing trade past this time window, if the target requires it.

c. Never, ever, ever, ever EVER use Globex price action to trade RTH. NEVER.

2. Rules apply depending on the current day’s open:

a. Opening inside yesterday’s range:

i. Known as an “Inside Day”.

ii. You are NOT allowed to have a net long position above the current day’s open on an inside day.

iii. You are NOT allowed to have a net short position below the current day’s open on an inside day.

iv. The open is a magnet on an inside day.

v. Look for reversals at the range’s edge, as opposed to follow through.

3. Trade at important levels only

a. Previous day High / Low / Open / Close.

b. Pre-defined “flip” levels.

c. Open outside of yesterday’s range, expect an extension of the range away from the prior day.

d. If price opens outside of yesterday’s range, but settles back inside, look for opposite side of the range to be tested. For example breaking yesterday’s low, but then trading back above yesterday’s low. This is one of the most common catalysts for major reversals.

e. No trading on the Friday of futures contract rollover.

4. Entries are ALWAYS

a. Off of important predefined flip levels only.

b. In combination with a support / resistance flip on the smaller timeframe chart.

5. Sentiment

a. The first 3 minutes of market order flow is used to define a bias for the day

b. Is the high or low “weak”?

c. What did Monday look like, in direction / volatility?

d. Where is the weekly open? How about the low / high? Be aware of the levels and how it would affect the weekly chart if a week went from negative to positive, or vice versa.

I am a perma-bull. I trade long probably 90 to 95% of the time. Even when volatility goes bonkers, I will usually sit out the first couple of days of the meltdown, and then start looking for support and trying to catch wider range longs instead of selling short. I see long setups easier, and so I like to stick with what I’m good at.

I trade on the 512 tick chart almost exclusively. I will only zoom out if I cannot ID a level of support or resistance on the 512. Even then, I will only zoom out enough to see just enough price action to be able to mark a line in the sand, and then I zoom back in. I pick my longer term levels the same way that I enter on the smaller time frame. It is basically the same setup for both: (SEE ATTACHMENT)

If I had dumb my system down to the smallest amount of information possible, it would be this:

1. Never be long above the open, never be short below

2. Trade RTH only

3. Trade on price “flips”

4. Use the order flow from the first 3 minutes of the morning action to judge bias

I’ve gotten pretty good at watching order flow at the open to set my bias for the morning session. I’m sure I could just be imagining it, but I feel like I get really good information in those first few minutes, and it has been pretty reliable for me. I wish I could give specifics, but I don’t really have any. I’ve tried hard coding things to make this part easier on myself, but I haven’t had success doing it. There is only so much information being presented (Orders being added, orders being pulled, orders being executed), so I think there is something there. For now I just keep watching it and using my spidey sense… lol.

That’s most of it. Nearly everything else is just the repetition of watching the same window of time on the same instrument for years on end. I hope it helps!

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  #3 (permalink)
SF Bay Area + CA/US
Experience: None
Platform: TS, TOS, Ninja(Analytics)
Trading: NQ CL, ES when volatile mrkts
paps's Avatar
Posts: 1,713 since Oct 2011
Thanks: 2,170 given, 1,698 received

with realistic goals and hard work and perseverance goes to show anything is possible by your post.

wishing only the best if you take this further. thnx for sharing yr insights

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  #4 (permalink)
Los Angeles
Posts: 19 since Jan 2011
Thanks: 2 given, 27 received

No problem, my pleasure!

A lot of my market read is based off of the open price, as are my targets. My ideal trade is an early morning selloff with the right conditions, where I feel there is a high probability of a retest of the opening price. I'll then get long below the open, with my first and only scale being at the open print. From there, I'll hold the rest of my position in hopes of an extension beyond the open price. The setup is different when there is a bullish bias, as usually I'm trying to buy retests of the open for continuation upwards.

I believe that there is so much information to be absorbed by just watching how price reacts to the open, as I believe nearly all open prints on the ES like to be retested. Either the open is retested early in the session (which then sets up the move for the day), or it is not retested early which sets up great reversals later in the session.

I use predefined price levels to enter the market. I will ID my levels be watching looking at past prices that have acted as both support and resistance in the past. I don't care of a price has acted as resistance 5 times before, if it hasn't also acted as support at some point in time, I ignore it. Since I'm usually aiming for open retests and defined levels, my targets will contract and expand with volatility naturally. I'm trying to only have 2 levels marked for the day, besides the open. It's safe to say that I'm never aiming for smaller scalps, and I am always fishing for the major trend for the day. During the volatility that we have had lately, my minimum target has been between 6-10 points.

Sorry for the brain babble, I'm just sort of typing it out as I think about it.

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  #5 (permalink)
Sydney, Australia
Experience: Intermediate
Platform: Sierra Chart, IRESS
Broker: IB, IQFeed
Trading: ES, SPI, ASX stocks, options
Posts: 399 since Jun 2015
Thanks: 169 given, 463 received

Great post, 100% inline with my thoughts except I trade globex so I obviously have to pick my own way through (as anyone should). Gives me confidence in my own system.

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