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Learning to trade the ES using volume profiling
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Learning to trade the ES using volume profiling

  #611 (permalink)
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8-30 pre-market

Econ: income/spending, PMI, michigan

ON Profile: We have an 8.75 pt range on heavy volume of 213k. The hi is just 1 tick above pHi and the low is just 1 tick below yesterdays vpoc. Vpoc currently at 1638.5.

I expected the ES to rally into the close yesterday but it didnt happen. Overnight, ES ran back up to pHi but only 1 ticked it and has now come back down to the close area. Bigger picture ES has balanced for 3 days between the mid 20s and mid 40s. Strong buying responses from below but lackluster selling responses from above although without fail it continues to be weak into the close. I interpret that as a market that wants to go higher but is nervous about news, probably Syria. We have some important econ out today which might set the tone early and then its the last weekend of summer before a holiday so I expect it to die down early as everyone leaves. My bias is to look long as bulls have held above yesterdays vpoc. A nice 1 or 2 tick of the ONLO would be a great reason to buy IMHO targeting that 1645 area. If it goes back up there I am inclined to believe it will not hold this time as its been challenged 3 times already. However, if buyers evaporate again perhaps another weak close is in the cards.

Levels Above: 1642.75 HVN/pVAH*, 1644.75 BAH/ONHI***, 1650.5/1651 CHVN/nvpoc***

Levels Below: 1636.25 ONLO**, 1630.75 mc VAL, 1628.25 pLO**, 1624.75 BAL**, 1620.5/1619 CHVN/nvpoc***

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  #612 (permalink)
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8-30 trades and recap

1. Long 1635 after wanting to get long weak break of 1636.25 ONLO but market opened kind of OD down and pushed to 1634.75 so I passed. After a bounce then re-visit to low and only 1 tick I got long. Scaled after 2 min and .5 MA. 15 min in after going 2.5 pts my way it is now back to entry and we have a double bottom. Stopped after 20 min on 2nd lot.

2. Sold 1632.25 -1 vwap after ES has been rejecting it all day. Scratched after a minute because I think I rather would be looking long at lower levels then holding a short and vpoc just shifted to it. Would have been full winner.

3. Long 1629.75 after low was only 1 ticked and this is the area of the strong buying from yesterday. Stop is below pLo. Definitely a fade. Well its gone 5 ticks against me now and stopped a tick short of pLo but we have a decent buying response off it and now 3 ticks in favor. Went 7 ticks my favor but stopped at IBLO to the tick with a weak print-dislike. Scratched 1 after 20 min. Scaled after 34 minutes.

4. Long 1686.25 after pLo taking out by only 2 ticks. Kerry is speaking now so risky. Stopped after 3 min. Unreal, stopped a tick off the low...

5. Long 1632.25 vwap after rocketing higher up to 1634.75 then pulling back. Scratched after 2 min- think its going lower. Would have been full loser.
Went long again at 1632 and once again scratched. No need to trade in the middle of the profile.

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Recap
ES opened OD and just grinded lower all day. Value and vpoc shifted completely lower but not by a lot. Price closed inside value right at vpoc. Volume was pretty heavy at 1.65 mill. Profile shape was nicely balanced. Daily candle will show a nice lower wick but I'm losing faith in buyers down there. Today we went down to 1626 twice and bounced both times but its not good for buyers when it keeps going down there.

Today was an example of me not listening to what the market was saying. It started with an OD down and because I had a long bias I basically ignored it and took a whole bunch of longs. A fitting way to end the month as it has been terrible for me. I had one winning day in the last 2 weeks. Brutal. After starting out positively I gave all my gains away and then some. Net pnl, not concluding commish is about -500. Maybe this holiday weekend is just what I need in order to start out positively a new month and start making progress again.

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  #613 (permalink)
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9-3 trades and recap


1. Long 1646.25 dVAL after being strongly rejected from pRange and then pulling back here. First scale after 3 min and .25 MA. Stopped on 2nd lot after 11 min.

2. Sold 1646.25 after weakly printing mid/vwap/open 2 ticks above and we have TICK mostly negative all morning. Negatives is that so far the profile is pretty balanced and Im taking a trade in the middle of it. Well it went 6 ticks against me and stopped at vpoc to the tick and came back to entry so hopefully that is good. Now its gone 4 ticks my way but it needs to get through dVAL. Hmm, 7 ticks my favor and now back to entry. Scratched after 32 min. Awesome, they flushed me out and 2 min later i would have gotten a scale...And then second scale shortly after that.

3. Long 1632.75 pClose on pullback after not getting filled then watching it bounce 3 pts straight up and deciding it still made sense to try a long on a pb here, using a 4 tick stop because I really want to try a long at the 1631 nvpoc. First scale after 9 min and .5 MA. Moving my stop to entry again (don't screw me this time!). Stopped after 26 minutes.

4. Re-entered 1632.75 long after making new low by only 2 ticks. Scratched after it went down to low again. Nice buying response it looks like though.

5. Long 1633.75 after making another new low by only a tick and then ripping higher. I am definitely paying up here. Profile looks pretty funny above with a quadruple top around 1635.5 area so I think that area will get cleaned up and run some stops. Scratched and re-entered at 1633 after it went 4 ticks for then 5 against. Great, entry is now vpoc. Scratched after 7 min and went down to lows again. Done with this area.

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Recap
ES opened OAOR with a large gap up but could not sustain it and ended up coming back into pRange. Value and vpoc still ended up shifting higher but overall stayed basically inline with established value over the last week of trading. Price closed inside value and inside of pRange. Profile shape is double or even triple distribution. Daily candle shows nice rejection off the low but also that we have been rejected from above our current balance. I am inclined to believe lower prices are in store.

I missed the open due to a doctors appointment but jumped in shortly thereafter with some good trades. Second trade I scratched and as soon as I ditched it the market collapsed. I am so frustrated with being a pussy on trades. I tried various longs totally anticipating the afternoon bounce and they just wouldnt give it to me until I gave up. I was sure the 1631s would not hold on the last test as it had been tested so many times prior but of course thats the time it does hold and I dont get on board. I broke my losing streak today which is nice but overall I still give myself an F on the day. It couldnt have been a real nice day had I held on to my trades. Tomorrow...

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  #614 (permalink)
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9-4 pre-market

Econ: beige book

ON Profile: We have a 6.25 pt range on average volume of 139k. The low is just a tick above yesterdays LVN at 1635.75 while the low is kind of in the middle of that wide upper LVN zone between 1640 and 1644. Vpoc currently at 1637.5 and profile is shaped like the letter b. Strong rejection from the hi while the lower area has seen multiple probes.

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Yesterday featured a failed breakout to the upside of our recent 4 day balance area. ES came down to the mc vpoc at 1631 and picked up some buyers to close in the middle but below pHi. In the process the mc vpoc shifted up from 1631 to 1637.5 which has also turned into the most traded price this year except for 1540 but in the next few days it will shift to the entire mc vpoc. As always, vpoc shifts confuse me so I dont really know what it means in this case. As I write the ES is making a new ONLO. So we are looking at an OAIR inside value and inside balance open. I will look to fade around the 1643.5 MP single/LVN area as well as around the 1630.75 pLo and expect rotation within said balance.

Levels Above: 1637.5 nvpoc/CHVN, 1643.5 MP single/LVN**, 1650/1651 nvpoc**, 1655 mcHVN

Levels Below: 1635 ONLO/LVN*, 1630.75 pLo*, 1624.75 BAL**, 1620.5 CHVN/1619 nvpoc***

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  #615 (permalink)
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9-4 trade and recap

1. Sold 1654 gap close. Ok finally up and running after being down all morning. We have a very strong market but tons of volume being let out up here and a poor auction below as a nice ledge has formed at 1652. Will target 1648 for second scale. First scale after 34 min and .75 MA. So 130 mins it some news comes out and we just had a sell off from 1654 down to 1650 which normally would be my out but I didnt have an order there and it has bounced quickly back to 1652. Ok came back down and now I am out after 2:17. No third scale.

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Recap
ES opened OAIR inside value and soon enough catapulted higher thru pHi and closing the Syria breakdown gap. Value and vpoc shifted much higher. Price closed inside value but just off the hi, above pHi and prior balance. Volume was pretty lackluster although average at about 1.37 mill. Profile is very distinctly p-shaped. Daily candle is a pretty strong green bar. Its possible, I think, that today we have rejected the 1637.5 prior mc vpoc/CHVN and broken out of balance and will begin to rotate up to all time hi again. Have to see but I think it makes sense to give the bias back to the bulls now until/unless we fall back into prior balance.

I had tech issues all morning and literally only got solved maybe 15 minutes before I put that short on so it was good timing. I dont know if I would have gotten on that long this morning. I had the ONLO/1635.5 LVN as an area of interest but who knows. Most likely being down this morning probably kept me out of a bunch of failed shorts, like the 1643.5 MP single. The trade I did do was good and although it didnt work out the way I envisioned it, it did work and I almost moved my stop on the second lot to entry but last weeks sting was fresh in my mind and it saved me. Ok, two green days in a row, lets keep this going.

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  #616 (permalink)
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9-5 pre-market

Econ: ADP, claims, factory, ISM

ON Profile: We have a 6 pt range decent volume of 170k. pHi got taken out by a few points while sellers were unable to make much downside progress, failing to even get to the 1649.5 afternoon lo. Vpoc current at 1653.75 and profile shape is very balanced.

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So all of yesterdays gains were maintained last night. Today is a jewish holiday that also happens to be in front of tomorrows big non-farms report so I am expecting a balanced, rotational session with an upside bias. Ideally I would like to see the market open OAIR and drift lower and weakly tag the ONLO and then grind higher up to 1658 where it runs out of gas and just balances. I'm going to put 1644 as my line in the sand for bulls though as any further selling below that turns the tides in bears favor for a move back to 1637.5.

Levels Above: 1658 CHVN**, 1663.5 nvpoc/mc VAH**, 1666.75 CLVN*, 1669.25 GAP

Levels Below: 1650.5 ONLO*, 1648 LVN*, 1644 MP single/bottom of balance***, 1637.5 CHVN**

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  #617 (permalink)
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9-5 trade and recap

1. Sold 1657.75 CHVN after the 1658 CHVN was only 1 ticked. Market acting strong and pretty quickly blew through pHi so maybe I will get run over here. Might be aggressive on first scale as the ONHI was 1656.5 and if it cant get through there my trade might be toast. Dang its holding above it and ISM is out soon... Scratched one right before the number. Number is out and still hanging around entry. Tick is mostly negative, I think the short is good idea but not working so far. Well now I would have gotten my first scale. Im going to hold this 1 lot for 6 pts. There we go, 45 min in we get a nice 5 handle sell off. Holding for 6 pts here. Ehh, took 53.75 after 60 min when it bounced strongly off prior swing low.

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Recap
ES put in a balanced rotational day. Value and vpoc shifted slightly higher. Price closed near the low and yesterdays vpoc. Volume was horrendous at barely a mill. Profile shape is very balanced. Daily candle is a doji-indicating uncertainty or just consolidation ahead of non-farms. Going forward I say the bulls have the edge but everything hinges on tomorrow. A bad report, as to whatever the criteria is looking for, could instantly reverse said edge.

Basically what i suggested would happen in my pre-market analysis was spot on. I just wish it had taken out the ONLO first instead of stopping 3 ticks short and allowed me to get on the long. The short was good but unfortunately I had to cut my risk ahead of the number. I was going to add it back on if the hi got 1 ticked but that never happened. Second day in a row I took a short that just seemed like I would get run over and took forever to give a scale but it was the right trade. I wish the market operated on my timeframe but it doesnt. Third green day in a row but all small numbers, would really like to bang out a g some day...

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  #618 (permalink)
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9-6 pre-market

Econ: non-farms

ON Profile: We have a 15.5 pt range on heavy volume of 255k so far, just after the econ release. The hi is the 1663.5 nvpoc to the tick while the low is just above that LVN from 2 days ago. Vpoc currently 1653.25 and profile shape is undetermined I guess.

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Ok so the news is out and apparently the market likes it. We have had a nice reaction off the 1663.5 nvpoc but are holding above pHi so now what? Despite the excitement surrounding non-farms, it seems to me they usually end up being pretty boring days. My inclination is to look to be a seller around the ONHI if it gets rejected again for a move back down to yesterdays prominent vpoc and possibly lower but recognize that the ONHI would be a second test so not ideal. If prices are accepted above 1663.5 then I think the 1669.25 gap is on the table where I will once again look to be a seller. I think its hard to be a buyer but if we open and responsive sellers are nowhere to be found then I think you have to try the long side. I think we can place all time frames back in bullish camp again.

Levels Above: 1663.5 nvpoc/ONHI**, 1666.75 CLVN, 1669.25/1670.25 gap/CHVN***, 1675.5 ledge

Levels Below: 1658.25 pHi, 1654.5 nvpoc, 1648.5 ONLO***, 1644 BAL, 1637.5 CHVN***

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  #619 (permalink)
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9-6 trades and recap

1. Long 1652.5 pVAL on some pretty wicked selling, stepping in front of a bus but this area acgted as good support yesterday. Wow, stopped instantly. Horrible.

2. Long again 1648.5 after ONLO one ticked. Really massive selling, whats going on here? Stopped, took 3 pt loss, unreal. Some syria news about russia...

3. Sold 1652.5 dVAH/ledge from yesterday. Market appears to be rejecting syria news now so maybe the short side is done. Stopped, unbelievable, done for the day. Lost everything I gained this week and more.

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Recap
ES opened OAOR and then shit hit the fan only to end up with a doji. Vpoc ended up higher still while value put in an outside day. Price closed inside value and inside pRange. Volume was extremely heavy at 2.15 mill. Not even sure how to describe todays profile shape. So sellers still exist in the mid to upper 60s while lower 40's are too cheap. I think bulls still have a slight edge going into next week.

God, what a horrendous day. I dont know how I didnt perceive the sell off as a news event, for some reason I assumed it was just some longs getting flushed. 3 trades, a total of less than 7 minutes in the trade and more than limit down for my worst day ever. On a friday. This will be my last blog post. I will continue to journal privately but honestly I am embarrassed by my performance and lack of sufficient progress that I have decided to just stop this. I really should be making money consistantly by now but I am down (less than a g only but still...). I thank everyone here who has posted or private messaged me with help! I will figure this out eventually!
Mike

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  #620 (permalink)
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God, what a horrendous day. I dont know how I didnt perceive the sell off as a news event, for some reason I assumed it was just some longs getting flushed. 3 trades, a total of less than 7 minutes in the trade and more than limit down for my worst day ever. On a friday. This will be my last blog post. I will continue to journal privately but honestly I am embarrassed by my performance and lack of sufficient progress that I have decided to just stop this. I really should be making money consistantly by now but I am down (less than a g only but still...). I thank everyone here who has posted or private messaged me with help! I will figure this out eventually!
Mike

I feel your pain, we've all been there.

If you do decide to stop posting then I can only hope you will truly continue to do it privately. Based on what I've seen over the years, public accountability is really worth a lot in terms of reason to improve. You should not feel embarrassed by your performance as a whole.

The idea of a public journal is to hold you accountable, primarily from not repeating obvious mistakes. It's not about a right or wrong method, it's about trading the way you've set forth in your own journal. For instance, if you say "I am not going to trade on Friday, ever" then you trade on Friday, then yes you should be embarrassed for violating one of your rules. Now whether or not that rule makes any sense, well that is for you to find out after reviewing days, weeks and months of your journal and looking for the patterns that emerge.

One thing I would strongly encourage you to do is to go back from the beginning of your journal this weekend, and start making some notes. Read every post in your journal and just start writing down the stuff that jumps out at you. I am mainly talking about observing certain patterns (behavioral, psychological but also in your methodology) and see if you can walk away with a good solid list of things that you hadn't previously been aware of but that in re-reading your journal they really stand out as areas of interest or focus for you.

What I've found is that most people will see themselves repeating the same mistakes over and over, but it was not at all obvious to them until they really went back and read every journal post in succession. It is at that time these things really stand out.

Regarding today's market, really the only advice I have is based on my own experience and my own trading. I stopped trading both sides of the market (long and short on same day) a long time ago. If I ever trade in both directions in one day it makes me uncomfortable. For a scalper, you might allow yourself 1 trade in the wrong direction then all remaining trades in the opposite direction. I cannot say for sure, because I am not a scalper and I am also not you. It's really based on what works for you. But I can tell you that switching directions during the day has resulted in some of the worst losses I've had, so I just don't do it any more.

In that context, I am currently favoring longs on the ES especially after weak NFP. So this morning in the sell off I would not be interested in shorts and would just sit on hands until price came to a level that I was interested in taking a long position from.

Anyway, I don't want to focus too much on methodology. Everyone needs to design their own method and not trade someone elses, if they have any hope of being successful. But I do encourage you to review your journal and learn from what it is telling you.

Mike

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