After a good day yesterday we got a bit of follow through and it ended up another decent day to be trading.
The market gapped higher and basically sold off nicely from the outset.
A had a downside bias so my plan for the day was to only take shorts. I got a couple of really nice moves on the way down that played out pretty fast.
I had to get short a couple of times at 71's as I got stopped out to the tick which is always annoying. I generally use a 3 tick stop and that works well for me.
Around lunch the market began to flatten out a touch and kind of got into a bit of a range.
If you look on the chart, the pink lines are the market profile ranges. Basically these are the areas that have the bulk of the volume. So initially most of the volume was between 71-62. So if price was at the upper level , 71, I'd be looking to get short. Which I did.
Eventually the market pushed through 71's and a really solid MP range developed at 80.
What I mean is that at 5480 - there were 900 contracts that had traded. At 5481 there were like 100. So that's a significant ledge if you can call it that.
That's telling us that there is selling at 80. So I took a couple of nice little range trades when it came and retested that level.
In the final 30 minutes we had the month end saga.
If you recall from earlier posts at months end or something similar, you can often see some of the big guys exiting positions.
We got a nice big seller at 83 - good for a few ticks. The move was quite big on the chart but I wasn't able to get all of that by any stretch.
Generally those last 30 minutes are a time for scalping the DOM. I'd even put the charts away and focus hard on the DOM.
Another decent day though.
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In the example that I mentioned, I saw on the DOM there was about 40 contracts on the offer (5483) at the time - however price kept on trading there. Maybe 500+ contracts traded at 83, yet the offer always kept on staying around the 40-50 mark.
What that was telling me was that there was a big seller there who kept on refreshing his order. Price just couldn't go any higher in the short term because this big seller was trying to execute his order.
If you watch the DOM for a while you'll start to see this kind of thing.
If I get a chance I'll post a video so you can see it happening live and it might be a bit easier to see.
Also if you are using ninja trader there's a great little free add on indicator that I'd encourage you to download.
It's called the 1 lot trader - or something like that.
It's just a DOM that shows all the volume trading at each price level and it will let you see the big buyers and sellers - which at the end of the day is what trading is all about. It's like a free version of what you get with Xtrader.
All the best
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