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A lot has changed and overnight volume is very decent on the ES and a few other markets. Now that the asians have taken to trading volumes are great. Contracts such as the Euro FX and British Pound are also excellent in the overnight session.
Taking counter trend trades (catching falling knives) is going to be very difficult for you as a new trader. I would cut those trades out completely for now. I would also wait for the bars to close before taking trades...on trade 3 you got short on a bar that closed up...and then you held it for your stop. Consider going to a 3 minute chart our smaller for entry timing if you want to trade flag breakouts.
So, just go ahead and trade whenever the market is open?
The other thing that prevented me was possible whipsaw at the opening of U.S. Market. It could be quite volatile. Any ideas how to avoid it besides getting out of a position 5-10 minutes prior?
By the way, is there a counter of sorts that shows much longer CME is open on a given day? I am aware of the schedule on cmegroup site. Looking for an actual countdown clock.
I remember about counter-trend trades. The question remains, how to determine a trend? At that particular trade I was expecting the price to go up for another try of the prev. high and it did not. Should we consider anything below EMA as a downtrend, and anything above, the uptrend? There should be a simple definition.
Going M3 for entry timing is smart. Will try to follow that. I was thinking about M15 as the flag there was much more precise.
Triangles are horrible to trade. Its normally indecision or a 50% fib retracement of the larger move.
I would look at that price action with the inclusion of two range extremes in mind (the white lines) and then fade the edges. So you would have 2 attempts at a long on this:
1. the blue line but you might be a bit late on that one
2. If price drops further to meet the white demand line
if you were to go long now I would say there are 3 possible targets:
1. the top of the triangle you drew.
2. The white supply line.
3. The orange descending line.
I dont know whats on the left of your charts but similar sort of thing for a short.
OK, here are some thoughts about overnights, and a bit about MA's.
Overnight:
Here is a 30-minute chart of ES for last week, showing the entire session, day and night. You can see that volume is fairly quiet after the NY close, during the "Asian Session" (it's called this because it overlaps Asian markets' periods), up until about 3:00 AM (US Eastern Time), when the Europeans start to come in. There is a volume explosion at the New York open at 9:30 ET, which drops off between 11:00 and 11:30 ET as the Europeans leave. Then there is a spike near the 4:00 PM ET close of the NY Stock Exchange as positions get finalized near the end of the day.
This pattern happens every single day of the year, with occasional variations depending on events. You can see that price moves tend to be stronger and faster during these "Regular Trading Hours" (RTH) also, and that activity starts to speed up as the regular open is approached (traders making early guesses about the open -- which has its risks of being fooled . Look how many times there is a sudden move or a reversal after the open.)
The obvious feature of this chart is that very little trading goes on during non-RTH hours. So is the activity significant? Can you trade the overnight? Yes, but there are long stretches of nothing going on. Do overnight trading levels and trends matter for the regular session? Some traders take them into account, some do not. The next two charts show ways to completely exclude the overnight, or to include it while diminishing its importance.
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Here is the same 30-minute chart, showing only the regular session (9:30 ET to 18:00 ET.) You can see that gaps are frequent because large chunks of time, and therefore trading, are removed when the overnight is removed.
In the past, all stock trading took place in this window (actually, only up until 16:00 ET), and this is the period of the old "pit session" in futures (up until 16:15 ET), when orders were executed face-to-face in the trading pits. Many traders -- Brooks is one -- only trade this time period, and some (including Brooks) mainly use this type of chart. Often these traders will also look at highs, lows and other levels from the overnight as well. (These levels probably will become less important as the day moves on, and probably much less so after the European close.)
Obviously, a 20-period MA (or any period MA) on this chart will be very different from the same period MA on the first chart, because the data is very different.
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Finally, here is a tick chart (this is 20,000 tick). Tick charts are not based on a time period -- each bar is complete when a certain number of trades ("ticks") are completed, in this case 20,000. So you can see that there are relatively fewer bars plotted during the overnight session, because there are fewer actual trades. Then the regular session expands and takes up most of the chart, because that is when trading is most active. This gives some recognition to the lighter overnight trading -- it doesn't just cut it completely out, but gives it less importance on the chart. You can also use a volume bar chart, where the bars are each of a certain number of contracts traded. This will be similar to the tick chart, but there will be no volume variation per bar.
Which to use? Depends entirely on what you are looking for, and what use, if any, you decide to make of the overnight trading. Traders make their own decisions, and none is necessarily right for everyone. You can actually trade with any of these types of charts, and do well with them. Ninja will let you produce all these types of charts (and others). Experimentation is fun.
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Moving averages: I think in his books Brooks uses a 20 EMA of a 5-minute chart most (maybe all) of the time. In his online posting he will often refer to the 20 EMA of a 15 minute chart and of a 60 minute chart. I have seen him use SMA's on daily and longer charts.
Moving averages are very much a matter of individual discretion and preference. Obviously, a 20 MA of a 15-minute chart will be approximately equal to a 60 MA of a 5 minute chart because the bars are 3 times the size. If you used a 1-minute chart (as some do), a 20 MA would be different still.
The point is that no MA setting is necessarily ideal, nor the only one to use. People use all sorts, and many don't use any. Whether to use or not use this or that MA, line or whatever tool becomes almost like a theological debate, and about as useful (my opinion .) Use them if you find they help you.
But these are what Brooks uses, for what it's worth.
As noted in my last post, I have been pulled away and distracted more lately with parenting the kids while they are off school for the summer. If they need to interrupt me with something, I get frustrated with missing posts. So I've decided to put …
A search by users brought him up, then if you go to his profile page you can see the posts he has made and the threads he has started.
I found his approach of commenting on each bar very helpful in establishing situational awareness, thinking more about set ups, and slowing down to gain perspective and be thoughtful about when to enter trades. Al Brooks does the same thing, for some reason the labeling sunk in and became a habit after reading TalB's thread.
Good luck and take your time researching stuff, it will come.
. Look how many times there is a sudden move or a reversal after the open.)
