Gap Open play on the Russell Index

Hi Everybody,

If you remember a couple of days ago I talked about a “Gap Opening” play where we look for a market to make a move into a DP within the first few bars of the trading session, usually after a Gap Open. Well, this is exactly what happened on the Russell Index yesterday, where the 3min Chart bumped up into DP resistance, where a red (sell) reversal bar unfolded. The market then declined straight into the “opposing DP” when you should have started to trail the stop just above the bars high to protect the profit.

The result, a nice +6.4R Profit (ignoring slippage and commission).

Yes, this is an Advanced trade, but I did cover it just a few days ago, so it should have been fresh in your minds

Thanks, Steve

One for the Advanced Traders........

OK, the 3min NQ did rally later, but I hope all the Advanced Traders among you noticed that this rally unfolded as a 5-wave pattern,. Then a reversal started to unfold right at the Typical Wave 5 WPT which was also right at the DP. And all of this on Stochastic divergence as well.

As such, this was a good short for the Advanced Traders among you.

So looking back, MTP was able to nail both the low of the day and the high of the day on the NQ – not bad for a days work :-)

Thanks

Steve

What about the TS3 buys later ?

OK, I know you are all going to want to ask about the TS3 buys that unfolded on the 3min NQ a little later on.

Well, you should all be able to answer this for yourselves, because we have just seen how the 15min chart had just reached larger degree DP resistance and was now declining. So what was the “larger degree” trend at this time ? Exactly – down.

Yes, I know the NQ did rally later in the day, but trading is all about what you knew “at the time”, and yes, ,markets will go in the opposite direction than anticipated sometimes, this is just trading. Successful trading is not about trying to “predict” the future movement correctly, it is about Risk control, keeping your losses small and your profits large. This is something most Amateurs traders simply do not understand, you don’t have to “predict the future” to be a successful trader....

Thanks

Steve

OK, let’s now move down to the 5min Chart for the actual trade entry.

As you can see, this had you long from the low of the day (which is always nice for a day trade). The target is then the “opposing DP”.

The result, was a very nice +11R Profit (ignoring slippage and commission). Not a bad start to the day :-)

Steve

Gap open play on the 5min NQ

Hi Everybody,

The first thing you should do each day, before the open, is to look at the larger degree picture (on your 15min Chrats), so you are “prepared in advance” for larger degree DP’s.

If you had dome your homework yesterday, then you would have know that the initial gap down on the NQ landed right at 15min DP support, please see Chart to the right.

The Advanced Traders among you should all know my “gap opening” play, which is where you look for a trade after a gap opening that then starts to reverse at DP support or resistance. Well, this is even stronger if it unfolds at larger degree DP’s as the NQ did yesterday.

So let’s now look at the 5min chart, for the actual entry.......

Steve

OK, here is the 3min ES chart.

As you can see, the market just meandered higher (just as the 15min Chart suggested), but (and this is the important part) there were no abc corrections off which we could have got long.

Amateur traders simply do not understand that you need not trade every day to be successful. They see a move, then want to be in it, with no regard to risk or discipline. This is why amateurs fail. Successful trading is all risk control and having the patience and discipline to follow your plan and wait for the ideal setup. And some days that does not unfold.

So again, it is days like this that build the patience and disciple that is vital if you wish to succeed and become a professional trader....

Steve

15min ES on Friday

Hi Everybody,

The ES on Friday was a perfect example of how traders need patience as well as discipline.

After a good day on Thursday, Friday was quiet. Why do I say this ? Well, (as usual) lets set the larger degree trend with the 15min Chart. As you can see, the 15min ES was up off the DP and Wave C low the prior day. So you should have been looking for buy setups on the shorter term 3 and 5min Chart during Friday.

So let’s see what unfolded in the next post......

Steve