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I record financial events that occur (ex. Fed Rate Decisions, Job Reports, Earnings, etc.), record what the price was, and then re-evaluate that price level when the price returns to that area.
A quick example, the ES is trading at 3900 on Tuesday before the Fed Rate Decision. The decision is announced, another .75BPS rate hike and the market moves under to 3710. Two weeks go by, market moves down after the move but then trends back to this level. Once the market breaks this level, I determine that the market is facilitating trade above what I believe it should be valued at, and I start to build up a short position. Usually with 30 points on the ES does price revert back down. Obviously vice versa for moves going down to a price level and reversing back up. Also, this trade can last for hours but never longer than a day.
I will say that two things are very important overall themes for my strategy. 1. Trade with the trend and not with it. If the market is on the rise, breaking price levels that are previously bounced off of, accept the trend and trade with it. The less you fight yourself, the more profitable you will become. My best trading performances come from when I don't deviate from my trading plan and I follow the direction of the trend and less the emotions running through me when I'm in the red. 2. The philosophy and market structure described in the market profile plays a huge part in how I view the market environment and market framework. The best book for this is Markets and Market Logic by J. Steidlmayer.
I've built this strategy and framework towards the market through two years of trading screentime and a total 6 years of learning the market. I tried primarily the ES, MES, ZN, and other instruments that have strong events and may present trading opportunities. If little of my strategy makes sense, that's okay. I will be posting on this thread my trades, my wins and losses. I've made this thread to learn from my mistakes, hold myself accountable, and hopefully learn from others who share the same trading characteristics.
Ill be posting pics of my charts once i reach 5 posts and I'm able to lol.
Can you help answer these questions from other members on NexusFi?
And pretty much all trading indicators don't work. They're a scam enticing you to trade more and serve ZERO purpose. I use only my lines and volume. The volume profile on the side of my chart serves no purpose. If you think price can be predicted through lagging indicators, then most of what I will talk about will not make sense. Price is never affected by what VWAP, BB, Moving Averages, Elliot Waves, etc say. It's all BS. I have been stuck in this stage too long ago. You have to forget all that junk and aim to learn the market from a first principle approach. Learn how orders are stacked, how markets are basically an auction, how the price of a commodity is trading at new price level because its in a passive auction and etc. This is all learned through screen time. Stop learning theories and studies and start seeing what is true in the market. This is the beauty of the market IMO. It's like a science that you are constantly trying to discover. You try different methods, apply them, and see what worked and what didn't. You record your findings and continue on.
However, if you trading VWAPs and RSIs, then you are closer to gambling than you are to trading IMO.
Thesis: Price is now above the price level when the third consecutive interest rate hike was announced back on September 21st, 11 am PST. I look at this and I see that the market is trading above this level even though the market environment has not improved throughout this time. Price being above this level, it will attract longer time frame traders and revert below this level, hopefully, haha. As you can see in the image, I've typed out the events next to the price lines. The white and yellow lines are the most important, as yellow is older and white is newer. I will be shorting the ES after the opening today barring anything new.
Exit Strategy: I have the GDP Growth as the closest white line holding up price at 3775. That would be the ideal exit price level, though anything below the yellow line will suffice.
Still waiting out my entry for this short. This is always the hardest part, the patience that's required to hold off. I'm looking towards activity at 12 to 1 am PST as movement is sometimes fast during these trading hours. Opened under the close and is just ranging a little, I'll be fine if I can survive the boredom. Screen Shot 2022-10-30 at 4.20.58 PM
Entry: 3899.25
MES: 1 Unit
I made a mistake by entering the trade below the yellow line, which is one of my rules. I was away from the screen when the price dipped below and I rationalized to myself that I better buy some before the move begins. The arrow represents my short entry. As you can see, they went the other way but that's fine. I'm gonna be holding this for a couple of hours. Also note the lot sizes, I'm going super small so I can learn more and not blow up the account lol.
So an update on the MES position. Patience here has paid off so far. Priced has moved down below the line again and is descending. So far my thesis is right. Price was overvalued above the line and big sellers came into the market. Now I'm looking to find a good exit. It's 1:50 am here on the west coast, so time may be the reason I end this trade prematurely. Screen Shot 2022-10-31 at 1.49.14 AM
So I'm pulling the plug on this trade. Starting to feel sleepy, and I'm bound to lose money during that state. I sold on the pullback up, which was the worst time to exit by oh well. The Red dashed line is the entry, and the green dashed line is the exit on my short position. Just a 5 point gain. Screen Shot 2022-10-31 at 2.47.08 AM
Trade #2- MES Short
Entry- 3901.75
Woke up this morning to the price being below the yellow line, but quickly approaching it once again. It reached this level at 04:25 am, as you can see in the graph, so I knew that I would probably only get one more chance before the price is quickly rejected here. The less time it spends in an area, the more demand is in that price range. I've seen this trade setup happen a ton through screen time and I was just quick enough to catch it. The price blipped above the yellow region for under 10 minutes and I was able to enter my short position right at 3901.75, which is also the yellow line.
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