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Not trading this week, as I am using this time to be fully present with Ruby during the day and have fun / explore various interests of ours before she heads back to school.
But - I thought reviewing $NQ_F in yesterday's session was worthwhile. This is a 100% classic action.
But - I thought reviewing $NQ_F in yesterday's session was worthwhile. This is a 100% classic action.
It's ALL about which side is stuck in trend because the algos know people must exit by end of session due to the huge difference between initial and maintenance margin.
Initial Margin is ~$500
offered by most brokerages, while overnight maintenance is $12,000.
VWAP is king.
Initial Margin is ~$500
offered by most brokerages, while overnight maintenance is $12,000.
VWAP is king.
Momentum of the Price Delta matters more than nominal price itself. Cap risk & Capture delta.
Very straightforward day. Morning rejection of +3stdev zone led to breakdown at +2STDEV and a snapback to the -2STDEV vwap as opening range breakdown momentum picked up.
Very straightforward day. Morning rejection of +3stdev zone led to breakdown at +2STDEV and a snapback to the -2STDEV vwap as opening range breakdown momentum picked up.
Why was there such a violent snapback? Context and nuance. A strong market filled with market participants that have been rewarded over and over again when BTFD'ing, and an up-sloping VWAP. Combine with $ES_F pushing for new ATH's.
Hard to force a winning side to capitulate. Bears stuck.
Standard action. simple day. Permabears continue to be stuck.
1 Day this will change, but more probabilistically come on a day that has a more sideways or downsloping vwap, where price is stuck below, trapping late longs.
Standard action. simple day. Permabears continue to be stuck.
1 Day this will change, but more probabilistically come on a day that has a more sideways or downsloping vwap, where price is stuck below, trapping late longs.
The irony is that it is usually *not* the permabears that will capture the turn; rather, it will be the people that consistently follow the price action and stay objective about the momentum of the trade that will capture it.
Smaller, players will capture more of a down move, because they won't be forced into a mental state of being too quick to cover.
What often happens when people force a short or who have been fighting it day in and day out, is that the slightest pullback gets covered in relief.
What often happens when people force a short or who have been fighting it day in and day out, is that the slightest pullback gets covered in relief.
To add insult to injury, they might be the last to finally get long a trend and revenge trade the swift move down by getting long.
Counter-trend trading can be done, and it can be done well, but it cannot be done at arbitrary levels. Prepare, anticipate and execute. Know where you are wrong, know in advance your style for where you are allowed a range of entries over a band of S/R, rather than a single price
If you are not executing this way as part of your normal mode of operation, avoid counter-trend trading entirely, as it will lead to disastrous results. Build a strategy and test it out with small size. If you can't make money in your strategy small, you won't improve it heavy.
There are times the VWAP acts as an attracting magnet. There are times the VWAP acts as a repellant. There are times when price squirms around it. No 1 way to utilize it. How the market reacts to it is highly dependent on the day's session, where we've come from & the journey.
Markets constantly provide a stream of information to us, and we only are allowed to know more of the story if our strategy doesn't require us to make 100% complete surgically precise do-or-die decisions. The Edge is realized over a random distribution of +/- returns *over time*
