Wednesday, January 20, 2010

Wed. 01/20/2010 - E-Mini S&P 500 Futures Review/Analysis

E-Mini S&P 500 Futures Review/Analysis
At first glance, the recent price action in the S&Ps may signal weakness, but I'm not so sure. If this market was truly weak, I don't think we would be getting bounces in the 1125-1126 area. A truly weak market would have flushed down further, IMHO. I could be completely wrong, but these bounces make me think there's still some life in this market. We'll see...I'm going to try to remain neutral until the market gives us some clear direction out of this area.

ES 5-Minute Chart for 01/20/10


  1. How was the movie that you went to see last weekend?

  2. Movie was awesome! Definitely check it out if you get a chance to see it.

  3. hi

    i've come across your blog about 3 days ago and are not too familiar with the charts you post

    when you have those up and down arrows on a chart, does that mean you went long or short, or is it some automatic signal that your chart generates?

  4. Hi James, the arrows are not automatic; I plot them manually and they just highlight areas where a trade could have been entered with low risk based on the key levels and preceding price action. Some of the arrows are trades I took; but not all of them. For example, I didn't short the retracement to the IB Low as indicated on the chart, but I did enter Long in the 1126.50 area on the pullback. I scaled out of that Long at the IB Low but there's no arrow for that. I also re-entered Long in the 1131.75 area. So to sum it up, the arrows are just good trade setups -- doesn't mean I was able to take advantage of all of them. It's just part of my routing to enhance my pattern recognition.

  5. ahh i see

    thanks for the explanation

    i did quite bad today, on the other hand

    i tried to go long near the open, about 10 minutes in, because others indices looked quite bullish to me

    that got stopped out

    and i went short at 1136.75 as it came back up several minutes later, only to scratch the position for -2 ticks because of an uptick in the nasdaq

    had i held onto that short, it would have erased my initial losses

    anyways, i was a little off today becasue i got up after the open, i live in california, and the initial long trade was kind of done in a hasty fashion

    but still, looking back, it still looked quite bullish at that moment

    anyways, i just don't like this fast twitchy movements in the indices

    i'd rather prefer a slower paced action where you can methodically assess and enter trades, but that's just me

    hopefully tomorrow will be better

    thx and take care

  6. James, inter-market analysis is tricky and can be painful as you experienced today. If you want to trade at a slower pace, I would recommend you stay out of the market in the first hour (9:30-10:30 AM EST). Let the Initial Balance develop in the first hour and Then initiate your trades. You'll have a lot more information and reference points to base your trades off of after the first hour.

    Good luck tomorrow!

  7. Hi e mini player,

    I have discovered your website just this january and have been religiously reading your informative articles. I am a novice trader, started 6 mo ago ,and with total losses of 15k.. Good thing I have my primary job..I am only doing ES..What sshould be the best chart, I am doing only 1 min and 5 min.. but with so much noise. Ive been scalping, happing to get a point or even 2 ticks. can you advice me, is it better just to put my entry on the lows or highs? I have been frustrated now, but I still keep on learning.


  8. Hi Joe,

    First of all, you gotta cut down the size. Trading 5-lots when you're just starting out is crazy. Keep in mind, that each ES contract is worth $55K or roughly 500 shares of SPY. Would you feel comfortable trading 2,500 shares of SPY when just starting out? That $15K loss could have been a $3-6K loss if you were trading 1-2 lots.

    Until you have this figured out, I would recommend using the Simulator. I don't know which broker you trade through, but I would recommend Infinity Futures (contact my broker Anthony Giacomin if you decide to go with them). Infinity's execution platform supports Live and Simulated trading, and their Sim is actually pretty realistic since it doesn't give you instant fills. A certain percentage of the bid/offer needs to be traded through before the Simulator fills your order.

    Regarding scalping for ticks; don't even try it. With retail commissions ($4-5 R/T), it doesn't make any business sense to scalp for ticks. Scalping is a difficult way to make money, and requires intense focus, discipline, tight risk control and a very high win rate.

    I would say use the Key Levels and only initiate trades at or near the Key Levels. Use a slightly wider stop (2-3 pts). Trade two contracts and scale out of your position at +3-4 points, then move the stop-loss to break-even on remainder. As the position moves in your favor, start tightening the stop to lock in some gains. Shoot for low risk, high reward trade setups at the Key Levels.

  9. hey thx for the response

    in response to "intermarket analysis", i rely on the movements in other "stuff" be it stocks or other indices to kinda give me a "bias" for the day

    if that "bias" coincides with a support or resistance level in the es, that's when i tend to initiate trades

    this works fine regardless of the time of day usually, unless the volatiility kicks up to panicky levels such as on wednesday or today, thursday

    when action is too fast, price tends to get away from you quick and when you do get filled (i enter at market), it is usually far from your desired stop level

    so in that point of view, i prefer a slower and steady market

    i didnt' get to trade today because i got up insanely late, usually this is rare, but looking back, even if i was awake, i don't think i would have made the short at the open

    my plan the night before was to short around 1135.50, and in order for me to enter the trade, i would have needed "confirmation" from movements outside the es, i guess that's what you would call "intermarket analysis"

    you said that it could be tricky

    well i wish there was a better way but at this point, with my level of knowledge, i can't just blindly look at levels specific to the es

    for example, you can generate literally upto 10 to 15 support resistance levels with fibonaccis, pivots, trendlines, support and resitance levels

    if you just blindly take those levels and enter trades whenever price touches them, i tend to get stopped out left and rigth

    and that's why i resorted to watching other markets to get a general bias and direction

    the downside is, you tend to miss the trades when the tape is too fast, such as today or yesterday, or they tend to give you false signals, although not too often

    and to "travelbug"

    i feel your pain because my situation isn't that different

    although i lost more money than you have over a longer period of time, i havent' lost money as QUICKLY as you have

    seems like you are using either too much size, or tend to overtrade

    here's an advice that i wish someone had told me earlier

    DO NOT OVERTRADE, set a finite number of trades you are willing to enter per day

    and KEEP A VISUAL JOURNAL of your days

    those will slow your rate of losing money, at the least

    trading is very hard.... but it ALWAYS seems like you know JUST enough to hang on and tell yourself to keep learning and trading

    that if you just keep at it, that you will make it

    the scary thing is, what if that is the reality of trading for 90% of the market participants....

    emini trader, can i shoot you an email over the weekend?


  10. James, can't promise how soon I'll be able to reply to it, but sure you can email me.

  11. to james and e mini,
    tnx for the advice.. trading 5 lots for newbie is really a gamble. It just happens on my first day without charts and just based on intuition, ask/bid size i was able to make 500 plus.. then came the losses after losses the biggest was the dubai news on a Thanksgiving night w/c i keep on taking the longs, thinking of a reverse..cost me i am learning from my mistakes.. i really appreciate your advices..

  12. by the way , i am with transact futures,w/c i think is under infinity. What chart do you use 5, 15 min??


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