Well I shorted the frontside 5 times today. I truly am unsure if I will ever learn. Lets try to make some really important parameters today to see if for the rest of the week I can make my only goal, "did you fight the trend" and If I did on any specific day then that is a losing day for me even if I am green.
Step 1: Is it a Trend or Range day?
1. Price Action/Structure (ES)
- We broke out immediately at open and ripped up through the premarket high, previous day close, and never even got close to open price again.
- Clearly a trend to the upside
1a. How strong is that trend?
- RVOL across the board was very very weak today which means that in general trading will be very difficult. If RVOL is this low and hardly increasing throughout the session its almost always a good idea to just walk away as fast as you possibly can. When RVOL is weak the strucuture gets very confusing and instead of making a clean lower high on a reversal it might just go break HOD again then have a weird big bull trap or vice versa. Its just much much harder to trade and scalping for 2 points is really all you can ask for on a day like that. Its hard to know early on what is happening so taking very small losses to see if we start increasing strongly is fine but taking 5 trades is not fine and that is what I did.
So far we have a trend but very very weak. This is a day where the probability of winning is potentially 55% if going with the trend and probably 30% when fighting the trend. The possible reward potential is only about 3 points so if you multiply the probabilty by the potential outcome you would get a very very -EV
- Internals are trending in the same direction as the /ES so that is a good sign but if RVOL is this weak, continuation again will be very difficult to catch. most likely we will get a lot of fakeouts and just tricky conditions but then again if you are shorting then you just made it already that much harder on yourself. I think had I been looking for long scalps instead of short scalps today I couldve walked away with 5 points but instead Im walking away -5 points from me creating my own narrative instead of just trusting the objective reality of the market.
- Weight was trending lower at the open but then stalled out and started to just consolidate at the lows without breaking down or breaking out. This was the #1 reason that I was going short today but I need to realize that the weight moves the NQ wayy more than it moves the ES. If I am going to trade something based off the weight it cannot be the ES. IF the weight is moving in same direction as ADD then yes I can trade ES with big size and look for continuation so long as RVOL is strong but to short the ES when internals are trending up and weight is holding its lows is not a good idea at all.
- Futures also just making higher highs higher lows. Trending higher but again weak RVOL
5. Sectors/Leading Symbols
- Risk on moving up risk off moving down. Again confirming uptrend.
- Leading ticker was Dow and Russel today. I have seen this before a few times and its always been basically a holder of the ES. When russel and dow are leading then es just kinda pisses around and holds its highs
Why did I think to go short?
- Weight was going lower
- NQ was leading to the downside meaning risk may not actually be "on"
- RVOL weak so I was okay with shorting the highs
Why should I have instead just been going long on dips?
- ES is trending higher
- All internals Trending higher
- Combo trending higher
- Risk on up risk off down
- Weight held its lows pretty fast after making them
Things to consider:
- If weight is consolidating then ADD will have much more weight then it usually does. When Weight drops and holds bottom and the ADD breaks up huge then just leave the ugly cunt alone. That leprechaun lookin ass bitch will fuck ur life up.
Idea: Totally and completely wrong on every trade I took. The only thing that made sense was the 3rd trade where I actually just shorted a new fakeout high looking for literally 2 points maximum and that is what I got. I do think all of these trades wouldve worked tho had I been going long instead. Where do I get long though?
Missed Opp 1: Trend Continuation
- We wick out the 21 ema 2 times then use it as support after using it as resistance in the premarket around 5-5:50am. This level was a perfect place to look for scalp longs for continuation. I probably wouldnt have held for the breakout just because again the day was identified as a weak trend which means that you just never know when that 10 point drop is coming. I couldve gotten an EASY 3 points here and possibly more had I been very cool calm and collected.
- Again same idea. Previous resistance is now being used as support. That level is identified and you can scalp moves into that zone for just small long continuation trades. On a day like today where RVOL is so weak just take the 2 pointers and let them add up. Its not worth it to go for homeruns even tho there is surely going to be a few on the day.
- PREVIOUS RESISTANCE TURNED INTO SUPPORT. Easy continuation here where we wick out the support level then continue back up through the previous lower high yet again trapping shorts and pulling in more longs. This is another easy 3-5 points
Had I first identified that:
1. ES is on 2m uptrend
2. Internals are all uptrending
Okay we have 2 confluence uptrend, we look for longs. How much can we trust strong continuation?
1. Futures are all uptrending except NQ (means scalp up moves dont look for strong continuation)
2. Weight downtrending but holding its lows as NQ breaks out
3. RVOL very weak so again continuation unlikely
I could have been looking for tiny scalp long moves and added up a few of them to get to around +250. 5 points on a day like today is great and I need to be okay with just trusting the trend and not looking for only short opportunities. Tomorrow if we are trending and internals are confirming direction then I will gauge likelihood of continuation based on Futures direction, Weight direction, RVOL value. If they are strong and moving in same direction, you hold and look for continuation. IF they are weak and in different direction, DO NOT FIGHT THE ES TREND. Yes if the internals are doing the opposite then its totally possible to take shorts at high but if internals and ES are together just follow the trend using continuation strategies AKA previous resistance turned into support. That is very simple to do.
1. ES Trend?
2. Internals Trend?
(Same direction? if Yes see 1, if no see 2)
1. How likely is continuation?
a. Futures direction together?
b. Weight same direction?
c. RVOL strong (above 0.5 before 10:00am)?
CONTINUATION IS VERY LIKELY
2. How likely is failure of continuation
a. Futures in differnet directions
b. Weight different direction
c. RVOL weak
1. ES Trend?
2. Internals opposite trend?
(MUST BE IN DIFFERENT DIRECTIONS)
1. How likely is reversal?
a. Futures conflicting?
b. Weight with internals?
c. RVOL strong?
REVERSAL IS MORE LIKELY THAN USUAL
2. How likely is it that reversal has very strong continuation?
a. Futures all trending together after reversal?
b. Weight trending with internals?
c. RVOL strong?