论 Daily Trend Reversal on ES

股海拾贝

I would like to use this thread to discuss how to identify large swing reversal on a 5 min chart of ES. My trade set up is a 5 min candle chart with a 20 EMA. No volume and no indicators. i believe the price chart along can give me all information I ever need. The ema is rarely used for set up too.

To detect daily swing, which will happen only 2 to 3 times a day, you need first find the current trend, then watch for its reversal signal, enter and HOPE this is the low/high of the day. The very belief, that you have caught the low/high of the day, after you have done it several times, can give a trader very powerful wellness to sit tight and ride the reversing trend, which some times travel all the way back to the starting point of the first trend.

The next natural question is when to get out. VERY SIMPLE, now you have the reverse trend in place and you are in the money. Looking for the reversal point of this trend too. and get out. Then you will have the leisure of pondering whether to go in again with some nice profit.

This is how I like to day trade ES.

股海拾贝

Now go back to the main point, what is a daily reversal?

Please ponder on the following two points I defined for a reversal. This is no new world found, many traders and many books discuss about it. It is just to make it a trade setup.


1. The trend must be weakening, each push will be shorter and cover less distance, in points. I call it a READY phase, once it is easy to see.
2. THIS IS VERY IMPORTANT. A strong reversing push entered the market, totally negate the final push in the trend direction. This is the GO phase.

股海拾贝

It is my believe, confirmed by many charts and many traders, A trend starts with MOMENTUM. So the GO phase is absolutely required for this set up.

股海拾贝

Using a ES chart (5/10) created for oldcat, I will illustrate my point. All times using bar closing time.

Trade 1.
10:34, a very large down bar break 1623.
10:39, the next 5 minutes, not much happen, market hesitate.
10:44, a big green bar, totally over power the last bear move. buy at one tick above this bar.

Trade 2.
11:29, start second leg of the up move.
11:34, the bull make new high of this trend, officially declare the second leg of this trend, and this bar is smaller that the one before.
11:39, market choked, goes no where. This is not a GO phase, because we didn't see any big bear momentum.
11:44, the bear stroke and drove the market down, this is our GO bar. Sell stop at one tick below this bar.
11:49, trade entered. Good chart reader should recognize the last bull trend was a ABC correction, and expect a retest of day low at around 1622.

Trade 3.
12:04, bear hesitates.
12:09, renewed bear push break the new low.
12:14, suddenly, out of nowhere, huge buying bar come, bull come in and traps many bears. This IS the GO bar. Buy at one tick above it.
12:19, once entered, trader can reasonably assume he caught the low of the day. He must hold it for good or bad, because the stop below 1621 should never be hit for the rest of the day. (Unless, a reversal developed on the new bull trend).
  

yupek

Good thread.  But I believe that for such exercise, the best way is to do real time analysis, and call for local bottom or top. It will be a great way to improve the analysis skills and check what techniques work and what don't.

股海拾贝

yupek 发表于 2013-5-11 07:25 PM
Good thread.  But I believe that for such exercise, the best way is to do real time analysis, and ca ...

I had made many calling some time ago in 168. That was fun time and I missed it.

Not this thread though. I prefer people upload their trade chart AFTER the market close. So we can calmly discuss and exchange trading ideas.

This thread is for education and benefit of the community.

股海拾贝

Add back three charts created on 5/9. Same idea here to catch a reversal.

One note: horizontal support/resistance should use price extreme of a 24 hour ES chart.  

开小差

oldcat

股海拾贝 发表于 2013-5-11 06:50 PM
Now go back to the main point, what is a daily reversal?

Please ponder on the following two point ...

Thanks, one question though, if the trend reverse from climax, there will not be the weaken phase, correct?

oldcat

股海拾贝 发表于 2013-5-11 07:11 PM
Using a ES chart (5/10) created for oldcat, I will illustrate my point. All times using bar closing  ...

The problem here is it maybe too later after we see a large trend bar. For example , it we take trade 2 short at 1625, the exit the short after trade 3 signal at 1623, it is only 2p profit but the stop will be large than 2p. Are we going to accept this?

trend

股海拾贝 发表于 2013-5-11 07:11 PM
Using a ES chart (5/10) created for oldcat, I will illustrate my point. All times using bar closing  ...

trade as your instruction: 1623 long, 1624.75 out and short? then next cover and long at 1622.75? Is this what your thought?

oldcat

trend 发表于 2013-5-12 10:16 AM
trade as your instruction: 1623 long, 1624.75 out and short? then next cover and long at 1622.75?  ...

The issue here is seems profit is too small compare to risk even our judgement is correct. We need at least 2:1 successful ratio to be positive which is hard. That is why I said we need to predict reversal instead of trade after the face. My idea is reversal will happen in high time frame S/R if current trend is a pull back in high time frame( a H1 buy setup in high time frame). Anyway , great discussion on real trade ideas here.

股海拾贝

oldcat 发表于 2013-5-12 09:52 AM
Thanks, one question though, if the trend reverse from climax, there will not be the weaken phas ...

It could happen. like the first 30 min of the day. Small trend can shoot up and down quickly.
However this is rather uncommon in DT. If the day has a established trend, it usually ends at day high or low. Climax reversal is not common.

股海拾贝

oldcat 发表于 2013-5-12 10:07 AM
The problem here is it maybe too later after we see a large trend bar. For example , it we take tr ...

Exit strategy hadn't been mentioned in these trades. It is a another topic, bigger than enter strategy. Usually I scale out half at reasonable fixed target and let the rest run (wait for reversal to take me out.) for these type of trading range play, exit before hitting support/resistance is good because we expect break out will fail. For trade 2, the half out target is around 1622.

Let profit run is very important in this set up. For a normal day running 10P up and down, a READY-GO trade has risk of 2P, and profit target of 6P (10 - 2p from bottom - 2p from top). It has risk:reward of 1:3. And we are shooting for those big break out too.

股海拾贝

trend 发表于 2013-5-12 10:16 AM
trade as your instruction: 1623 long, 1624.75 out and short? then next cover and long at 1622.75?  ...

Not quite. These are three enter points. Exit strategy is complicated. Usually I scale out half. There is a let run component in this set up. We want to take what market gave us. I don't know how much that is, but in a long run will be very good.

股海拾贝

oldcat 发表于 2013-5-12 10:23 AM
The issue here is seems profit is too small compare to risk even our judgement is correct. We need ...

A chart attached will be nice.

trend

Thanks 股海拾贝's answer, as a complete trade entry and exit should be considered together. I'm interest to know how you set your exist target under different entries.   

oldcat

chart of spx this Thursday

股海拾贝

5/13/2013. Today seems go nowhere. So I will start update the charts. I made three trades today, the third one is going on.

股海拾贝

Trade 1:
9:59, market seems going to reverse to up.
10:04, long at 1625.25.
11:24, get shake out at 1627.25.

This is not much of a READY_GO trade. 10:00am reversal trade is a very profitable one.