Sunday, September 15, 13. Trade E-mini Futures without Indicators

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Jesse Oliver
8 years ago
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1 Trade E-mini Futures without Indicators

2 Keep It Simple Simple systems work better Simple is more robust

3 What You Need To Know Logical market structure Entry patterns and rules Trade management Recording and analysis

4 Three Trade Setups These three trade setups do not require indicators, the setups only require that you know the rules and times to execute trade. Opening Range Breakout Harami and Engulfing Trend Reversal Pennant or Flag Trend Continuation

5 Trade Life Cycle The three trades are only the setups, which are events that present a high probability for a successfully completed trade. That success will depend EXCLUSIVELY on how you manage the trades through the entire life cycle, from start to finish - when to stop out, when to take profits, and what you learned as input to future trades. Trade Life Cycle - the structural analysis, identification, execution, management, recording and followup analysis.

6 Markets To Trade The trades work in the e-mini index futures market, where there has been extensive testing and experience by professionals for many years. E-mini S&P 500, ticker ES E-mini Dow, ticker YM E-mini Nasdaq, ticker NQ E-mini Russell 2K, ticker TF There is NO evidence that these trades will work in any other markets, with the rules presented here.

7 What To Expect You will not win every trade Sometimes the trade setup is not there, so don t trade IF you follow the rules you can expect >65% win rate IF you follow the rules you can expect > 2.5 profit factor def: Profit Factor - the net profits of all winning trades, divided by all net losses.

8 Opening Range Breakout (ORB) The is a time-based trade, that first establishes a price range from the market open to a predetermined period of time (number of bars). After the range has been established, there is Breakout Period (number of bars) that the trader waits for a breakout from the range. If there is no breakout within the Breakout Period, there is no trade If there is a breakout, as defined by the rules, the trader takes the trade and manages it until predetermined targets are hit, the trade stops out, or the session ends.

9 ORB Rules Prerequisites The trade is conducted on a 5 minute bar chart The opening range is defined as the highest high and the lowest low achieved during the first 12 bars (60 minutes). During the breakout period, which is after the opening range, wait for a breakout. A breakout is defined as a bar that closes above or below the opening range. Only trade with the current trend, include the trend from previous day. Trade Rules If the next bar opens above or below the range, then go long if above, or go Short if below. Set a protective stop one tick outside the opposite side of the range from the trade entry. Set a predetermined target, equal to one half the size of the range or 6 ticks, whichever is less, as the initial spot to remove 1/2 the trade (assuming you traded more than one contract). After the initial target is reached, move your protective stop to one tick outside the range from where the breakout occurred. If you removed some profit, reset the stop appropriate to the number of shares remaining. Set a trailing stop on the remaining shares equal to approximately one quarter of the range. Exit the trade at the end of the market session if no stops are executed.

10 Opening Range Breakout

11 The Two Amigos The next two trades, the Harami and Engulfing require some knowledge of market structure and candlestick anatomy. No indicators or oscillators are required, just the ability to draw lines on the chart. What you need to know, is how to identify trends in different timeframes, find logical areas of support and resistance, and spot two very simple candlestick patterns.

12 Pro s Hours Trade The Harami and Engulfing trade entries are only executed during specific times, often referred to as the Pro hours. Because these trade times are when professionals trade, they know their probability of success is vastly greater during these periods......so we do what the pros do! If the patterns do not setup during these times, then don t enter the trade, go do something else...read a book, play with your kids, call a friend.

13 Pro s Hours

14 Pro s Hours Explained You may have noticed that the Pro s hours illustrated in the previous slide are not really one hour in length. These are guideline times for the E-mini S&P, they may be slightly different for other markets. These times are the result of a backtesting study over the past five years, to produce the highest probability of success.

15 Market Structure Trends, channels and market highs and lows comprise market structure. This structure is multi-dimensional, and should be viewed in multiple timeframes in order to understand the fractal nature of the market, and... See the parent-child relationship between the trends, channels and market highs and lows. The most important thing to know about market structure is that bigger timeframes are stronger and exert influence over smaller timeframes

16 Market Structure

17 Key Concepts Enter trades ONLY during high probability time periods - Pro s Hours Wait for pullbacks to the current trend, and favor reversals that go with the bigger trend Look for logical support and resistance for pullbacks and reversals The stronger that support and resistance is, the better

18 The Four Tenets of Trading 1. Go with the trend 2. Cut losses short 3. Manage your risks 4. Let your winners run Watch this AppleInvestor video

19 Harami Candlestick 1st Target 2X Go LONG 1X STOP

20 Engulfing Candlestick 1st Target Go LONG STOP

21 Engulfing and Harami

22 Time Box Strategy Prerequisites Only trade during the morning, afternoon and bond close time boxes. Only trade with the daily trend AND with logical support or resistance Rules Trade and set your stops given the above prerequisites, and the Harami and Engulfing slides Use the following rules for your first profit target objective... Harami: trade entry + (2 x Harami candle range) Engulfing: trade entry + Engulfing candle range After your first target is achieved, set your stop at least two ticks above the entry, to guarantee a profitable trade. Next profit target is 2X the original target. Once achieved enter trailing stop at 1st target, with a trail equal to 1/2 the first target.

CHART PATTERNS. www.tff-onlinetrading.com

CHART PATTERNS. www.tff-onlinetrading.com CHART PATTERNS Technical analysis, as you have seen in our Trading Academy videos so far, is not just about charts. It does, however, rely heavily on them and often uses chart patterns to assist in making