Nasdaq Confirmation with other Indexes

Before placing @NQ trades we should confirm levels with the other 5 minute Indexes

Trade our Rules or Don't Trade

Today's lesson is to "TRADE OUR RULES", change them or DON'T TRADE.

Adjustment to our Pull Back Entry

When price breaks out of a good Supply or Demand level we draw a base with 2 minute candles and enter the trade with a Limit Order 1 tick into that level placing a stop with the least amount of risk needed.

Protecting Profit

After 7 ticks profit we move the Stop Market to 1 point (or 4 ticks) below Breakeven.

Once again, whenever we see a contradictory tick pattern before or during a potential trade we cancel or exit the trade IMMEDIATELY.

"Scalping" the YEN and EURO is a bad idea. The NQ should be the only market we "scalp.'

When we see DOJIs at Supply and Demand Levels we should consider entering the trade IMMEDIATELY with a stop 3-5 ticks above/below the DOJI high/low. Many times this will provide a lower risk entry than our maximum 12 ticks.

Knockout those Pullback Trades

When price trades below a Demand Level and then trades 1 tick back above that Level enter the Buy at Market with a stop 3-5 ticks below the recent low (and vice versa.)

Breakout Days

In order to capitalize on large breakout moves consider entering long at Previous Daily Lows or Globex Lows either manually or with confirmation with a potenial profit target of ther Previous Daily High or Globex High (and of course, vice versa.)

Contradictory Tick Signals

Whenever we see a contrary tick pattern during (or even before) a trade we should immediately exit ( or cancel) the trade unless it is a longer term trade.

For Small Trades

If price is revisting a fresh supply or demand level on a 5 minute chart we can place a scalp trade with a 4-6 tick stop. If this trade was going against the prevailing trend we could make a scalp trade (or no trade at all) but risk no more than 6 ticks. Ideally, the better trade would be the buy at the demand level in an uptrend or the short at the supply level in a down trend.

Why Trade Price? by Ryan

• Price is the only indicator that doesn't lag
• All indicators are derived from price
• Price is the most reliable "indicator" to trade
• Price is the most important thing to trade and learn (i.e. Candles, Supply and Demand and Trend)

Thought for the Day

Nice Round Numbers can act as potential Supply and Demand Levels

Buying Around Previous Day's Low

As long as you're in an uptrend and it doesn't break the Demand Level around the Previous Day's Low you can enter that trade with the Previous Day's High as your potential Supply Level / Profit Target (and of course vice versa.) - Michelle - 03/17/10

Michelle's Reversal Patterns - 5 Smoke Signals for Uptrend Reversal

1) Break uptrend line
2) Break demand line
3) Reversal Pattern: Double Top, Head & Shoulders, Lower Swing High
4) Decreasing Volume with Increasing Prices
5) Closes below 20 EMA

Michelle's Reversal Patterns - 5 Smoke Signals for Downtrend Reversal

1) Break downtrend line
2) Break supply line
3) Reversal Pattern: Double Bottom, Inverse Head & Shoulders, Higher Swing Low
4) Decreasing Volume with Decreasing Prices
5) Closes above 20 EMA

New Strategy for Confirmation Trades

To establish a confirmation for a Buy entry on the EURO or YEN Futures here is our checklist:

1) Establish good Demand Level where we certain price is out of balance and Demand exceeds Supply.

2) Watch for a Closed Higher Low on 2 Minute Chart.

3) Watch for a 5 Minute Bar Low (5MBL) with the confirmation of a Closed 5 Minute Bar with a Higher Low.

4) Establish True Range of 5MBL Bar to establish Buy Limit Entry. True Range size of 4-14 use an entry 25-33% below 5MBL High. True Range size of 15+ Buy Limit Entry should be 50% of 5MBL True Range.

6) After price trades 1 point above 5MBL High immediately enter Buy Limit Entry at established True Range level with a stop 3-4 points below 5MBH Low but no more than 12 points.