NQ and Other Questions

Discussion in 'Index Futures' started by lmn, Apr 8, 2004.

  1. lmn



    I wonder whether anyone shorted NQ today, 8th April 2004, in the beginning?

    What puzzles me is, from 11:25 am to 12:00 pm ET, there seemed to be a reversal developing, which caused me to cover my short. Then it turned out to be a retracement only and NQ continued to fall afterwards.

    So, if you also shorted NQ today and stayed through the retracement, can you please tell me why you saw that as a retracement but not a reversal?

    I also would like to ask:

    1. Do you find technical indicators useful for index futures? The futures are so choppy sometimes many indicators do not seem to make sense to me.

    2. Do you think 1-minute charts are useful? I have heard that some people scalp the futures using 1-minute charts, but again such charts seem too choppy to me. Or is it because of my lack of skill?

    3. YM closes at 4:00 pm ET while NQ and ES close at 4:15 pm. Why the difference? Why is there an additional 15 minutes for NQ and ES, but not for YM?

    I am fairly new to futures, so I apologise if many of the questions are silly. Thank you indeed.
  2. there is very little "sense" to it. if it was obvious no one would be making any $. :)
  3. lmn


    Hi LongShot,

    Do you mean that it was very difficult to find out that was not a reversal during that time? :)
  4. yes, very difficult if not impossible to know before the fact. you trade what you see, place your bet, but get out with "reasonable" losses if wrong (or maybe flip it).

    of course after a sustained drop like that you must expect some profit taking and reversal.
  5. lmn


  6. NP. I am here to help. :p
  7. dbphoenix


    You say you saw "a reversal developing", but you don't say how you define a reversal. Therefore, it's not possible to make any comment about where your definition of a reversal may be steering you in the wrong direction.

    This is particularly important if your rules tell you to cover your short when you see a reversal developing (or tell you to cover when the reversal setup is in place, which is something else entirely).

    On the other hand, if your trade management rules tell you to place your stops here or there without regard to congestion or reversals, then the issue of reversals is irrelevant.

    Let's say, for example, that your rules tell you to place your stop above the last swing high, particularly if there's any doubt that what looks like a reversal might actually become one. If that were the case, you would not have exited. You might also have postponed your exit when you saw that volume dried up dramatically (it's tough to stage a reversal to the upside when there's no volume).

    I'll have a chart posted later in my journal (see below). If you're interested, your other questions are answered there as well.

  8. Hi lmn,

    As dbphoenix mentioned...you didn't define reversal.

    Via the attachement chart I provided 15min chart interval...I saw a counter-thrust that failed to reach a recent candlestick resistance level.

    I didn't trade NQ but I was in a private chat with a trader that did trade NQ and the attached chart is what we were talking about as he scaled out of his position...

    Also, I did see a weak white candlestick in Harami position for the candlestick that closed at 1145am est on that chart...

    It did manage to push NQ up several points until it ran out of steam via the appearence of that wide range body dark candlestick after a wide range body white candlestick...reason why I was a skeptic about its strength when it was occurring.

    (Note: Those back to back wide range body candlesticks in that failed counter-thrust when merged together will also produce a Long Legged Doji in a bearish position)

    He traded 5 contracts getting Short @ 1503.00...exiting two at PT1, two at PT2 and his remainder one contract at PT3.

    I marked PT4 on the chart. It is another profit target had he spread out those last three contracts over PT2, PT3 and PT4 instead of just PT2 and PT3.

    Thus, if you only had one contract...I can understand how easily you could have gotten spooked out of your trade prior to bigger gains...

    I remember seeing some traders also covering early between 1015am - 11am est...they were mainly one contract traders protecting their profits.

    Yet, that counter-thrust (you call it a reversal or retracement) could have easily powered back upwards above the R level on the chart.

    However, the big picture was this...events in IRAK heating up, warnings in France about possible terrorist activity (bomb) and the daily chart had a few bearish candlestick patterns I saw.

    Also, that over-reaction to the YHOO earnings yesterday set things up nicely for those that wanted to get Short today.

    Answer to #1: Yes but not needed. Many other ways to trade.

    Answer to #2: Yes as long as the candlestick charts are very clear.

    As soon as I start seeing either too many dojis, no candlestick patterns or no clear candlestick s/r levels...

    I start increasing my chart interval.

    I guess any chart interval is suitable as long as it fits well with your trade methodology (profits).

    However, if your trying to scalp...I highly recommend you use tick charts instead of 1min charts.

    Examples of tick charts is like those by NeoTicker or Ensign.

    Answer to #3:

    You can call the CME at 1-800-331-3332 and ask.

    Last of all, hindsight makes everything look nice and clear.

    However, patterns repeat so its important you learn as much as you can from hindsight information.

    P.S. Here's a huge hint about price action only trading...study your wide range body candlesticks...

    There more powerful than indicators or pivot points.

  9. Not going to answer your Q's individually. You can make several improvements by directing your attention to other stuff.

    You are monitoring in such a way that you deprive yourself of observing the continuity with which the market operates.

    Whom ever got you started on the 1 min may have misdirected you in other ways as well.

    Several futures indexes open before NYSE at 9:30AM. The margin requirement to trade changes before 4:00pm on some trading places.

    All indicators, today, have to be adjusted from the designer defaults to work quite well.

    Here are some general comments. You can always know on the open what to do. The fastest paced trade of the day occurs right off.

    Generally there are four trends per day (two am and two pm) plus a midday lull. The first trend starts at a fast pace then develops more as a slower trend that extends the fast paced trend. You do not understand this stuff yet. Try drawing the channel lines for a few days and you will see.

    All trend endings and beginnings are telegraphed and, in fact, overlap each other.

    To make a lot of money fast, you can use one gimick over and over. By doing this in the vacuum you are in, you get a rapid intro to how to make money without knowing much. To make more, then all you do is learn how to really trade by embroidering around the gimick.
  10. Rossored


    I find indicators a complete waste of time on any instrument. I use just OHLC bars, price action and sometimes ES volume to trade - nothing else. I was given this gem by another trader whom I have much respect for, and she has helped my trading no end by telling me this. You ought to try it if you dont already.

    I trade YM using a 1min chart. Dont find I'm able to do so effectively on anything but a 1min chart.

    However, I trade ES and NQ on 5min and 10min charts, and dont seem able to trade it on anything less as the "noise" level does my head in.

    Anyway, on YM today I found it perfectly clear to read from the start that it was going down, down, down. The open triggered any stops around the 10550-55 level, and down we went - with one clear as hell pullback, giving a further southward target, and it traded off like a good 'un.
    #10     Apr 9, 2004