So I thought I would explain some of my technique for trading ES Mini Futures. After a long time of trading, what I've noticed is that on an initial uptrend or downtrend, the first likely thing to occur is a reversal. I calculate a trend based on the highs and lows of the last 50 bars of an Adaptive Moving Average scheme (I used to do the math, but for the last 6 months I actually wrote it into a ToS script so I no longer have to do the math anymore). If a trend doesn't reverse, than what it does is close higher, then return to the close of the trend changing candle, before continuing on with the trend. If it immediately reverses the trending signal, then it normally returns to the beginning of the trend changing candle, before another potential go at that trend signal. Otherwise, it's a failed trend signal and it reverses until you end up see the trend change signal for the opposite direction. Basically I initially take an OPPOSITE position of whatever the trend appears to be, unless it confirms the trend is continuing.
I know, I know, it all sounds fairly confusing probably... but it has proven to be fairly effective (currently I'm at 80% accuracy on my trading log for the last 3 months). This is effective on ANY timeframe, be it 1m, 3m, 5m, 15m, 30m, 45m, 1h, 2h, 3h, 4h, 6h, 12h, D, etc. (Those are the only ones I look at).
Because of the amount of money involved in trading futures and the volatility of this current market, I've been mostly intraday trading using the technique on the 5m (most trades last about an hour'ish') but still using the longer timelines for potential indicators on reversals. Note, your reversal signals are also your EXIT points for the current trade you are in. If you are having a successful trade, and the next trend signal comes in claiming you are going to keep heading that direction, expect a bull back and I exit to take profit and reverse my position unless something tells me the current trend is actually going to continue.
If you'd like to see this in action, I marked where the 2-Hour Uptrend Signal just hit (and then there was a reversal). It then went for another shot until it hit the 3-Hour Uptrend Signal, and again there was an initial reversal. Please note, this is a 4-Hour Chart, so you'd have to bring up a 2-Hour and 3-Hour chart to see those candle signals I referenced. I suspect you'll see this in real time if you look for the 4-Hour Uptrend Signal (I believe the candle will have to CLOSE above 3815'ish' for that to occur). This occurred on the 4-Hour back when we were in the 4000-4100 land. (The Uptrend 4-Hour candle signal is the 9am EST one on 5/26/2022, and the downtrend 4-Hour candle signal was the 9am EST on 6/1/2022). You'll notice at the close of BOTH those candles, the next candle reversed, on the first candle signal it only reversed a little before continuing on the trend, and on the second it went back around the beginning of that candle twice before we started our massive downward move on June 9th.
So, all that being said, since we are currently appearing as the 3 Hour Uptrend may continue, I'd see the next key area being the 4-Hour Uptrend signal. Once that signal occurs, it will either immediately reverse, or go slightly higher before coming back briefly and continuing on the uptrend (with about 80% certainty). If the 4-Hour Uptrend continues, I'd expect a big area will be around 3906, as that is when the 12-Hour Downtrend began at 1am EST on June 10th. And remember, I said if a trend continues on it tends to return to the initial starting point before continuing, and after crossing 3906, we never had a 12-Hour candle close above 3906 before we went down more, so the pattern even though feeling so long winded now, still applies on the longer timelines.
So... there you have it. Reverse Trend Trading. I encourage you to go backwards and see how often you begin to see one of scenarios play out. You'll also want to check the next higher timeframe to see if it hit that trend signal also. Basically, I don't believe in predicting the market, as much as I believe in reacting to the market.
Safe trading, and always remember the MOST important part of any trading plan, is the risk management part. Especially when trading futures due to the significant amount of money involved. If you're interested in looking into this, PAPER TRADE it first, and then trade Micro contracts if you decide to enter the futures market first also.
Disclaimer - This is simply my trading technique, and DOES NOT constitute any official trading or financial advice and any trading you perform on this technique you assume for responsibility and all the risk involved.
I know, I know, it all sounds fairly confusing probably... but it has proven to be fairly effective (currently I'm at 80% accuracy on my trading log for the last 3 months). This is effective on ANY timeframe, be it 1m, 3m, 5m, 15m, 30m, 45m, 1h, 2h, 3h, 4h, 6h, 12h, D, etc. (Those are the only ones I look at).
Because of the amount of money involved in trading futures and the volatility of this current market, I've been mostly intraday trading using the technique on the 5m (most trades last about an hour'ish') but still using the longer timelines for potential indicators on reversals. Note, your reversal signals are also your EXIT points for the current trade you are in. If you are having a successful trade, and the next trend signal comes in claiming you are going to keep heading that direction, expect a bull back and I exit to take profit and reverse my position unless something tells me the current trend is actually going to continue.
If you'd like to see this in action, I marked where the 2-Hour Uptrend Signal just hit (and then there was a reversal). It then went for another shot until it hit the 3-Hour Uptrend Signal, and again there was an initial reversal. Please note, this is a 4-Hour Chart, so you'd have to bring up a 2-Hour and 3-Hour chart to see those candle signals I referenced. I suspect you'll see this in real time if you look for the 4-Hour Uptrend Signal (I believe the candle will have to CLOSE above 3815'ish' for that to occur). This occurred on the 4-Hour back when we were in the 4000-4100 land. (The Uptrend 4-Hour candle signal is the 9am EST one on 5/26/2022, and the downtrend 4-Hour candle signal was the 9am EST on 6/1/2022). You'll notice at the close of BOTH those candles, the next candle reversed, on the first candle signal it only reversed a little before continuing on the trend, and on the second it went back around the beginning of that candle twice before we started our massive downward move on June 9th.
So, all that being said, since we are currently appearing as the 3 Hour Uptrend may continue, I'd see the next key area being the 4-Hour Uptrend signal. Once that signal occurs, it will either immediately reverse, or go slightly higher before coming back briefly and continuing on the uptrend (with about 80% certainty). If the 4-Hour Uptrend continues, I'd expect a big area will be around 3906, as that is when the 12-Hour Downtrend began at 1am EST on June 10th. And remember, I said if a trend continues on it tends to return to the initial starting point before continuing, and after crossing 3906, we never had a 12-Hour candle close above 3906 before we went down more, so the pattern even though feeling so long winded now, still applies on the longer timelines.
So... there you have it. Reverse Trend Trading. I encourage you to go backwards and see how often you begin to see one of scenarios play out. You'll also want to check the next higher timeframe to see if it hit that trend signal also. Basically, I don't believe in predicting the market, as much as I believe in reacting to the market.
Safe trading, and always remember the MOST important part of any trading plan, is the risk management part. Especially when trading futures due to the significant amount of money involved. If you're interested in looking into this, PAPER TRADE it first, and then trade Micro contracts if you decide to enter the futures market first also.
Disclaimer - This is simply my trading technique, and DOES NOT constitute any official trading or financial advice and any trading you perform on this technique you assume for responsibility and all the risk involved.
Comment:
Just to note, currently, every timeline below the 4-hour is on an uptrend, including the smaller 3m, 5m, 15m, etc. The 1m changes so often, I usually only use it as a reversal indicator to go in and never as an actual trend.
Comment:
Also to correct the above, I was looking at the 4-Hour trend but that chart is a 30m chart so that I could show the area where the 2-Hour and 3-Hour showed the signs. I misspoke when I said it is a 4-Hour Chart.
Comment:
There it was, the 9pm EST 4 hour candle made that uptrend signal... the next candle has a small reverse but nothing major yet, it'll be a call for a reverse to the downside now unless a 4 hour candle manages to close higher.