It was a slow and quiet Monday. Before I started the day, I was reading John Carter’s book. His point on opening volume of E-mini S&P(ES) caught my attention.
If the first six bars on a five-minutes ES chart have most of the volume at or well under 10,000 contracts, expect a choppy, tight range session.
If the first six bars on a five-minute ES chart have most of the volume at or well above 10,000 contracts, expect a more volatile session with better trends
I think this is a pretty good idea. I use it as part of market tone determination for day trading E-mini S&P(ES) and Dow mini(YM) during cash market opening hour. That was what happened today. Other than the very first candle, the following 5 candles of E-mini S&P were trading below 10,000 contracts. And in fact, the broad market was rather quiet (partly because there was no fresh lead, no economic report). I ignored any possibility of trading E-mini S&P and Dow mini for the day even though there were a couple of dummy set ups. (I was right in this case).
Instead, I was looking at E-mini Nasdaq. ( Until this point, I am thinking, if market opening volume analysis of S&P shows a choppy, tight range session, can Nasdaq escape from this market sentiment and dancing in its own pace?) I got a short position.
That were a little of discipline and psychological plays. E-mini Nasdaq was indeed, moving in my favour after short position was established. And it poised to reach my 1-R break even point. It did not. To be frank to myself, I was really tempted to close the position when it was moving back around my entry point. It was the temptation and that’s all. I left it alone and sticked to the rule, let the market stop me out (And I got stopped out, Darn)
First trading day of the week, I am down with 1-R. No big deal, at least, I stick to the rule. The challege here is market tone determination. More works need to be done.
Ok, I just talked too much.