I started live trading the first range extension after the opening swing is printed. I was using a DOM for trade entry and I immediately remembered why I dislike the DOM so much. It is a very distracting tool, in my opinion. The market is noisy enough as it is. When you add the flickering of this device into the mix trading becomes even more obscure.
I will continue testing the strategy next week and I am setting chart trading up over the weekend.
One of my observations from trading this setup live is how incredibly fast it happens. I can sit here in retrospect and circle the idea, but the live environment gives you seconds to get your entry in. Also, the trade can take immense heat in seconds. Without a rock solid plan and execution, this high probability scalp trade is destined for failure. It appears the best approach is a limit order set in place beyond the opening swing on the chart. Then as price exceeds either extreme your entry is hit and filled.
I thought the overlapping of opening swings on Tuesday/Wednesday was an effective piece of context. I was a buyer of swing longs against it. However, the prices did not hold off sellers who cut through them with a slow grind lower. I am so familiar with being on the right side of the slow grind. Usually sell flow is much more knife-like. Anyhow I found it odd and powerful to be on the receiving end of a grinder (Thursday afternoon).
The infamous Elroi can be seen on my charts today. He has been getting chopped up pretty good during the opens. I have always found his signals to be more potent later into the session but I like to see the signals because they give me insight into how other algorithms are performing.
Here are this week’s opening swings in the NASDAQ. Feel free to share your thoughts and observations:
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
The way I see it, trading the e-Mini is the most difficult and complex skill to master. You’ll have to be the best of the best to tackle the monster that guard the secret door to winning consistently in the e-Mini arena.
The monster you face, ironically, is your own self. The intra-day charts all looked “do-able” in hindsight.
“The algo said to buy here and sell there… see how close to the top and bottom of the inra-day range?”
However, out of the three good “catch” the algo gave you, there were also several “bad calls” from the algo that would have caused you losses.
Human seemed to find that as long as those “catches” were plenty in the historical charts after a back-testing exercise, they started to dream of the treasure at the end of the rainbow.
The hungry speculator couldn’t wait for the market to open in order to test the new found “high-win” e-Mini system.
“Ding! Ding! Ding!”
The e-Mini took off to the upside, triggered the algo buy signal, then violently turned south and took the trade to the negative territory in the span of three minutes. Trust me, if you are daytrading the e-Mini, three minutes can be a life-time in a highly volatile price movements. You, the speculator, witnessed the whole price action with your finger still frozen in mid-air waiting for the brain to send a signal to the keyboard.
“Eh, thanks goodness I didn’t take the buy order…”
So the speculator was glad to know that he was spared the losses from this first algo trade in the morning simply because he was hesitant.
Whoa! Another signal from the algo!
“Buy again?”
The wave of emotions suddenly came upon you. It enveloped you and bound you up like a straitjacket. You couldn’t move. Your hand remained stuck on the mouse with the cursor still blinking in the middle of the screen.
The doubt, the fear, the pain of the indecision were intolerable.
“Damn! I’m not going to take this algo trade!”
RELIEF….. whew……
Then the regret became remorse. The self-nagging wouldn’t stop as the speculator witnessed the biggest rally in the span of five minutes…
Welcome to the world of heavy-weight trading in a highly volatile e-Mini arena where every minute, every second counted ’cause these precious time impacted your mind and generate emotions once the bell was struck.
Even the best could only handle this high pressure decision making in a time-cooker for so long. Nevertheless, the best of the best see the challenge as a life-time pursue. Daily discipline are enforced by practicing mind-calming skills from the art of sports such as martial art, marathon running, etc.
These daily discipline enables the best of the best to bypass all the mind noise and trade the system based on personal algo AND instinct. Yes, the instinct (or intuition) must be a part of the system; otherwise, the brute force of the algo can eventually wear down even the best of the best when it run into a series of bad trades.
Instinct/intuition balances the algo which in turn transforms the speculator into the best of the best.
I tried the e-Mini arena multiple times and each time I came back bruised. I then realized trading in a fast-time schedule did not fit my trading mind.
Eventually, I found that by opening the time span with swing trading, I found my trading groove.
Goodbye e-Mini and hello stock trading…
Z
Thank you for sharing this anecdote Zen, your thoughts are always appreciated