2023-04-19

Middle Picture

  • Normally after going up, we go sideways to consolidate/balance
  • These time after going up, we do not balance sideways. We continue to go up but in a slowly grinding way
  • Ranges are small
  • I think to get better ranges and a better trading market we need a good liquidation to balance inventory
  • Keep your expectations low until we see such a change

Intraday

  • The last two days we saw the same day-structure. One to the downside. One to the upside
  • Its a normal variation day where we see a directional move early followed by nothing but chop and a small correction of actual days inventory
  • Do not expect any continuation or second directional move in that actual middle picture !!! 

2023-04-18

The last days this market is very hard to trade

  • It indicates a structure but does not complete it like normal
  • Neither on the upside nor on the downside

What do i do?

  • Everything is temporary. Good times, bad times, everything
  • I decrease my expectations and my contract size until we see a better market
  • Normal thing

2023-04-17

  • We are in a bullish environment 
  • Friday we had a liquidation break which strenghtens a market
  • I was interested in longs. Unfortunately we had a very very long and slow contra move which ended in K.
  • Not tradeable in my market model
  • Price probe created a spike
  • It resulted in an inside day which should give some opportunity to break out of it as it is a form of balance

2023-04-14

What happened

  • Man, that was again a hard to read week
  • We failed two times to break out to the upside of that 7 day balance area. That is normal. But unexpected is that after both failures we do not see continuation to the downside
  • I think there was a fed speaker on friday morning that initiated the upside failure
  • Sometimes it is more important what did not happen than what happened. What did not happen was the downside continuation

The week ahead

  • The market almost always is mainly driven by speculators inventory
  • At the moment it seems even more speculator and algo driven
  • On the one day they buy it like crazy on the other day they do the opposite
  • We sometimes see longer than expected intraday auctions. For example after fridays upside failure we went down in BCDEFGHI.
  • Nevertheless we do not get continuation after a pullback but a counter auction that takes back more than vwap and more than mid
  • Always keep in mind that algos do not have to trade in logical structure. They can act schizophrenic a long time
  • How to navigate such a market. In the end like always: Only take the best entries at good prices after good inventory correction auctions with good change. Scale out humble
  • The mechanics of market behaviour stay intact even if we have phases like this. One news, one untypical large execution can mix up the whole structure. There is of course randomness involved. Sometimes more, sometimes less
  • This game is a marathon, not a sprint

2022-04-12

Thoughts before the open

  • We spike up in eth with cpi numbers
  • But we come back and open only with a small gap 
  • This is a first indication that eventually we get a look above 7 day balance area and fail
  • But we never know. Small gaps often are buyable. 
  • Like always: Trading is ambigous 

What happened

  • We have a chaotic first hour
  • We get the first directional move in C to the downside. This strenghtens the look above and fail thesis
  • Then we get an unexpected nearly 100% percent pullback. In my interpretation this was a gamechanger. If the thesis is correct this should not retrace that much
  • Around 2pm we again have some chaos with the fed minutes and we end up with a second directional move to the downside
  • In the end ee have a look above and fail on D1. But it retraced nearly 100% intraday and ended with only 47 points of range.
  • This is nothing. I interpret the market on D1 as in Balance. Normally we would target the weak low which is the low of that 7 day balance area.
  • But the environment is not normal. It is a low volatility environment. Do not target anything from the bigger timeframes. Trade small.
  • Perhaps we see more volatility with the upcomin earnings session 

Glossary test

Sometimes gap rules have to be applied
When the up auction is finished we see a strong high

2023-04-11

  • We come in near yesterdays rth high
  • We see an expected inventory correction followed by a directional move. So far so good
  •  The problem is that the ranges are small. You need to invest some points to identify inflection points and get into a running trade. When you want an adequate win potential you end up seeing that you dont get your targets
  • The market does not care about your risk/reward
  • At the moment we have low volatility. YOU have to adapt to this
  • Only take the best entries. Scale out defensively.
  •  Low volatility one time leads to high volatility 
  • The last days i am loosing. But i am loosing very small. This is a normal professional drawdown.
  • I improved my trading clearly by focusing more on short term inventory and less on the timeframes above. I enter trades AFTER correction of short term inventory
  • In the past i regularly enterd trades more based on medium timeframes which leads to expensive fomo based entries
  • If i would not have improved that way i would have a huge drawdown in actual environment, not a small one

2023-04-04

Post market

Looking back

  • We have a piling on on the daily. The normal thing is to balance a little
  • We get that liquidation break after failing above A
  • Not easy to trade as there were news at this time
  • I shorted near B low as it became clearer, so i was positioned for a first directional move
  • Did not get a scale out because orderflow did not indicate
  • Created a nice afternoon rally high with a volume peak in I period. Great place to get full size again if you are not already
  • Given the flagpole on the daily i saw potential for second directional move. I stayed in position with a scale out at low of day
  • Never reached lod so i closed in K. If we do not follow through there is potential for a short squeeze in which you do not want to be short

Looking forward

  • We now put put the daily in Balance which is very healthy
  • Sellers had chances for a bigger break yesterday as well as the day before yesterday
  • A bigger break did not occur which indicates that the market is strong
  • Balancing on the daily normally needs a few days of time
  • Trade the next days in that context

2023-03-31

Post market

Market

  • Impressive finish of first quarter by the bulls
  • Now we have piling on and some balancing would be healthy to bring short term traders inventory in balance
  • In other words: To kick out some poor loated longs (fomo buyers)

My trading

  • I had some small losses in the beginning and later participated in the second directional move
  • My behaviour in the beginning caused unnecessary emotional trouble
  • I have multiple years of experience daytrading the ES
  • I have guidelines resulting from this experience
  • Staying with these guideline takes out much emotional trouble and makes my life much easier

My gap guidelines

Large gap rule:

Do not follow large gaps early. The market usually takes care of old business first. The first order of business is the inventory correction

Small gap rule:

Do not fade small gaps. After small gaps we sometimes see an open drive/ gap and go

2023-03-30

Post market

Middle picture

  • Gaps and vpocs stacking
  • We see more range in eth as in rth
  • On the one hand we see higher prices and higher value and gaps are holding which is positive
  • On the other hand the participation (volume) is low which does not confirm higher prices
  • We have a piling on which increases the odds of a liquidation break
  • Anything can happen. It´s also possible that covering or new money comes in. There should be enough cash in the market waiting for lower prices
  • PCE at 8:30 could things shake a little
  • In summary this is still a very indecisive market

Daytrading

  • It is ultra important to a) buy relatively low AFTER a break and b) scale out moderately
  • Of course shorts are also tradeable especially early in the session when we come in high with long overnight inventory
  • Trade from the framework that the market is controlled by market makers

If the market wants up wait for „relative oversoldness“

If the market wants down wait for „relative overboughtness“

This is the way to construct

Asymmetric Opportunities

2023-03-29

Post market

  • Large gap up above the downtrendline in spy
  • Trying to gap and go
  • Fail and fade
  • Fade is slow so very tough to trade
  • In the end the gap holds and fills less than half. But it needs until D to create a change
  • Then we consequently go up but also very slow and hard to trade
  • In the end we saw a classical development: Fade followed by a two leg up-move. But everything so slow and small that it is hard to trade
  • I ended with a small loss. Did everything right 

The market has a good chance to go higher