[FulcrumTrader]

I have noticed a good shift with all the Momentum price moves with follow through I have been watching in the market the past few months. There has been really good energy behind many of these Momentum moves and I have found myself working these type of trades frequently past weeks. The markets have provided many Momentum based opportunities in both Futures and Forex action......currencies alone have had brilliant moves.

For those taking shots at these very robust set ups with solid follow through, what are your weapons of choice for targeting the action?


Recent FED day trade example for a Momentum set up I traded -

[electroniclocal]

Fulcrum, in addition to tracking the order flow, I use 2 CCIs to track trends and changes in Momentum. Using a 45 and a 6 or 9 period CCI, I use both the interplay between these two CCIs as well as identifying turns in Momentum. Examples of a number of these trades are here.

[BlowFish]

Hi FT, Might I ask why you don't use other side resting inventory as a target? Is it because this type of trade you are simply going for a quick momentum fuelled move? If momentum was strong after 21 ticks would you hold on if there was no resting inventory in the way? Would you bail early if momentum subsided?

Sorry for the avalanche of questions. It seems to me that you have built up a very robust set of tools and I was a little surprised that you did not appear to be looking at them for exits (though I could quite easily have missed something).


The trouble I find with 'momentum' is that it can change very rapidly (instantaneously actually). Of course you can smooth or decrease the sampling rate with the issues of lag that introduces. I don't use a momentum indicator per se though I have looked at pace, trade intensity, volume, delta etc. to construct novel and useful indicators. I think after a while you can gauge momentum pretty well by how price develops in real time.

If I wanted a pure momentum indicator I would look at change in price (velocity of price) multiplied by the volume that occurred during that change (the 'mass'). I guess delta nuts might split up the volume dependent on the bid/ask at the time. I would average this over a sample period.

[ziebarf]

The trouble I find with momentum is that it just costs too dang much!

"FulcrumTrader Premium Daily Advisory Service
$57.00 per month subscription"


Or this guys momentum, which is really steep!


"CONSISTANT PROFITABILITY SET: $2500

Over 200+ hours of theory and live recorded training in 17 DVDs
2 hours of 1:1 mentoring by EL in 8 separate sessions
Full set of iterative trading plans
EL Trade Summary and management DVD"

[UrmaBlume]

Chris,

Price/Cumulative Delta divergences can indeed be great setups for momentum trades.

One way to find where these trades are most likely to occurr is by scanning different instruments for the out-of-sequence presence of commercial/smart money and the presence of out-of-sequence local price volatilities.

This table shows a scan of the most active US futures for unusual activity from smart money/commercial actors plus for greater than normal local price volatilities.

The setups you describe are much more likely to be where there is more commercial activity and they result in increased price volatility. The scan below was taken 1015 9/27 PST:

It's always better to be trading what's hot and not trading what's not.

Cheers

UB

[FulcrumTrader]

Originally Posted by ziebarf »

The trouble I find with momentum is that it just costs too dang much!

"FulcrumTrader Premium Daily Advisory Service
$57.00 per month subscription"


Or this guys momentum, which is really steep!


"CONSISTANT PROFITABILITY SET: $2500

Over 200+ hours of theory and live recorded training in 17 DVDs
2 hours of 1:1 mentoring by EL in 8 separate sessions
Full set of iterative trading plans
EL Trade Summary and management DVD"

Actually, I have no idea who's course you are showing that costs $2500 for momentum trading? Who is that and show a website link.....thanks. Also, the FulcrumTrader chatroom has nothing to do with Momentum trades....that room is for those trading supply and demand based Cumulative Delta methods.

[FulcrumTrader]

Originally Posted by BlowFish »

Hi FT, Might I ask why you don't use other side resting inventory as a target? Is it because this type of trade you are simply going for a quick momentum fuelled move? If momentum was strong after 21 ticks would you hold on if there was no resting inventory in the way? Would you bail early if momentum subsided?

Sorry for the avalanche of questions. It seems to me that you have built up a very robust set of tools and I was a little surprised that you did not appear to be looking at them for exits (though I could quite easily have missed something).


The trouble I find with 'momentum' is that it can change very rapidly (instantaneously actually). Of course you can smooth or decrease the sampling rate with the issues of lag that introduces. I don't use a momentum indicator per se though I have looked at pace, trade intensity, volume, delta etc. to construct novel and useful indicators. I think after a while you can gauge momentum pretty well by how price develops in real time.

If I wanted a pure momentum indicator I would look at change in price (velocity of price) multiplied by the volume that occurred during that change (the 'mass'). I guess delta nuts might split up the volume dependent on the bid/ask at the time. I would average this over a sample period.

I do frequently use the next zones of resting inventory as targets for thinning out multiple contract positions. I would though at least cover 2/3'rds of my overall trade at the 3 to 1 (risk:reward) target. You do not have to cover all the trade at the 3:1 target but per my plan I cover 2/3'rds. If I do get counter indications printed while in the trade, I am eligible to terminate trade at that point per my trade plan for the set ups.

I do look for Momentum moves in the market at 4 key times of the day....some time based (like first hour of a cash session), and at other times just after a supply and demand event has played out (like an inventory grab). I think finding the momentum moves that actually stick in a market do need to have solid reasoning for the energy that is creating the action. For myself, I have found 4 key times of the day and/or events that initiate some of the best actionable Momentum moves.....so I do not take all the signals I see each and every day. I wait for Momentum signals within the 4 times or events that I have set in my trade plan.

[FulcrumTrader]

Originally Posted by UrmaBlume »

Chris,

Price/Cumulative Delta divergences can indeed be great setups for momentum trades.

One way to find where these trades are most likely to occurr is by scanning different instruments for the out-of-sequence presence of commercial/smart money and the presence of out-of-sequence local price volatilities.

This table shows a scan of the most active US futures for unusual activity from smart money/commercial actors plus for greater than normal local price volatilities.

The setups you describe are much more likely to be where there is more commercial activity and they result in increased price volatility. The scan below was taken 1015 9/27 PST:

It's always better to be trading what's hot and not trading what's not.

Cheers

UB

Yes very good point, this is why I frequently will track a supply and demand event play out in the ES but I will actually trade a different instrument to take advantage of the move. Many times I will trade TF or DAX when I see certain Momentum moves initiate in the ES.....of course there are also times when I just take the trade in the ES itself. I watch market breadth during the trade day and I watch the futures instruments relation to each others pricing/delta levels (too see what looks strong and what looks weak).