Predictor

Currently short... will cover at 1404 but anticipate break lower..

Lot of reports today.. Economic Calendar - Bloomberg ADP report was negative.... break below 1404 could produce a large sell off Keeping an open mind now but was planning to go long but now seeing these reports entertaining the short side

First, I think there is a major distinction that needs to be pointed out because it may not be obvious. There is a difference between being able to make a living wage trading the e-mini over a year versus trading the e-mini for a living. Typically, when one thinks of "making a living" they think of steady, consistent, and risk free income whereas trading results are often non steady, inconsistent, and are at risk. Typically, I look at making 30% of my max risk per day good while keeping my average realized max risk and gain about equal. I also think that risking up to 3%-5% of daily capital is not too excessive if one is consistent. This implies that one needs about 34k to be able to attempt to make a living wage of around 55k. The problem with this model is that its not at all realistic but is based on best case vs worse case scenarios. In reality, it is best to consider worst case scenarios. In worst case, a trader should need enough savings to be able to run himself for at least a year and a trading account large enough to cover a year's losses. Some might say 2 years even. Based on this new minimum, one is looking at about just over 100k. Yet, in truth most traders will see the benefit in having a multiple of that to forgo the benefits of a career and to reduce the risks of over leverage. The mathematics change quite dramatically to favor the trader if the trader has additional income streams, side businesses, etc -- which is why every trader should have such streams. The lesson is clear: for most, it is a much better deal to attempt to make a living wage trading then to attempt to trade for a living.

Algorithms very clearly running stops today.... they run the stops at the lows and then the highs.

Market looks set to retest 7-8

Lot of supply coming in form of iceberg around 7ish.. trade is more two-sided. ---- This supply led to OF drive.. down from 7... may offer out/exit there... test of 8 still seems a possible play

Buy programs going off now... taking out OB imbalances... likely to drive to retest 7ish --- For those who believe the book in futures is spoofed (not talking stocks).. There were about 4,000 orders listed off the 5 and then about 4,000 transacted.. So if there pulled orders there weren't many. --- Nice strong OF drive here... will be looking to see what happens around 6.75-7ish... a drive to 8 is possible.. will be reducing size.

In highly mean reverting market/tight range.. all the buying will be at the highs and selling at the lows as liquidity providers take other side and exhaust both sides.. seeing that sort of activity now... --- Market long... feeling the waters.. wrong move --- Added to long.. very selectively when under water.

Some buying coming in off the 5.75 anticipate this buying to fail.. looks like high frequency algorithmic activity --- Seller pushed just below to 5.25 but buying momentum is now building... price now at 7ish -- Buy side book thinning? May indicate drive lower imminent --- As long as buyers hold 5.75ish then they should be assumed in control.. was anticipating one more flush out but seems slow to come..

Retest of 1404-1405 looks like a possibility... Been super busy readying my software for release but the last several days would have been great trading for my style. If I take any trades today then that's the best setup I feel, although weighing possibility of a break lower.. Order flow is heavy to the sell side indicating lack of interest in the new highs... however I feel shorts are still higher risk and will try to keep to long side.

Swishy, thank you. I appreciate that you see the value. Absolutely, we will be producing more videos. I will be sharing these both as promotional/educational and as part of my own training with the software. Yesterday was a great example where order book imbalances marked every major swing low to the tick. It is very evident that various algorithms are trading based on these imbalances. I plan to make a video to show this and for my own trade review purposes, probably this weekend. Our software can be a benefit to most traders -- employing a wide and diverse range of trading styles. I've had the idea for a systematic trading method that I feel could work well with our software, and I may share this systematic trading methodology in the future, as well. As for free trials, my plan is to make the software affordable enough so that anyone who wants to pay a modest monthly fee can try it out. I'm not asking hundreds (or even thousands -- like some trading software sells for) but a monthly fee that will be lower then I pay for internet (and lower then I previously payed for my cell phone). I'm aware of various trading rooms and so forth that offer trading software and they typically charge over 2x what I'll be asking -- for often bland repackaged generic software. Obviously, a monthly subscription model can only work if the traders who try it out see the value and keep the subscription. Having stated all this, that's not to say that we'll never offer a free trial. But, my goal is to offer it on a low risk subscription basis and not to spread our resources thin by trying to support a large non paying base.

Took a medium loss. If you look at my calls they were spot on today but I executed the game plan poorly. I was able to spot most of the turning points spot on with the orderbook imbalances. Nearly every major pivot low today were OB imbalances. Huge imbalance at the 10 -- shorts trying to get filled. What made it difficult for me was there was a heavy sell side imbalance at the 14, as well. I waited forever for the 16 but not long enough. Today had a good game plan, pegged the day structure, knew the lows, and my software pointed out the pivot swings but series of small errors coupled with tight range made it difficult to pull off.

Market looks set to move higher.. if 12.50 taken retest of 16.25 is very possible

Currently short.. feel 12 is acting as an attractor but will likely see lower. Bias is now long.. tested 12, held. last update..

Not sure if I will trade today.. a bit tired from working on my software overnight. Some of my models suggest a low of around 1411 with high of 1420+ possible. I believe this is over optimistic. I'm thinking we trade down to around 1404-1405. I'm short biased but even so may focus on a long reversals off the 11 and 04 instead of getting short early.

philmg You are describing a perfect hedge. This is not exactly how professionals hedge. Traders can hedge with options -- which is similar to buying insurance. They can also trade a portfolio or a basket with the idea that when some stocks go down then others will go up. In general, a portfolio of low correlated assets will have a lower risk profile. Some traders may want to limit certain types of risk. For example, if I buy the SPY (with USD) then I'm implicitly long SPY and short the USD. However, if my view were such that I was bullish on both SPY and the USD then I might try to mitigate this risk by shorting Euro. This is the basic concept of many futures hedges. What some traders do, and I have did this myself with some success, is to hedge a position say in Forex with a perfect hedge which is equivalent to going flat but which may produce a psychological benefit that would be similar to taking some other action: namely taking a loss to go flat and then re-entering the new position.

In this post, I share what I've found are the best times to execute my orders using the orderflow and orderbook information that I've now available. Executing on OrderBook Imbalance + OrderFlow Reversal I've found the best time for executing orders is after price has moved to a relative extreme (range extension) and the book and order flow are both working together. I like to execute my market orders when the yellow mode is showing that I'm trading with the dominant pressure and again preferably when the order book is supporting me. These entries will almost always provide me with an opportunity of Favorable Excursion. Executing After OrderBook Imbalance Is Taken Out The next time I will execute is when the order flow is able to push through an area of resistance in the order book. When these resistance areas are taken out, the price will often jump about 1 to 1.5 points. Often, it will go on to run several points but not usually without a retrace. I suspect the jump is because there are stop orders that are run on the other side of these resistance nodes. This entry technique is higher risk and only suitable to some market conditions. Generally, if this technique fails then my trade will immediately go into the "red" and my pricing will be bad which often necessitates taking a loss. Executing After Dominant OrderFlow Established At Price Extremes Another entry that works very well is to wait until there is a clearly dominant order flow present. For example, if we've established that the order flow has turned strongly negative then this often a great entry. One way to execute these entries is to wait for a low volume/weak retracement and to offer using a limit order. This helps to avoid getting "trapped" with late market order traders but can be hard to pull off. The second way to execute is to watch for an extreme selling/buying to build on a level and for the price to extend. While it can be tempting to front run such selling, it is best to wait for a price reaction because the pattern is almost identical to a large limit order trader replenishing the bid/offer. We need to make sure that limit order trader is taken out.

More On How I Use My Software/Trading.. I spend most of time focused on the real-time activity in the OrderFlow monitor. I don't perform any historical analysis of the OrderFlow Bars. I primarily watch various custom spread relationships and perform intermarket analysis on higher time frames. I have models that can usually provide a reasonable estimate of the highs and lows for the day. Sometimes I will check these models before trading which gives me a good idea where reversals may happen. At other times, I have systematic strategies that trigger and will give me some inclination of which side I want to trade on.

We're also adding the ability to highlight the high volume nodes for the bars. I track the HV nodes in my work closely and find them very useful. Low Contrast Colors with HV Nodes Bolded

I will share how I view the futures market participants. I do not break it down between retail vs institutional but rather view all traders (of size) as professionals. Large Speculators: The large speculator tends to sit outside the market and have a defined zone where they will exhaust market order traders. These speculators can hold large size and so often determine trend. Primary Liquidity Providers: These are traders who provide liquidity via limit orders. It is my feeling that these limit orders are mostly straight up, i.e not being pulled. There are obviously any number of strategies these traders could use but suspect they use semi-martingale with perhaps options. This participant may also be able to throw around some large size but must clear quickly. Secondary Liquidity Providers: Large institutions who can cause significant price change when they pull their limit orders. Day Traders/Equities Bots/HFT Bots: These are firms that have significant buying power but must clear by EOD. Much of the price action is a result of the margin buying power of these bots/traders. This group also includes day traders who buy at market and drive price. Institutions/Systematic Traders/Funds/Etc: When actively buying/selling can cause significant trend.... often can be identified as a "limit order" price driver. --- Much of dynamics in market are caused by participants (of size) who move slowly versus participants of speed who move faster and are able to front-run the former. This front-running creates instability in price because participants of size tend to control market using limit orders over certain time frames while participants of speed control the market over other time frames. The differences in buying power due to margin controls is a significant factor in this. In general trading is about determining the kind of randomness present in the current market and finding good low risk entries. I find orderflow is help in that.

Bias is short at current levels... risk is higher. Last update for today.

GDP revision seems to be driving factor here..

I've also added the PressureVolume style to our OrderFlow Bars. It is not exactly same because we are looking at the difference in buying/selling that occurs on different price levels in the monitor whereas in the bars we are taking the difference of all the volume that occurs on that price level. The style is similar to bid vs ask except we only show the difference in parenthesis for the positive side. I like this style because all the numbers are now positive.

Josh, everyone should trade according to their plan. I am usually looking to get into a move that can deliver 2-3 points but sometimes will attempt to scalp for less. Today, I am looking for continuation of the drive higher. Unfortunately, they ran it overnight. I'm not sure if I will be trading today but my game plan would either to be to get long on a strong drive higher off the open or buy any significant pullback. I will be looking for a low/reversal in the 1403 region. My models suggest market could drive into the 1409 to 1413 range. At this time, I am weighing if the wild swings we seen yesterday were more typical of high uncertainty markets which suggest more wild swings and reversing or if we have switched to a momentum fuel rally. With the market already being so extended beyond my levels.. at 1416 I am less inclined to attempt a long off the open.

Large imbalance in book at 6.50-7.00 retracement likely.