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  1. Our NinjaTrader community of 60,000+ traders continues to expand around the globe and we want to thank you for helping us further our leadership role in the industry. As a token of our appreciation, we are inviting all members of the NinjaTrader community to take advantage of discounted prices on a NinjaTrader lifetime license or an opportunity to change your existing license. This limited-time offer provides significant savings on each of the following purchases: > Single Broker Lifetime License: Only $999 ($100 savings) > Multi Broker Lifetime License: Only $1349 ($300 savings) > Change to a Multi Broker Lifetime License: Only $350 ($200 savings) Lock in your savings today and have access to all future versions of NinjaTrader for life! These limited-time discounts expire on Friday, December 20th. If you have any questions regarding these discounts or how credits from your existing lease may be applied to a new purchase, please send an email to platformsales@ninjatrader.com. Thank you again for your ongoing support as a member of the NinjaTrader community. Please note: CQG only available to eligible customers. This communication is sent to you by NinjaTrader, LLC, a software development company which owns and supports all proprietary technology relating to and including the NinjaTrader trading platform. RISK DISCLOSURE: Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
  2. Open a new futures brokerage account by August 31st with a NinjaTrader Lifetime license & receive: Commission-Free Micro trading for the rest of 2019 $50 margins on Micros Access to the most powerful version of NinjaTrader Free platform upgrades for life! Simply open & fund your new account in August with as little as $400 & purchase a Lifetime license. You will then receive a monthly rebate for commissions on all Micro futures trades placed through the end of the year.* Open Futures Account A NinjaTrader Lifetime license provide access to all premium features including Chart Trader, OCO orders, Order Flow +, and more. With the recent launch of Micro E-mini futures from the CME, now is the ideal time to save even more with NinjaTrader! *Program Requirements Account must be funded by August 31st, 2019 with $400 minimum A new NinjaTrader Lifetime license ($1099) must be purchased by August 31st, 2019 Standard exchange, NFA and routing fees still apply A commission rebate will be applied monthly to the account holder’s balance Commission rebates will only be applied to Micro futures trades placed on or before December 31st, 2019 2nd accounts for current NinjaTrader Brokerage account owners not eligible for rebates Futures and Forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
  3. Here is a quick educational video we created on Options on Futures.
  4. Open a new NinjaTrader Brokerage account by June 30th and SAVE on your Lifetime license purchase or lease: Lifetime License:Only $899 ($200 savings) Quarterly Lease:3 months free ($225 savings) Along with access to premium features including Chart Trader, OCO orders & more, you will also save on trades with discount commissions as low as $.09 per Micro contract and low forex spreads. Simply fund your account with the account minimum of $400 to lock in your savings. With the recent launch of Micro E-mini futures from the CME, now is the ideal time to open your account & trade with the full power of NinjaTrader’s award-winning platform! Questions? Contact us at 312.262.1289 or brokeragesales@ninjatrader.com. Platform License Discount Requirements: Account must be opened & funded in June 2019 with $400 minimum Discount is available for new US-based and international futures accounts and US-based forex accounts Discount is applicable to software purchase or lease only 2nd accounts for current NinjaTrader Brokerage account owners not eligible for platform discounts
  5. Options on futures are now available to trade through NinjaTrader Brokerage! This expansion allows options traders to save on their trades with NinjaTrader’s deep discount commissions and benefit from industry-leading support. Why Trade Options on Futures with NinjaTrader Brokerage? · Discount Pricing: Save on trades with simple low rates · Span Margins: Real-time portfolio margining · Low Minimum: Open your account with only $1000 In addition to the FREE NinjaTrader platform included with all brokerage accounts, traders will also have access to the CQG Desktop web-based platform to trade options on futures. · Current Clients: Contact Brokerage Support to start trading options on futures · New Clients: Open Your Brokerage Account Let Us Know How We Can Help Contact our brokerage team at 312.262.1289 to discuss how NinjaTrader’s solutions can be customized for both new & experienced traders. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
  6. Trade Micro E-mini Futures with NinjaTrader Brokerage Micro E-mini futures from the CME Group have arrived! You can now trade the most popular equity index futures contracts at a fraction of the cost & ONLY $50 margins with NinjaTrader Brokerage. At 1/10th the size of the E-minis, Micro E-mini futures allow traders to access the following highly liquid index markets with a fraction of the financial commitment: S&P 500 NASDAQ 100 Dow Jones Industrial Average Russell 2000 Why Trade Micro E-mini Futures? Learn how these contracts are an ideal opportunity for new traders to enter the market at a reduced cost in this 2 minute video. NinjaTrader is the premier destination for futures trading providing: Discount Pricing: Save on trades with simple low rates Low Margins: Only $50 for Micro E-mini futures Low Minimum: Open your account with only $400 Free Platform: Includes all key features needed for live trading Ready to Start Trading Micro E-mini Futures? Contact our brokerage team at 312.262.1289 to discuss how NinjaTrader’s solutions can be customized for both new & experienced traders. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View Full Risk Disclosure.
  7. NinjaTrader is making it even easier to get into the trading action in April. For a limited time, you can open & fund a new futures brokerage account with ONLY $400! With $50 day trading margins available for Micro contracts and deep discount commissions, now is the ideal time to build experience trading these popular CME Group contracts. LEARN MORE Why Trade Futures with NinjaTrader? FREE Platform included with brokerage account Unlimited simulated trading with live futures market data Clear savings through discount commissions Low day trading margins including $50 for Micros and only $500 for ES Questions Contact us at 1.800.496.1683 or brokeragesales@ninjatrader.com. Program Requirements Account must be opened & funded in April 2019 with $400 minimum Futures and Forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.View Full Risk Disclosure.
  8. There has never been a better time to start trading futures with NinjaTrader! Open a new Futures account by March 31st and receive up to $500 in commission rebates. Simply fund your account with the account minimum of $1000 and start trading! You’ll receive a rebate back on all future trades placed prior to May 31st. OPEN ACCOUNT Why Trade Futures with NinjaTrader? FREE Platform included with brokerage account Clear savings through discount commissions Low day trading margins including only $500 for ES 1000s of Apps & Add-Ons to personalize your platform Questions? Contact us at 1.800.496.1683 or brokeragesales@ninjatrader.com. Commission Rebate Requirements: Account must be opened & funded in March 2019 with $1000 minimum Trades must be executed on or before May 31st, 2019 Commission rebates will be applied to the account holder’s balance monthly as a $0.25 credit per futures contract Standard exchange, NFA and routing fees still apply Existing NinjaTrader Brokerage account holders are not eligible for this promotion Futures and Forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.View Full Risk Disclosure.
  9. OEC Trader is now called Gain Trader and the Gain API now allows you to have simultaneous connection to mobile and web. Thanks, Matt Z Optimus Futures www.optimusfutures.com There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
  10. Does anyone know of any indicators, indices, or market internals that function well during the overnight session for the US index futures, bond futures, oil, gold, type of 24 hr trading during non US hours?
  11. Hi all traders, I'm Larry Pi @ ninZa.co ninZa.co provides traders with essential, affordable, excellent, and elegant NinjaTrader indicators. There are also many FREE AWESOME indicators that you can download at ninZa.co. Please visit my website and pick the indicators you like/need! Link: ninZa.co
  12. High leveraged trades in Futures & Options can be tricky. Stop losses can be used for risk management but a few stop loss triggers can take away a substantial part of your capital. What is important is the entries are timed precisely and once an entry is made, ride on the position till exit. Equally important is the stock selection which can give the best trending position. Using Triple Trend Oscillator one can analyze the long term trend and take position in a shorter time frame with a precision entry using a minor trend, all this information available on the same indicator. An advanced option trader has highly sophisticated tools to trade in options where each of the factors affecting option pricing is analyzed. However, for a trader it boils down to managing the intrinsic and time value of an option. Hence it is important for an option trader to know the trend force and direction before trading in options. A strong trending move can negate the effect of theta (time value erosion), keeping the option trader in profit, even when close to expiry. Trading naked options, if timed correctly, can become a relatively risk free, simple and high profit strategy . An option trader using the Triple Trend Oscillator will be in a position to judge the tend quality. The position of trend oscillators close to zero indicates sideways moves which can kill an option trader. The best trend structures would be when the trends are placed away from the zero line indicating strong trending move in either direction. Again the position of the intermediate and minor trend would indicate the trend strength and the trigger line could be used to take position in the direction of the major trend. Notice in the following chart, how the thin black line zero crossover can be used to make precise entry in the direction of a larger trend. Even if you miss the first entry or are not confident, one can always use the second crossover for a good directional trade.
  13. Based on my own experience as well as working with hundreds of traders over the years, I have come to the conclusion that there are three major components to winning in the stock market. An excellent Method, a customized Plan that fits YOU, and the right Mental Approach. While mastery of each of them is paramount, building the right Mental Approach seems to be the most challenging to master for the majority of traders. Without a winning attitude and the proper mindset, even the soundest of all methods will lead to lost money. In fact, a winner is more defined by mental make-up than by method. This is why the trader with a winning attitude and a faulty approach can still produce positive results, while the trader with a loser's mentality will stumble and fall, despite an excellent approach. Don't think so? What do you actually think causes one trader to play six winners in a row, and another to experience six consecutive losses? How is it that one trader can use a daily newsletter and win, while another uses it and loses? What do you think differentiates the person who buys XYZ and wins, from the person who buys the same XYZ and loses? The difference lies in the Mind, plain and simple. One of the most revolutionary axioms I have ever come across is this: "As a man thinks in his heart, so is he," and this universal truth is just as applicable to traders as it is to anyone else. Monitor the attitude of a winner and you will find a level of confidence and certainty that is almost beyond belief. And while most people will make the mistake of assuming that winners are confident and certain because they win; the truth is that winners consistently win because they are confident and certain. No method, however sound, will work for the trader who mentally pictures himself losing before each trade is placed. And no amount of Money, however large, will save the individual who secretly harbors the belief that, "Whatever I touch, turns to mush." As choice-making individuals, we must choose a winner's mindset. You can never fail, or even feel like a failure, if you recognize the simple fact that you are not your results. You create them, which means that you posses the power to alter them if you happen not to care for them. There is room at the top for all dedicated traders, but the first step is to actually believe that. The second is to start acting like it. Think the part, then act the part and the rest mysteriously takes care of itself. But don't take my word for it. Just try it. Jared Wesley
  14. I notice that the ESZ4 is trading 9 points lower than the ESU4 but with the same action and higher volume. Can someone elaborate this price difference? Do the price always move in unison? SHould I be trading the ESZ4 rather than the ESU4? Are there unique oppurtunities or dangers associated with rollover? I am a begginer and this is my first rollover period. I would appreciate any veteran insights!
  15. If you have $10,000 to put towards your trading account, don’t waste your time. As a matter of fact if you have $15,000 or even $25,000 in your trading account, don’t waste your time. That is, don’t waste your time with careless mistakes because every trade counts. The Learning Curve is Flat The learning curve for learning how to trade futures for a living can be extremely flat, that is you may spend countless hours learning all there is to know about the trading the markets, but you aren’t seeing a return in profits. Your time spent learning increases, but your account stays the same, or in many cases shrinks. If you want to win at this game and become consistently profitable over time then you absolutely, positively, must be disciplined 100% of the time, all of the time. Don't Waste Your Money on Tuition Many people like to credit their trading losses in the early years towards “tuition” or “paying their dues” and while there is something to be said for learning by doing, there is no reason for justifying a trading mistake. Every error you make in trading is costing you money. That First Step When starting out as a trader, you probably traded a practice account for a couple of months and began to learn the ropes, testing your strategy (my broker of choice is Infinity Futures for both practice accounts and live trading). After becoming anxious you make the switch to live trading and realize that most of what you learned goes out the window when you’re in a live trade. Your emotions come into play and your methodology becomes foggy. And the Light Bulb Goes Off There are many “light bulb moments” along the way, but limiting the mistakes when you’re trading a small account is crucial if you want to prevent blowing up your account. Along with reading the material on the EminiMind Blog I recommend reading and learning from the mistakes of other top traders in the Market Wizards series. 3 trading mistakes that will lead to disaster: Impulse trades – If you find yourself clicking sporadically on the trading ladder you need to stop immediately and reevaluate your trading plan. Revenge trading – Just because you had a loss doesn’t mean your next trade needs to be a home run, try for consistent singles and doubles with a few strikeouts in the mix. Trading too big for your account size – If you’re trading an account size of $10,000 then the max number of contracts you should be trading on the ES or 6E is 2, enough said. The Only Guarantee While no one can guarantee your success trading the markets (if you come across such claims be leery) I can guarantee you that if you make any of these 3 trading mistakes you will lose money. Treat your trading capital like you would your children, or if you don’t have children, like a one of a kind Porsche, you wouldn’t throw your kids in front of a bus so don’t piss away your trading account with avoidable mistakes. Patience pays in trading the markets so don’t waste your time trading a small account. Every trade is a valuable step towards generating consistent income trading futures for a living.
  16. Good Morning. For Futures, I'd like to understand how the Implied Volatility (iVol) of a particular option chain relates to its underlying. Better to use an example: I'd like to write puts on the Dec'13 Option Chain for Natural Gas (/NG). This particular Option Chain is associated to the December Contract (/NGZ3). Obviously, I'd like to time my short position with a high iVol, ideally after a peak has occurred. My doubt is if the iVol associated with the Dec Options is tight with the specific Dec contract. One can tract the iVol for each specific contract and they all behave differently. I use ThinkOrSwim for this purpose. On the other hand, iVolatility.com provides a iVol index for the underlying as a whole. Which approach better reflects the iVol of the Option chain? Thanks,
  17. The secret to day trading is that there is no secret. Smart-ass, huh? Bear with me, I'll explain. A secret means that not a lot of people know about it. When trading, do you want to look at something that only a few people are looking at? So that when you make the decision to enter, it's you against everyone else? Hell no! That makes no sense. Even Paul Rotter, probably the largest individual futures trader, said he wouldn't be able to go against everyone else if the market was going one way. So you want to be on the side of with the most volume. And where does the majority of futures volume goes through? Trading Technologies' (TT) gateways (I remember a quote on their site that said about 70% of all futures volume goes through them). And what do you see on the screen of every professional trader? Columns of red, blue and prices. What is it? MD Trader that is part of TT's X_Trader (or a competing product that looks pretty much the same)! Don't you think professional traders would tell TT if there was something essential missing on MD Trader if this is what they use all the time? What about X_STUDY (TT's charts that are also part of X_Trader). How many chart types does it support? Not many. How many indicators does that have? Not many, and most of them are based on volume. And why don't traders complain about X_STUDY? Maybe they don't look at charts for decision making? So might it be possible that all the information you need can be seen on this small MD Trader window? Is this even possible? Paul Rotter (same guy I mentioned above) says he looks at charts for orientation, but doesn't make decisions based on that. What does he use to make decisions? The MD Trader! (Btw, this is not a commercial for MD Trader, you can use any competing product that shows you the same information). And what does MD Trader show you with just 5 columns? • All Bids • All Offers • Last Trade (Price and Size) • Volume by Price (a.k.a. Volume at Price, Market Profile, etc) • Your Orders inkl. your estimated position in queue (shown as EPIQ) Why is this relevant? Because this is a market, not some magic world. Bids and Offers make a market and the last trade shows transactions that took place in that market. See, this is simple. This is just a market, no magic. Think of it as a bazar. No one uses charts or indicators on a bazar to make the decision to buy or sell something. Same with the trading pit. And traders in the trading pit also use something else: noise. Noise meant momentum. How can you see momentum in the MD Trader? It's how quickly bids and offers change and how much is how quickly traded. So momentum is another important information that you can't put in numbers, but you can feel looking at the order book. What about Volume by Price? It allows you to find out how much has traded at a price when the last trade information is changing too quickly. It also summarizes the entire day's trading. You don't know whether the volume that you see there are still open positions or whether they have been already closed. But some of them are likely to be open. And those traders care where price is right now. You don't know when the traders that are on the losing side are going to puke, but you know that they are going to puke at some point. And that point comes closer the more the market moves against them. And they don't care whether there was an S/R on the chart or there is some indicator telling you to buy or sell, when they want out, they get out and this will affect the market. What about EPIQ? It shows you how likely it is that your limit order is going to get filled. Do you really need this? No, but it's good to know. No reason to enter at market, if your EPIQ is 10 and you expect a few more trades at that price. I hope I've given you something to think about. And please don't flame me in this thread, it won't change anything. That's like saying Newton's law of gravity does not apply to the part of the world that you live in. It is what it is. I'll post a few snippets of my favorite posts made by other traders from this forum to illustrate what I mean by all this.
  18. My current day trading methodology is an amalgam of volume profile, Market Auction, and VWAP principles. My instrument of choice has been AAPL options. A couple of months ago I made the switch from trading weeklies to a little further out and deep-in-the-money. I just couldn't handle the high rate of time decay anymore. Initially it was a good switch, however recently I have come into a situation where the spread has become problematic. I exclusively use market orders when entering/exit. During the high liquidity part of the day's open, the spreads are awful. For example this morning I had bought some calls on a break above VWAP, the market order was literally 1.40 above the bid. Horrible way to start a trade, especially given that it moved against me. In the past I had always found it difficult to time a limit order with the chart of the underling where I want my entries/exits. With AAPL options, the bid/ask can move extremely fast. At any rate, I was curious what everyone's thoughts were on this matter. I know of a few people having great success trading futures. They have a very structured system and have no issues putting in their orders at particular points in the chart that meet their auction criteria. I feel at times that with options, I'm having to juggle elements that take away from it being a similar "mechanical" trading experience. Thoughts?
  19. Alright guys, so I made a poor call on AAPL and I'll clear that up later. I'm still long AAPL, by the way. Today, I want to talk to you about a great trading system that I utilized to bring me gains in futures trading. It is called the floor trader strategy and you can read more about it right here: http://www.trading-naked.com/FloorTraderMethod.htm There are 3 things to remember with this method: 1. The first is to watch out for retracements; a minor rally in a downtrend and a minor decline in an uptrend. I have always loved retracements as they are so easy to identify and trade on. 2. Exponential Moving Average (EMA) is vital and it involves the 9 and 18 EMA lines. 3. Identify entry level or trigger.
  20. Emotionally it's a lot easier to buy on strength than to buy into weakness. Buying into a falling market feels unnatural. Your instincts warn that price may continue to fall resulting in lost capital. On the other hand buying when the market makes new highs feels more natural. Price is moving in your direction and the sky is the limit! However, what feels natural or easy is often the opposite of what you should be doing. In this post I'm going to compare these two different trading strategies on the S&P E-mini futures market and see which one produces better results. I created two simple trading systems in EasyLanguage. Both systems will go long only. Both systems will utilize a 200-day simple moving average (SMA) for an environment filter. Long trades will only be opened if the closing price is above the 200-day SMA. All open positions are closed at the end of the 5th day. No commissions or slippage will be deducted for these tests. The tests were all executed on the S&P E-mini futures market between September 1997 and September 2011. BUY NEW HIGHS First let's create a system that goes long if price creates a new three day high. In other words, when price creates a short term breakout on the up side, we will open our long position. This will represent our buying into strength test. Below is the equity curve. The system is profitable, but we have an ugly looking equity curve with deep drawdown. BUY PULLBACKS Instead of going long on a new three day high, we are going to go long after three consecutive lower closes. This system will represent our buying into weakness test. The equity curve below depicts this system. What a difference! This equity graph looks great all the way until the recent market volatility that hit during the summer of 2011. Our last trade produced a large loss at the very end of our equity curve. Remember, both of these trading systems have no stops. The point is clear. Buying into weakness outperforms buying into strength for the S&P.
  21. What I am sharing is my interpretation of Open Interest in futures. What is “Open Interest” in futures? For every single futures contract of open interest there is a buyer who is “long” and a seller who is “short”. There are never more longs than shorts and vice versa. At the end of the day each contract that has not been closed out between the “long” and the “short” equals one digit of “open interest”. If open interest is increasing it means that there is an increase of both buyers and sellers that are building a position or putting one on. This has nothing to do with volume increasing. Volume can decrease on a trading day and open interest can increase. Likewise, volume can increase on a trading day while open interest can decrease for that day. A single digit of “volume” is a transaction between a buyer and a seller but not necessarily between a long and a short. Now how does that make sense? There are two types of buyers, those who are buying to initiate a “long” position, and those who previously sold “short”, and are now buying to close out a position. If you are the buyer of a contract and you are going “long”, what affect will that have on open interest? It all depends on whether or not the seller who is selling it to you is liquidating an existing “long” position or if they are initiating a “short” position? Next… If you are looking to buy because you are closing out an existing “short” position, what effect will that have on open interest? Again it would depend on whether or not the seller who is selling the contract to you, is closing out an existing “long” position or if they are initiating a “short” position. The two types of sellers are those who want to sell and initiate a “short” position, and those who were previously “long” and are selling to close out their position. This is why volume or transactions don’t have to be between a “short” and a “long”, just a buyer and a seller. The topic of open interest and volume along with their implications can be as confusing as it gets in this business.If you are confused or having difficulty understanding this so far I would suggest coming back again and re-reading before moving on. Let’s look again at the scenario where you are buying to initiate a “long” position. If the seller who sells you the contract was already “long” and closing out their position, then open interest will stay the same. There is still someone short on the other side of that contract out there.So you have volume for this transaction but open interest does not change. In this same scenario, let’s say the seller of that contract to you was instead actually someone initiating a “short” trade, than the open interest will increase. Volume can be down from a previous day and open interest can still increase and vice versa. In summary, if the NET buyers of the total contracts traded on a given day want to initiate “long” positions and so do the NET sellers want to initiate “short” positions, we will see open interest increase. If the NET sellers of the total contracts traded are liquidating their “long” positions and the NET buyers are also closing out their “short” positions on a given day, then open interest will decrease. If “longs” are buying or selling to other “longs”, and if the “shorts” are buying or selling to other “shorts”, open interest will not change. What is also important to add to this conversation is that money is never made or lost in the open interest as a whole. This is what it means when futures are stated to be a “zero sum” game. If you make $1,000 in profits trading futures today, you can be sure there are positions that have an equal $1,000 in losses today somewhere else as well. Profits and Losses are debited and credited in equal amounts at the end of each day from those who traded or have positions on. In order for you to make $100,000 trading futures, other traders or investors will lose $100,000. One should know their competition AND know themselves before considering whether or not they can thrive or even survive in this business. Lastly, the greater the open interest the greater the speculation and/or hedging and vice versa in the futures markets. I believe this is extremely important in determining the probabilities for supply and demand within the profile of the auction market in the weekly time frame. Questions for the readers: If open interest is increasing or decreasing is that bullish or bearish? What if volume is decreasing or increasing in either scenario? Are you bullish, bearish or neutral? What if the commercial traders are going NET long or NET short in each scenario? What if price is increasing or decreasing with each one of these different scenarios? Do you know which one of these scenarios gives you the greatest “edge” with your system? Ignore the changes to open interest and you may be wrong on what the changes to price, volume, and the COT report mean. Yours truly, Scott Pluschau This piece was written by one of TopstepTrader's Funded Traders Scott Pluschau TopstepTrader http://www.topsteptrader.com seeks to find and develop undiscovered trading talent from around the world. While in our program, those who display a strong trading skill and aptitude will be backed as a fully-funded trader.
  22. Using Pivot Points to make Better Trades Pivot Points have been used by floor traders at the major equities and futures exchanges for a long time. Traders found that the price tended to hover near the pivot level and trade in between the pivot and support and resistance levels generated by a simple calculation based on the previous day’s high low and close. One advantage of using Pivots is they are a predictive indicator as opposed to lagging. Predictive Vs Lagging Indicators The majority of technical indicators most traders use such as moving averages and RSI are lagging. Meaning they are telling us what has already happened, or at best, what is happening in real time. Few indicators are predictive; one type of predictive indicator is Pivot Point study. Pivot Points use old data to predict future price movement, and, since technical analysis is based on the idea that many people looking at the same thing will draw similar conclusions, we can use pivot points in a variety of ways to improve our trading. Pivots have been used by floor traders for many years, traders found that daily price action seemed to fluctuate more intensely around certain levels based on the previous day’s high, low and close. Traders also found that by using the pivot point and the previous day’s range, high and low, they could set support and resistance levels that price respected. There are several methods of calculation for these pivots we will explore the classic calculation method in this article in detail but we will also discuss the alternative methods. Classic Pivot Points To calculate the pivot point, take the previous day or session’s high(H), low(L) and close©, add them together and divide by 3 [(H+L+C/3 = Pivot Point (PP)] Now we can calculate the support and resistance levels based off of the pivot, Support 1 is (PP x 2)-H , Resistance 1 is (PP x 2) – L =, S2 is (PP-Range), S3 is(PP-Range) x 2 and S4 is (PP-Range) x 3. R2 is (PP+Range), R3 is (PP+Range x 2) and R4 is (PP+Range x 3). Range is High-Low. E-mini S&P500 Chart: For this example we will use the E-mini S&P 500 futures. The previous session high was 1124.25, the low was 1110.25 and the close was 1122.25 Using these values we can calculate the pivot point, which is 1118.92, Support1= 1113.57, Resistance1=1127.58, S2=1104.94, S3=1090.92 and S4=10796.92. R2=1132.92, R3=1146.92 and R4=1160.92. Looking at this chart, we see that when price fell, it fell exactly to the first level of support and bounced higher. We used the exchange hours to set our session and ignored the Globex/overnight session when calculcating our pivot points. The reason we did this is because much more volume is traded during the exchange session and the institutions that really move the price are trading during these hours. Most institutions do not trade the low liquidity overnight session unless there is a news event. So when the market opened the next day it immediately fell and found support exactly at S1. The difference between R1 and S1 was about 14 points, which is a pretty large range for this contract. In other words, it would take a major event to push the price to the next level of support or resistance (S2, R2). By using S1 as the buy entry and our pivot point as a take profit level we can use S2 as the Stop Loss level, the difference between S1 and the PP was 5.34 (5.25 rounded down, which is 21 ticks on this contract), so that was our profit potential on this setup. Conversely, we could have set a buy stop slightly higher than R1 and a sell stop right below S1, this would be more of a breakout strategy where we look for the price to move through either level with momentum and continue down to S2 or move higher to R2. Alternate Calculation Methods There are several methods to calculate pivot points, 2 alternate methods are Woodie’s and Fibonacci. For Woodie’s method instead of using the previous session’s closing price, we use the current session’s open price. The formula to calculate the pivot point is PP=(H+L+(Today’s Openx2)/4. Our Support and Resistance levels are calculated the same way as the classic method. Another method is Fibonacci, this method uses the Classic calculation to find the Pivot Point (H+L+C)/3 but uses the major fibonacci levels to calculate support and resistance levels. S1=PP-0.382 x (H-L), S2=PP-0.618 x (H-L) and S3=PP-1.0 x (H-L). R1=PP+0.382 x (H-L), R2=PP+0.618 x (H-L) and R3=PP+1.0 x (H-L) Here is a table using the same Open, High , Low and Close data to compare the different calculation methods: Combining Pivots with other tools. Pivot Points are a valuable tool for any trader, however, no single tool tells the whole story, we are looking for multiple indicators to align and confirm a move. Meaning, if the price is nearing R1, our RSI is above 90 and we have an important Fibonnacci level at or around the same price, that validates our prediction that we will encounter resistance more than relying on any 1 indicator. It is important to look at different indicators that tell a different story. For example if you are using a moving average crossover for entry confirmed by a MACD, you are basically looking at the same thing in two different ways, a MACD measures the difference between 2 moving averages so of course the signal will be confirmed! But if we mix the inidcators up by using a momentum indicator such as RSI or Stochastics, now we are looking at 2 different instruments that are giving a similar reading. Combine these indicators with support and resistance tools such as pivots and Fibonnacci, now you have 3 totally different indicators for confirmation, that means you have a much better chance of making a good trade. You may find yourself taking less trades, however this is about quality, not quanitity. In the end, trading is all about probablilty, and if you put the probability in your favor over and over again, you will increase your chances of coming out on top. Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors. Jesse Richards is a Series 3 registered Commodities Futures Broker and a Principal of Fast Trading Services LLC
  23. I don't have enough historical data to check back very far but it seems to me that the Bund (FGBL on Eurex) is at its highest price (126.95) it has ever been. Is that true? Can anyone confirm or correct me?
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