Emini Day Trading Lessons: 10.25 Points – Trending Through All-Time Highs
The Top Bursts Open
It seems like we've been hanging around these highs forever but it wasn't until today that we really saw the bulls step in for a serious push. It all got going with an early FOMC Meeting Minutes release and once the trend was established it never let go. Unlike some trends it was somewhat choppy and stalled often but in the end buyers kept stepping back in and driving price upwards.
There's always some uncertainty in a bullish trend like this when we are putting in all-time highs. Without any prior marker to go by the various players can be a bit hesitant will take a more conservative approach on the various pullbacks until big hands step in. As retail day traders we're the little fish in a big pond, so what we need to do is look for areas where the big guys are coming into the market and then we can jump on for the ride.
The Trading Day
The day got off to a good start right at the market open as you can see in the chart at the top of this post. This first few minutes after New York gets going is always full of uncertainty but with the earlier news release a trade here made sense. It was aggressive but with tight trade management you really couldn't go wrong with a long that was looking for the prior highs. High momentum in the initial moments of the trade suggested to us that there was likely more upside to be had so this ended up being an excellent +3 winner. I left about a point on the table but at this point in the day the coming trend was far from certain.
Looking for a continuation after that high momentum made sense but the market made things a bit difficult on us with a deeper retracement and I ended up taking a loss before finally catching a better move for 2 points. When it comes to strong trends we need to be aggressive in finding our entries and this was a good case where it paid off.
From there it was more of the same as the trend continued onward. The interesting thing about the market today was the overall structure, as every time we had a move we then followed it with a period of consolidation.
In order to maximize the potential on the day a trader needed to be willing to allow for some draw-down as price consolidated before each continuation.
This isn't the easiest thing to do but if a good trending move is in place we need to allow our trades some "breathing room" so they can get a chance to resume the prior move. It might mean a loss or two overall for the day but in the long run this sort of patience pays off.
The interesting question now is, where does the market go from here? Most bullish runs are associated with euphoria where your barber and the taxi driver are throwing out their new "hot stock tips" and everyone believes this is the one that will never come to an end. This run is different as there's still a great deal of fear in the market and the uncertainty is evident in the price action.
One thing's for sure - the next few weeks should be very interesting in the markets.
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
