The Emini day trading Rules of Thumb section is going well. Almost done with only a couple left. These rules really help me – they stop me making stupid mistakes and taking low probability trades.
Today’s video is all about there being a maximum of 2 trend or directional moves per day. We either get a trend day (up or down) or a reversal day (down then up or up then down). We rarely get a day when the market is “schizophrenic” and moves up then down then up again (or vice versa).
There are two important cases when this rule of thumb doesn’t work:
- On FOMC days the market can have multiple large trend moves after the announcement at 1 pm Chicago time and appear quite “schizophrenic”.
- On small range days (less than about 8 Emini points, top to bottom) the market can bounce back and forward quite a few times, but none of these moves are a strong trending move.
This afternoon had a great little Long trade that set up and took advantage of this Rule of Thumb. We had cyclical Support on all 3 timeframes (500, 1500 and 4500 tick charts) and blue Professional down bars, showing the Pros buying the dip. It ran for a 5-6 points before the Close.
Good luck with your Emini trading tomorrow.