Emini Day Trading Diary

Hi,

Plain and simple, what can I say, I play the FOMC annoucement for years now and it never fails to make me good money every time.

Analysis from Briefing -->
anticipation of, and then digestion of, today’s FOMC event that dictated trade. For the fifteenth consecutive time, the Fed raised the fed funds rate by 25 basis points. As had been expected, it wasn’t today’s tightening that sparked selling. The rate hike, to 4.75%, had been fully expected. The catalyst was instead the accompanying policy statement. Some participants had been hoping that the Fed would signal an imminent end to the current monetary tightening cycle. The directive’s diction was little changed, though, and provided no signal that rate hikes are coming to an end.

Specifically, the statement kept intact the wording that "some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance." Furthermore, the statement also maintained the statement about the concern that "possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures." This does not mean that several more rate hikes are certain, but the lack of any change in the statement suggests that the FOMC is currently anticipating raising rates at least one more time, and possibly more. As the Fed has asserted, policy decisions will depend on the data.
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I didnt read the news, I didn't even watched CNBC after the annoncement was made, CNBC was sayingt that fundamentals remain strong and expected a rebound later in the trading session. All these does not really matter to the day trader. We capitalize on short term imbalances. I shorted one contract at 1704 and 4 more at 1701. My profit target was at 1692. Within an hour, my position closed with $960.

Posted by Michael Taylor at 7:05 PM | Permalink | Comments (0) | TrackBacks (0)

Hi,
I made a total of $880 today ( before commission). Market was not really trending, but price movement was swift and decisive and I just felt that I have to be in the market. There was a huge rally from 10:00 till 11:00 am, but I missed it. I decided to wait for it to retrace. Price was at an overbought condition at 11:00 am and when it spiked down by 2 points together with stochastics crossing the overbought line, that was enough signal for me to short it. I shorted one contract at 1703, and another 2 at 1699. When priced touched the moving averages at 1693, I covered my shorts and this translated to $440. Price fell even further to 1685. At this point if you observe carefully, price has moved from 1706 to 1686, a 20 point move, in a matter of an hour. It is reasonable to expect the second half of the market session to concentrate on a retracement. I drew a fibonacci line from peak to trough ( 1706 and 1686) and planned my exit target at retracement level 50% which is at 1696. I longed 1 contract at 1688 and another 2 contracts at 1690 with my profit target at 1696. This trade lasted for around 80 minutes and I was automatically exited at 1696 with a profit of $400. On hindsight however, price retraced all the way to 1698 which is the 61.8% fibonacci level.

Posted by Michael Taylor at 7:05 PM | Permalink | Comments (0) | TrackBacks (0)

Today is a special day.
The price movement is very smooth and I made easy money. The trades were plain and simple. Very seldom do you find such situations in the market and when it happens, you'd better plunge right it.

My first trade was at around 11:30, I longed one contract at 1708, I wanted to long another contract, but price was moving so fast and there was no pull back, in a matter of minutes, I hit my price target of 1721 and made $260. Price continued to move up further but was showing downward pressures already, my next move was to wait for a break downwards where I will short it all the way to the low of the morning session.

As expected, at 13:00, price spiked down but I needed more confirmation and I resisted the temptation to go short. Finally at 13:40, I was convinced that price is going down and shorted one contract at 1715. When it broke 1710, I was convinced that it is definitely going down and I shorted 3 contracts at 1708, with my profit target at 1695 which was the low of the morning session. At 15:00, my target was hit and I was out of the market with $1180. Total winings for the day --> $1440. I sure can sleep well tonight!

Posted by Michael Taylor at 7:41 PM | Permalink | Comments (0) | TrackBacks (0)

15 minutes chart --> Click to enlarge :

From hindsight, MACD has mapped out the most profitable days to be Tuesday and Thursday. The slope of the MA generally coincides with price action. When it is upward sloping, price is in a uptrend, and when it is downward sloping, price is in a downtrend. However, I warn against using the 15 minutes chart for real-time trading, 15 minutes is considered a tremendous lag in day trading. We should only use the 15 minutes chart for confirmation of the generation direction only. You should also learn to identify and avoid flat market conditions. Do risk your money if you can tell where the market is going.

Posted by Michael Taylor at 4:18 AM | Permalink | Comments (0) | TrackBacks (0)

Hi

A rare double bottom pattern formed in today's 5 minutes chart. You wouldn't know it is a double bottom until after it formed. And If you trade conventionally by waiting for price to break the neckline before you enter, it might be too late. This is fast paced, day trading, you can't afford to wait for confirmation. Once you recognize an opportunity you have to pull the trigger and go for the kill. My main signal came from the reflected stochastics and MACD. I longed one contract at 1697 and another contract at 1698.5. profit target is placed at 1706 and stop loss at 1694. The trade was smooth and lasted for around an hour.

Posted by Michael Taylor at 1:54 AM | Permalink | Comments (0) | TrackBacks (0)

Hi,

Remember I said yesterday that market has an upward bias. So the logical way to trade this market is to go long. You can go short, but its simply not worth the risk. Marketk opened with a 3 point gap and closed the gap almost immediately. At this point I was already tempted to go long, but price did not reach the moving averages yet and I waited for another chance. Price fell low enough and there was a strong rebound with stochastics and MACD in the oversold region. I bought 1 contract at 1700 and another 2 at 1702. My price target was at 1709.5, half a point below 1710 and stop loss at 1698. This was a slow trade, although price did not move drastically against me during the trade, it climbed slowly and there are times when I questioned my trade. But if its not hitting my stop loss, I decide not to exit it manually. My perseverance rewarded me with $480 when price closed at 1709.5 after two and a half hours.

Posted by Michael Taylor at 12:05 AM | Permalink | Comments (0) | TrackBacks (0)

5 minutes candlestick chart

Hi,

I didn't trade today. You'd be wondering why, when the market seems like an easy kill. The market has been flat for the past two days and I wasn't in a hurry to plunge in. From hindsight, it just seems that the market is going up, during actual trading, it is much more complicated than that. I didn't want to risk any money until I am pretty sure of market direction. Market ended the day up and finally broke away from consolidation. Market has an uptrend bias now and you bet I'd be going in for a kill tomorrow!

Posted by Michael Taylor at 9:28 PM | Permalink | Comments (0) | TrackBacks (0)

Hi,

How's your trading lately? If you have been trading, I would guess that results are not that fantastic. The market is very indecisive now. I have been extra cautious about getting into the market lately. Remember, there are 3 courses of action that you can take in the market at any one time -- LONG, SHORT, OR SIMPLY DO NOTHING. Sometimes, DOING NOTHING is the BEST COURSE OF ACTION.

You can see for yourself that the moving averages are almost flat, MACD is not even moving far enough away from the zero lines, price action is pathetic and slow, you will be able to feel it if you are in the market, watching every market move.

Posted by Michael Taylor at 6:33 PM | Permalink | Comments (0) | TrackBacks (0)

After the hardware set up all that remains is installing the appropriate softwares and you are ready to go. Although it is not a must, it is advisable to invest in antivirus softwares and firewall softwares such as Norton or Mcafee. The last thing you want to worry about is whether your system is infected or not.

Real time Data Provider
Day trading imposes stringent conditions on data providing services. Although there are a lot of free delayed quotes on the internet, a real time data provider is necessary. Usually the data will come together with software to display the data as candle sticks in real time. Some brokers provide real time data but lack the necessary software to display the data in a meaningful format.

Qcharts off good real time stock data with a state of the art charting software that you can run from your computer.

Novice traders should strart from the Qcharts subscription which costs $95/month. Besides this, you will also be required to subscribe to data from real time exchanges, for example, if you chose AMEX ($2/mth), NYSE ($2/mth),NASDAQ ($2/mth) and CME EMINI ($15/mth). This will constitute a total cost of $116/mth to Qcharts.

Interactive Brokers
There are many brokers out there in the market. Interactive Brokers which offers one of the cheapest commissions from trading Emini. ( $2.40 per trade) also offers good support and I have never failed to get a response from their help desk.

You will also be required to choose which market data to subscribe. For trading Emini, subscribe to “ US Securities and Commodities Bundle Non-professional - Level I ” which is free. However a charge of $10 will be imposed if the monthly commissions is below $30.

$2000 is the minimum required to open an account. However, a starting minimum of $5000 would be desirable, since IB restricts you from trading once your equity falls below $2000. IB provides several trading platforms including web based and downloadable software versions. The software version is more stable. One caveat here is that you need to install a Java plugin before you can run the software.

Posted by Michael Taylor at 2:30 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Candlestick Chart

Unemployement report figures are released at 8:30 am today. Payrolls were up a strong 243,000 in February. January was revised to a 170,000 gain from an originally reported 193,000 increase. The net change overall is slightly ahead of expectations of a 200,000 to 210,000 increase in payrolls. Hourly earnings were up 0.3%.

Generally, the data is positive and usually we can expect an immediate market reaction during the release of the data. However, the data went unnoticed and market remained flat. I remained extremely cautious and stayed out of the market. There was a major spike up at 10:00 a.m but I decided not to go in for 2 reasons.

Although we can MACD boucing back from negative region, stochastics is not in the oversold region ( instead it is in the overbought region --> see red box). This is conflicting evidence and suggests the market can behave in unpredictable ways. Secondly, moving averages are almost flat and the 15 minutes chart (below) shows that the previous day had been a downtrending. It would be wiser to go short than long. I decided to wait for price to hit the moving averages and go short when it rebounds.

It turned out that the upward spike lasted for 20 points and I missed the opportunity to go long. Such situations occur frequently, but as a trader you should not regret or blame yourself for not taking the plunge. Trust your own judgement. At the point in time, I believed staying out of the market is the appropiate course of action and I sticked to it. NO REGRETS.

Price action 11:00 was range bound and did not provided a signal for me to short. I decided to take a break and call it a day. Market is moving in unpredictable ways and price is still range bound.

15 Minutes Candlestick Chart

Posted by Michael Taylor at 1:11 AM | Permalink | Comments (0) | TrackBacks (0)

Hi,

The market is at crossroads and this is pretty obvious from the flat moving averages and relatively range bound price action. The main market announcement for today is the initial claims and trade balance at 8:30 am.

According to briefing.com:
Initial Claims rose 8,000 to 303,000 ? the first time in seven weeks that they have crept above the 300,000 mark. Still, initial claims remain at very low levels. Second, the trade deficit widened to $68.5 billion.

This is very good information. However, the market did not react much to the announcement and I stayed out of the market. I couldn't tell where the market is going until around noon when price borke below the moving averages. However I missed the boat and decided to wait for a pullback to enter. My chance came at 14:30, I shorted one contract at 1657 and another contract at 1653.5, setting my stop loss at 1661 and profit target at 1648. One hour later at around 1545, I am closed out with a profit of $290.

Posted by Michael Taylor at 1:11 AM | Permalink | Comments (0) | TrackBacks (0)

Market opened with a 11 points gap down. Will this gap close? I don't know. Since the market is almost flat, I decided to let price action play it out before I make any trades. It did close the gap at around 10:30. A pity that I was not in the trade. After closing the gap, price immediately rebounded downwards and continued bouncing up and down. But if you draw a support line, you will notice that price do not fall below this line. This is the single most important evidence that the market is NOT going down for the moment. Why do I say NOT GOING DOWN instead of GOING UP? Simple, not going down doesnt mean it must go up. It can go sideways as well and you can lose as much money if you are trapped in a sideways market. When my mid- term MACD crossed the zero line, I decided to go long. I entered at 1694. I longed another contract at 1695. Stop loss is placed at 1691. I wasn't prepared to lose big, and my maximum loss is at $140. I placed a limit order at 1704 as my profit target. From 12:20, price spiked upwards and in a couple of minutes my profit target is hit and I am out with $380 profit.

Posted by Michael Taylor at 1:09 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes candlesticks

I made 2 trades today, the first one which lasted 15 minutes cost me $30, while the second trade lasted an hour. The ISM index was announced at 10:00am. Market took some time to absorb the information. In fact the market rebounded from the moving averages at around 10:00 am. I shorted but the downtrend was short-lived and at 10:10 am it started to go up. This early trade ended up with me losing $30. (This earlier trade is not shown in the figure)

The market was moving veriy slowly. I decided to wait and see. At around 11:00am. priced pierce the moving averages with the mid-term MACD crossing the zero-line. Further study of the 15 minutes chart (below) also showed that this formed a doube bottom pattern with yesterday's price. After the losing trade previously which I shorted, I decided to go long. This proved to be a good decision. I entered at 1684.5 , and added another contract at 1689. I set my profit target at 1695 which is a natural resistance line. Stop loss was at 1679. The trade never looked back. It just went up all the way to hit my profit target putting $390 in my pocket. So I more than covered up my previous loss.

15 Minutes candlesticks - Double Bottom

Posted by Michael Taylor at 1:09 AM | Permalink | Comments (0) | TrackBacks (0)

5 minutes candlestick charts

Hi,
Like what I have described in the previous trade shortly after the opening bell today. Consumer confidence is going to be announced at 10:00am. I even made a losing trade, expecting that price will rebound from the moving averages. However, I managed to cut loss at $10 when I sensed that downward pressure is stronger than upward pressures.

My hunch proved correct and market did begin to fall and penetrate the moving averages. I shorted one lot at 1690. When price fell even further with great momentum. I knew that market is reacting to the consumer confidence report and this is going to be a sharp down turn. I shorted another 3 lots straight away. I set my stop loss at 1965 and a price target at 1680. But as the price kept droping, I shifted my price target down to the next support area at 1676. I was pretty confident that this great fall will be able to hit my price target. And BRAVO... it did and $1000 goes into my pocket within 20 minutes. This is one of the best trades I had since the beginning of this year!

Posted by Michael Taylor at 1:08 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Candlestick Chart

Unemployement report figures are released at 8:30 am today. Payrolls were up a strong 243,000 in February. January was revised to a 170,000 gain from an originally reported 193,000 increase. The net change overall is slightly ahead of expectations of a 200,000 to 210,000 increase in payrolls. Hourly earnings were up 0.3%.

Generally, the data is positive and usually we can expect an immediate market reaction during the release of the data. However, the data went unnoticed and market remained flat. I remained extremely cautious and stayed out of the market. There was a major spike up at 10:00 a.m but I decided not to go in for 2 reasons.

Although we can MACD boucing back from negative region, stochastics is not in the oversold region ( instead it is in the overbought region --> see red box). This is conflicting evidence and suggests the market can behave in unpredictable ways. Secondly, moving averages are almost flat and the 15 minutes chart (below) shows that the previous day had been a downtrending. It would be wiser to go short than long. I decided to wait for price to hit the moving averages and go short when it rebounds.

It turned out that the upward spike lasted for 20 points and I missed the opportunity to go long. Such situations occur frequently, but as a trader you should not regret or blame yourself for not taking the plunge. Trust your own judgement. At the point in time, I believed staying out of the market is the appropiate course of action and I sticked to it. NO REGRETS.

Price action 11:00 was range bound and did not provided a signal for me to short. I decided to take a break and call it a day. Market is moving in unpredictable ways and price is still range bound.

15 Minutes Candlestick Chart

Posted by Michael Taylor at 1:08 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minute Candlestick Chart

Hi,
The market opened today with a 6 point gap down. It hit my longest Moving average ( blue) and bounce up slightly, stochastics and MACD were also showing a slight upturn. I decided to enter 1 contract to test the market. However, I am not really confident of this trade, but I decided to make a bet anyway, since the my risk is minimal as I placed my stop loss at 1681.5. If you look at the 15 minutes chart, Nasdaq 100 is not really trending upwards, the market is almost flat. This is the main reason why I am abit uneasy about this trade.

Well, price moved slowly and the market was ranging, my hunch proved to be right and I shifted my stop loss up to 1684 and cut loss at $30. Well, you have to be able to roughly feel the market, feel how it moves and observe the price action.

15 Minutes Candlestick Chart

Posted by Michael Taylor at 1:06 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes NASDAQ 100 EMINI FUTURES

Market is in uptrend now, it makes more sense to long rather than short. However my MACD and stochastic indicators are giving an entry signal. I didn't want to risk it big and decided to be cautious. I shorted 1 contract at 1687 and another 1 at 1684.5. I set my profit limit order at 1681.5. The trade lasted for a mere 15 minutes with $170 in my pockets. Not a bad trade for 15 minutes of work. But I would say, the market is not really moving...

Posted by Michael Taylor at 1:06 AM | Permalink | Comments (0) | TrackBacks (0)

5 minutes chart

The market opened with a gap down. Usually I don't bet on gaps closing. But, this gap happened to be at the lower band of the Bollinger Bands. ( see 15 minutes chart below). I was confident that the gap will not only close but go beyond the gap to reach the top of the band. I entered 1 lot at 1662 and another 2 lots at 16635. I set my stop loss at 1658, a pretty tight stop loss because I was prepared to leave as soon as the trade turn against me. I set a limit order to sell 3 lots at 1674 which is the high of yesterday. The trade was highly successful, although there were minor hiccups along the way. After I took profit at 1674, NQ went further up to 1682.5, there was no way I can predict that. Most traders would kick themselves for not staying longer in the market. But remember, GREED, is one of the biggest money losers you can have.

15 minutes chart

Posted by Michael Taylor at 1:05 AM | Permalink | Comments (0) | TrackBacks (0)

Hi, the market has not be performing very well lately. I did not even trade today. Staying out of the market when there is no trade is as important as knowing when to enter the market. A non-trending market can cause you to lose big time, cancelling whatever profits you might have from previous trades.

Today's market opened with a gap down. Remember what I told you about gaps? there is no guarantee that the gap will close within the day and this is a typical example of what happened. During the later part of the market at around 1500, you can see a double bottom forming, However, I did not enter as the market still appeared to be in a trendless mode and I wasn't willing to risk my money for that little profit possible.

Posted by Michael Taylor at 1:02 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minute Chart

Market opened with a 8 point gap up. I missed trading the gap and wasn't willing to enter half way since I was not confident that the gap will close. BAD NEWS is --> the GAP CLOSED, and even overshoot the gap by almost 2 points. There was a strong rebound after the gap closure and I shorted at 1667.5, and a second lot at 1665 with my stop loss at 1672. I automatically enter into a limit order to buy it at 1671. The position was automatically closed with $210 of profits. NO SWEAT!

PROOF --- TRADING CONFIRMATION STATEMENTS. Click to enlarge the image below.

Posted by Michael Taylor at 12:59 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Chart

Are you thinking of going long? DON'T EVEN THINK ABOUT IT! As I have said time and again, the market is in a downward bias. it only makes sense for you to short the market. In this trade which lasted for around 40 minutes, I demonstrate how you can use the Multiple MACD and Stochastics method for an accurate entry and exit signals. When used together with the candlestick movements, this method is almost IDIOT PROOF. However, you have to experiment with the parameters of the stochastic and MACD indicators. I have fine tuned and perfected the paramerters after years of trading. For a full discussion, please refer to Day Trade Emini for Regular Profits.. You might ask why is it IDIOT PROOF?
Well, see for yourself the areas I have circled in blue. Do they look like OBVIOUS turning points? YES? and if this is coupled with a strong downward candlestick, chances are price is moving down.

Posted by Michael Taylor at 12:58 AM | Permalink | Comments (0) | TrackBacks (0)

The minimum needed to open an account for trading the Emini Futures ( S&P 500 and Nasdaq 100 ) is $2000. This amount is imposed by the brokerage.
However, this amount would only allow you to trade 1 lot. In my experience, trading one lot makes sense when you are a novice trader, experimenting with new methods. However, it is simply not cost effective to trade just one lot. Usually you would want to load the boat when you are winning ( buy or sell more lots when the market is moving in your favor). I would recommend a minimum of $5000 trading capital to start with.

Posted by Michael Taylor at 2:19 PM | Permalink | Comments (0) | TrackBacks (0)

Hi,

A very common question I encounter is what are the symbols for the emini futures?
The symbols changes every quarterly. You can find the details in this article : Emini S&P 500 symbols

Posted by Michael Taylor at 2:19 PM | Permalink | Comments (0) | TrackBacks (0)

Dear Trader,

I have added news feed ( RSS, ATOM and RSD) to my Emini Trading Blog. Now you can use your favourite news reader to subscribe to my site at http://www.daytradeemini.com/blog

Posted by Michael Taylor at 2:16 PM | Permalink | Comments (0) | TrackBacks (0)

Having a stable computer system is crucial to your trading success. Imagine what would happen if your computer hangs in the middle of a trade. What happens if you suddenly get disconnected from the internet? Accidents do occur and these scenarios are very possible, I have encountered an internet disconnection while trading. Such scenarios are potentially lethal to your trading especially when the market can move against you in a couple of minutes in the case of day trading.

Besides making sure that our equipment is up-to-date and reliable, care must also be given to the planning of a backup system. For example, I have 2 internet connections just in case one fails and I always have my laptop on standby should my PC hang in the middle of a trade. This section covers the necessary precautions and minimum set up you need to start trading. It is important to remind ourselves that making money through trading is our ultimate aim. It is easy to fall into the trap of delaying setting up your trading system because you want to fine tune your computer system. Have the basic reliable set up and get ready to go!

Although there are no hard and fast rules to your hardware configuration, I recommend the following minimum configuration.

CPU : at least 1GHz
Memory RAM : at least 512MB ( charting software is memory intensive)
Monitors at least two 17 inch XVGA monitors (resolution of 1280 X 1024)
Graphics Card Any graphics card capable to support 2 monitors, usually one monitor will be connected via analog cable and the other monitor connected via digital cable. Hence it is important that one of your monitors support digital output.
Internet Connection Cable or ADSL, try not to connect trough wireless since wireless connections are prone to instability.

A minimum of 2 high quality monitors is needed in order to display all the charts and order management screens. If you only have one screen, you might ALT-TAB in windows to switch between the different applications, however, there is not really much reaction time when the market is moving and I strongly recommend have at least 2 monitors to display all the necessary charts and applications.

Posted by Michael Taylor at 2:14 PM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Candlestick Chart

Unemployement report figures are released at 8:30 am today. Payrolls were up a strong 243,000 in February. January was revised to a 170,000 gain from an originally reported 193,000 increase. The net change overall is slightly ahead of expectations of a 200,000 to 210,000 increase in payrolls. Hourly earnings were up 0.3%.

Generally, the data is positive and usually we can expect an immediate market reaction during the release of the data. However, the data went unnoticed and market remained flat. I remained extremely cautious and stayed out of the market. There was a major spike up at 10:00 a.m but I decided not to go in for 2 reasons.

Although we can MACD boucing back from negative region, stochastics is not in the oversold region ( instead it is in the overbought region --> see red box). This is conflicting evidence and suggests the market can behave in unpredictable ways. Secondly, moving averages are almost flat and the 15 minutes chart (below) shows that the previous day had been a downtrending. It would be wiser to go short than long. I decided to wait for price to hit the moving averages and go short when it rebounds.

It turned out that the upward spike lasted for 20 points and I missed the opportunity to go long. Such situations occur frequently, but as a trader you should not regret or blame yourself for not taking the plunge. Trust your own judgement. At the point in time, I believed staying out of the market is the appropiate course of action and I sticked to it. NO REGRETS.

Price action 11:00 was range bound and did not provided a signal for me to short. I decided to take a break and call it a day. Market is moving in unpredictable ways and price is still range bound.

15 Minutes Candlestick Chart

Posted by Michael Taylor at 3:01 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Candlesticks

Market was ranging from the opening till around 13:00. If you played during this period, chances are you will lose money, I have said many times and warned many times to stay out of such a market. How to tell that it is ranging? Basically, moving averages are flat, MACD and Stochastics have poor symmetry. These are tell-tale signs that you should stay out of the market.

My chance came at around 13:00 when the market started to break downwards. I entered one contract at 1682 and another one at 1680. Stop loss was placed at 1692 and profit target at 1670. The trade was smooth with little hiccups along the way. I ended up at 14:00 with $440 in my pocket.

Posted by Michael Taylor at 7:00 PM | Permalink | Comments (0) | TrackBacks (0)

In the above figure, the pink box closes two candlesticks with long bodies compared to the candles in the blue box. A larger body indicates momentum and more movement compared to a smaller body which indicates consolidation and little movement. This applies to both rising candle and falling candles. If we are already in a long position, we would want the candles to form large bodies and move up with momentum. If subsequent candlesticks have small bodies, this might indicate that the market is coming to a standstill and it might be advisable to exit your position or you can decide to wait for further movement. Another usage is when a candlestick pierces a support or resistance line, a pierce by a candlestick with a longer body is more decisive than a pierce by a candlestick with a smaller body. ( Figure below)

Posted by Michael Taylor at 11:11 PM | Permalink | Comments (0) | TrackBacks (0)

Technical analysis focuses on the behavioral swings in prices and attempts to predict future price direction through indicators. There are several well know patterns in TA which forms time and again from mass psychology of the market. Patterns are usually associated with a particular market scenario and it pays to observe and capitalize on them.

There are several means of price representation, we can represent it in the form of a line chart which plots the price versus time or as a bar chart or candlestick chart. I will discuss only candlestick charts as this is one of the simplest yet effective representation of price.

There are two types of candlesticks as shown in the figure above. There is a time parameter to candlesticks. You will need to specify the time duration of the candlestick, for example, 1 min, 5min, 60min, 1day, etc. Candlestick condenses the open high low and close prices of the specified time duration into a single diagram. For example, if you specify the duration to be 5minutes, the high low open and closing prices during that 5mins will be displayed as a candlestick. Candlesticks are further divided into two types : rising candle and falling candle. Rising candles and falling candles have different color codes to make them more visually distinct. The closing price for a rising candle is higher than the closing price. Likewise, the opening price for a falling candle is higher than the closing price. The rectangular box in forms the “body” of the candlestick and lines extending beyond the body are called “shadows”. The upper shadow represents the high and the lower shadow represents the low for both the rising and falling candlesticks.

Posted by Michael Taylor at 2:06 AM | Permalink | Comments (0) | TrackBacks (0)

5 Minutes Candlestick Chart

Hi, This trade lasted for an hour and resulted in $290 in profit. The market opened with a gap down of around 5 points. Now don't be too anxious to go long and expect the gap to close. Sometimes, gaps don't close. I waited and my chance came at around 10:00am. Price rebounded from the moving averages. I placed a limit order at 1691.5 which was slightly further than what the price was at that moment. Price slided a little bit and I was lucky to get a fill. Stop loss level is at 1688, quite close, so the risk is not really that great. I longed another contract at 1694 and price ultimately hit my profit target at 1698. It even continued to 1702. There was no way I could predict that it will go beyond the gap. However, I can almost tell for sure that it was goigng to close the gap. So profit target is best placed at 1698 ( the gap level). Just bear in mind, GREED kills!

Posted by Michael Taylor at 7:01 PM | Permalink | Comments (0) | TrackBacks (0)