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My rules are simple:
1) wait for a trend change
2) buy or sell the ES after a pull back to either a chart point or 50% level or both
3) look for stoc to agree - above 50 a buy, below 50 a sell
4) risk 2 points or a break of the most current level
5) profit target one point - if trading multiple contracts take most off a one point and try to allow the rest to be a runner
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Many times I do not follow the rules to the letter based on market situations but I try.
Sometimes I will try for a runner even thou I am only trading one contract like today.
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At point 1 on the chart is the first good setup for a short. You can't see it on the chart but the market broke down at about 7:39 but the sideways action between 7:30 and 8:30 plus news at 8:30 did not give much of a good entry. On the break 2091 at 8:42, you could have sold the pullback to 2091 a few bars later but I was looking for a better setup.
At the open, the ES bounced back to 2019 and everything was in perfect alignment. I shorted are 2090.75 and as we began to break hard decided on a runner. I took 9 ticks.
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At point 2, ES had broken down from 2089 and rallied back to that point. A 50% retracement and stoc was still negative.
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At point 3, ES have broken above 2090 a trend change, then had a 50% retracement back 2090 and stoc has still above 50.
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At point 4 it gets a little messier. Was the break below 2091 a trend change or not? I believe it to be so the pullback to 2091, again 50% and stoc still below 50 was a short trad entry.
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At point 5 it gets even messier. With the break below 2087 on a close of a candle, was the bounce plus sideways action around a trend break? I would say no because of it being a down day. You could have played it either way or both.
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Again in the action between 2:30 and 3:00 you could make a case for longs or shorts. We had too much weakness and not enough of a bounce for me to think either way. Now thinking about it after the market is closed, not enough of a bounce would signal a short in my mind seeing I did not mark it as the trading day was going on.
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At point 6, there is another long but that is really hard to take at the close on a Friday.
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Bottom line is my mind is keep your trading rules simple and wait for good setups based on them.
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