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Home / Futures Blog / Using the Taylor Trading Technique in Trending Markets- EMini S&Ps

Using the Taylor Trading Technique in Trending Markets- EMini S&Ps

August 26, 2015 by Scott Hoffman

The recent down trend in stock index futures made Taylor Trading Technique signals less obvious. Sticking to a more mechanical cycle count can facilitate trading in these markets.

In last night’s edition of Swing Trader’s Insight I labeled the stock index futures as being on the Sell Short day of the Taylor trading Technique cycle. The recent volatility has made it more difficult to do an eyeball chart reading to identify the TTT cycle. In this case, a mechanical count helped keep our bearings and anticipate likely play for the day.

Monday was a Taylor Trading Buy day. Although it was obscured by the fact that the market closed down from Friday’s close, the intraday pattern was bullish. For the EMini S&P futures, the session low of 1831.00 was made minutes after the 8:30 AM open, and by midday they had rallied to the day session high of 1950.75.

ESU daily August 26

This meant Tuesday was a TTT Sell day. We would anticipate early strength (for Taylor’s “smart money traders” to sell out of positions they bought in the previous session). On a Sell day, we don’t usually expect to see too much upside, nor do we expect to see a major selloff- we look for the selloff the next day, the TTT Sell Short day.

Normally we look for tests of the previous session high (for a TTT Sell Short day) or previous low (for a TTT Buy day) to be our setup for a TTT trade. The recent down draft / trend has prevented the normal high to low, low to high swings of the Taylor cycle.

In trending markets it’s best to not try to overthink things. Stick to the TTT count to come up with the session’s likely directional bias and use that bias to find trade entries in that direction.

So when I wrote this morning’s comment for the EMini S&P I was looking for short sales setups. The overnight high of 1923.50 was a natural level, and 1900 was likely a round number pivot point. (I left it off the morning comment but the first overnight high of 1915.00 was another reference price as the first rally attempt above it had failed.)

ESU intraday August 26

The 8:30 AM open saw a rally above 1915 and then a turn lower. 1900 was taken out 10 minutes later, and the market began making a series of lower highs and lower lows as the morning progressed. This pattern stayed in place down to a day session low of 1875.50.

Sometimes the Taylor Trading Technique has an obvious rhythm- look to go long in a session after a big down day, or look to short in the session after a big rally. In strong trending or volatile markets it may be more productive to look at things more mechanically.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

Filed Under: Swing Trader's Insight

About Scott Hoffman

Scott graduated from the University of Chicago in 1986 with a degree in Economics. After graduation, Scott worked on the floor of the Chicago Mercantile Exchange then moved upstairs, serving as the personal broker to a former chairman of the Chicago Board of Trade. There, he worked as a broker and margin manager, starting up the firm’s full service brokerage division.

Today, Scott serves as an educator and mentor for new traders, and as a trading partner and ally for experienced traders. The breadth and depth of Scott’s knowledge make him the “go to guy” for both retail and institutional traders.

Scott also publishes two futures advisories, Swing Trader’s Insight and Trade or Fade. He also writes the futures trading blog at www.futuresinsightblog.com. Scott has written articles for a number of futures publications and has done numerous futures trading seminars, including seminars for both the CBOT and CME.

Scott offers his customers the knowledge he has gained from his more than 25 years of experience in the futures business. Scott is accepting new clients at this time.

Scott lives in suburban Chicago with his wife and three children. In his free time he enjoys coaching his children’s sports and various other athletic activities.

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

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