In this morning’s note for Swing Trader’s Insight, I said we should look for a Taylor Trading Buy day for the eMini S&P futures. Early session weakness was a good buying opportunity and the market saw a good rally today.
In last night’s Swing Trader’s Insight I was more cautious. Friday was a doji bar and the market closed relatively high in the range. I generally don’t trade eMinis during the overnight session (especially Sunday nights) and Friday’s bar could have resulted in a meltdown overnight.
Although I don’t trade it, I use the overnight trade to give direction for day session trades. Although the ES sold off overnight, it hadn’t blasted below the Friday low, and it appeared more likely the overnight selloff would suck in weak sellers, which would make good fuel for a rally if one started.
For a Taylor Trading Buy day, we use the previous session low as our “reference price” -we look for an initial move below the previous day low to be our heads up to anticipate an upside reversal, and a move above the reference price is our trigger for a long entry.
For the September eMini S&P, the 8:30 AM open was 2766.75, and the market immediately sold off below the Friday low (reference price) of 2765.50. Within 10 minutes it had move back above the reference price, where we went long.
The initial stop loss went below the session low of 2761.25 – if the market sold off and made a new low then we weren’t seeing the bullish momentum that had us buy initially. In this case, the low was never retested. After spending some time around the reference price, it rallied through the morning. If you held for that long, the double top at the 2678.00 session high (made around 1:25 PM) was a signal to take profits.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
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.
© 2021 StoneX Group Inc. All Rights Reserved