Fading Opening Gaps on Futures | John McNichol | 11-25-19 | Trading Futures

Fading Opening Gaps on Futures | John McNichol | 11-25-19 | Trading Futures

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Good. Morning everyone John McNichol, here thanks. For starting another week maybe a short week as we have Thanksgiving. We're. Going to discuss on trading. Futures today, we'll, look at fading. The gap as. Well let's take a look at some pivot points so stick around. All. Right well appreciate, you being here today whether you hear live or listen the archived session, good morning to you Ricardo thanks for being here along, with everyone else again, John McNichol with trading futures let's, take care of our disclosures, and get right into it. Final. Presentation is, for educational purposes. Only and. Not a recommendation, or endorsement, of any particular investment, or an investment strategy past, performance, of any security or strategy does not indicate or guarantee future results or. Success, in order. To demonstrate the functionality of the platform, we will be using actual symbols, keeping in mind TD Ameritrade does not make recommendations. Or determine the suitability of, any security or strategy for individual, traders any investment. Decision you make in your self-directed account, is solely, your, responsibility, now. While this webcast may discuss technical analysis, other approaches, include, fundamental, analysis, may have served very different views and futures. And futures options trading, is speculative, and not suitable for all investors please, read the risk disclosure for futures and options that link is provided for you here and, futures. Of futures options trading services, are provided by TD Ameritrade, futures and Forex LLC. Those. Trade privileges subject, to review and approval not all clients will qualify. Options. As well not suitable for all investors as, these special risks inherit, to options trades may expose investors, potential rapid. And substantial, losses carefully, read that previous provide a copy of characteristics, and risk of standardized. Options. Transaction. Cost commissions and other fees or important factors should be considered when evaluating any trade. And. We. Have a demo, account that we're using looks like a real account but it's not you, have the ability to practice what you learn here today with paper money that software, is for, educational. Purposes only and successful. Virtual trading, during one time period does not guarantee successful. Investing, of actual. Funds during later time period as those markets change continuously. The. Transaction. Cost commissions and other fees or important factors should be considered when evaluating any trade and that zero Commission, applies, to online u.s. exchange listed, stocks ETFs and options, trades, $0.65. Per options. Contract fee applies, to option, trades, and, those. Zero commissions do not apply to. The futures that were discussing here today Mike, thanks, for being here, all. Right let's go ahead and share our desktop, and move, right into it here. Thinkorswim. Platform coming. Up point, your attention over. To the. Left-hand. Side today. We're going to review. Fading. A gap, or fade in an intraday, gap. We're. Gonna apply, or bring up some of the pivot points as well and we'll, do a practice, trade on active. Trader so our learning objective, for today, is, by the end of this session one should be able to place a practice, trait, on. A future contract utilize. An active, trader and applying. A principle. Or applying a simple. Strategy which. Will look at fading, the gap now, if you have any questions feel free to utilize the chat would certainly love to hear. From you. And. Let's. Go ahead and take a look. The. Market. Surgeon. Pretty good at the opening. Today. So, our example of, faith. In the gap may or may not apply but we'll go ahead and walk.

Through, It here I see. A pretty good surge on the, futures at the market opening, we're. Going to talk about some, of the principles and what we can look at here and I'm, gonna go ahead and share the big board. Let's. See if we can go ahead and bring this up. Should. Just take a moment here. All. Right so I'm gonna go ahead and actually go to the big screen right. Now and. I. Have a grid, chart on the screen right now where, we have an, example of the really, look at the micro. Futures, /m. Es. This. Is a relatively. Low, multiple. Future. Contract. Traders. With smaller accounts or. If someone's looking to hedge a relatively. Smaller account, it. Could be a product that may be suitable. One. Of the comparisons, is to the, /e. Which is the SMP, futures, contract. If I go ahead and let's, say well click on the drop, down menu, on a chart. Here it. Allows me to. We're. Looking at /m. Es, which, has a multiplier, of. And. That. Did not work which. Has a multiplier, of about. Five. Dollars for every point each, tick, is worth, about a buck twenty-five, that's, as, compared, to. /es. On. The. List for the SP many. Futures, has, each. Tick is worth, $12.50. Or a multiplier, of fifty. That, also translates into, the. Initial. Margin, on. The contracts, we're on the fourth, /es it's six thousand nine hundred and thirty three compared. To the, on the. /m. Es which, is six hundred and ninety three dollars. Alright. So, you know looking at the chart on this on. The, daily chart trend. In the market still. Pretty strong we're, actually seeing prices a gap. Which. Is typical, in, a lot of cases from over the weekend we, may also see intraday. Gaps as well throughout the week, from. The, close, of regular. Trading hours on the equities to, the opening, of the next day as, far as technical patterns, this, would be an example of a. Flag. This. Is a strategy, that we teach in our technical. Analysis. Swing. Trading class every, Monday at the market open, and. So. That's looking at a daily chart now, as we go ahead and look at more of an intraday, chart on. The other side here we have a 5-minute, chart we. Have some examples of pivot points on there now if I go ahead and actually bring this out a little, bit more here so we can go ahead and do that. We'll. Kind of zoom out here. And, look, at comparing, some of the price action from, Friday. Going. Into, Sunday, evening now, in the shaded areas is the overnight price, action. In. The light area, that is the regular, trading hours in this example from Friday so, we kind of zoom in on this.

We. Can see and let's go ahead and we'll actually make, the screen full we'll focus on this intraday, period. Here so. Maximize, that. As. We go ahead and look at it. Coming. Into Sunday. Evening, there. Was a bit. Of a gap, in. That price action. Looking. At the previous close. And. Then. Seeing where prices that opened on Sunday, evening. Now. As we go ahead and go forward on this. To. Where we are right now now, up until right before the market, opened. Notice. That there was a bit of a range here, a lot. Of price action pretty much had stayed within the range of. That. Opening, hour on Sunday night and, that opening, range some traders may look at that from a standpoint of support. And resistance. I'll. Kind of continue, going forward here. So. You try and go forward here. Pretty. Much held that range throughout. And. Then. We see essentially. A breakout, going. Into the morning here now. The question, is does. One trade it or, fade, it now we're, going to look at an example of fading, today although with. Prices did, make that initial pop. You'll. Be interesting to see if it actually holds that range or if it continues trading, down through, it now, one of the considerations as, far as, fade. In the gap is thinking. About well how much is one willing to risk, on that trade now a good reference point is again, going back we, go back to that daily, chart. Right. Here and one can look at well what is the range of that day. Now a tool that one can add is a TR. Which represents, average true range average. True, range a. TR. What. I did is we're, applying a, five period. On that now the standard said and I believe is fourteen, period, so, what we're looking at is trying to identify well, what's the average trade, and range of this. Instrument, over the last five trading days, as. Far as looking at the current read and current read and showing about nineteen, point three eight points, that means that the. Average trade, in range from, high to low a little, bit of more of a calculation, on that is about, nineteen points. Now. If we go to the previous day, on. That. So. It allows us do that there click. On the previous day that. Value was around twenty, 1.04. Now, we're going to use that as a reference. As. Far as trying. To set a an expectation, for, risk, so. Twenty-one point zero four we're, going to do is we're gonna figure, out a percentage. Of that daily range that. We may be willing to risk for our example, we're gonna use forty percent about, forty percent of that daily range so. We're going to do a little math on that let's take care of that when. You bring up our calculator. And. As. We bring that up good. Morning you Larry thanks for being here. We'll. Take, 21.0. For. Again. We're looking at the value from the previous day, and. We're. Gonna go ahead and, multiply, that, by point, four. That's. Going to be about eight point four one points. Now. The, multiplier, on, /m. Es remember is about, five, so. If we were to go ahead and multiply that, by five. And. Hit, equals. That. Would be. $42. So. The daily range. Times. 40%. The. Risk would be about forty two dollars and, eight cents now if this was the four, /es. That. Would be a $50. Multiplier. So. This. Would be, four. Hundred and twenty some. Dollars so. Consider, as. Far as you know the size of your account. What. You're willing to risk on an. Individual, trait, so. Let's. Say I had an example, of a. Let's. Say an example of a. $20,000. Account. Let's. Say was willing to risk about, one percent, on. That trade, so. One percent of twenty thousand would, be $200, so. What we can do is take that, 200. Divided. By forty. Two point, zero eight. And. That. Would equate out to be in four point seven, five, contracts. That, we can position size for all. Right. So. Let's, go ahead and see if we can go ahead and apply this to, a trade. Actually. Before we do that let's, go ahead and maximize on. The. Five-minute, chart here. And. Take. A look at, a couple of things where we actually go into trade let's talk a little bit about some, of the pivot points now, if you have any questions feel free to ask with sir we'd love to hear from you. We're. Going to go ahead and go back to the big board. What. We have on the chart here is, also. Examples. Of pivot points pivot, points are what some traders may utilize to, identify. Potential. Areas, of support and resistance now. On the example, that I have here if I go ahead and click on the beaker, and. What I'll do is I'll also share, this. Grid, chart with you before. We leave here today if. You want. To see an example or, if you want to manipulate yourself.

But, We have two examples of, pivot. Points that are on the chart one is a daily, pivot and, also. A weekly, pivot, so. All one has to do is just go ahead and select that indicator, from, the. List of studies. And. They. Should be into peas there. Pivot. Points now, if you go ahead and click on the there's. A little question, mark next to each of these indicators, a. Little. Sensitive there for some reason doesn't want to come up let's, try that again. All. Right may have to do this ahead on a regular, screen. As. I look, so you add the indicator a couple times to looking. At the pivot point is basically showing, us. Potential. Areas of supported resistance, by calculating. Previous. Day's trading ranges, or in, other examples previous. Week one, may be able to look at the previous month, if, you go ahead and click on that question mark and bring up some of that down at the bottom you got more details that'll take you to the learning center where, you can take, a deeper dive and really all things think or swim also. On top of with, this indicator. As well. There's. A full breakdown of pivot points on the learning center which is accessible, via, the education, tab and. Education. Is for our coursework, but notice there's another tab for Learning Center and that will cover down on everything on the thinkorswim platform all. Right let's go back to the chart. And. As. Far as contrast, in the, daily. Pivots, versus, the weekly pivots, I did. Put. A little bit of a contrast, the, weekly pivots are actually thicker and. Also. The actual, pivot, itself. The. Actual pivot itself. It's. Not got all my electrolytes, in as it doesn't want to read my finger is good. Looking. At the, colors, the purple color, represents. An. Example, of the daily pivot now. The idea, is if price action is above the pivot has, a tensity, of being more, bullish, as far, as with. Some of that posture if prices. Are below that pivot a. Little. More negative now you're looking over the last two days you. Know price action has generally stayed above, that, daily, pivot. The. Weekly pivot. Created. That in more, of a gold format. There so. We can kind of see the contrast, of. What's. Happening over the previous week so. From a little more of a longer time frame some. Traders may look at that as being the you, know the overall bias at least over a shorter term kind of what that hourly, trend is what the trend is over the last week and price, action is above there and then. Above and below those pivots one, may see support. And/or resistance, levels and in, this case we're. Seeing. Our. Levels. For. Resistance, and notice, as we speak that 5-minute, has kind of come up and tested and backed off a little bit off of that, r1, level. Likewise. As far as support. Broken. Resistance, as tends to become a new support, and then also below the pivots one, may see certain. S levels, and, what traders may do is trade those, support, and resistance. Levels now. We may try do a practice, trades on those at, a later time and actually. The, the gap that we'll talk about there's a little bit of a confluence with that, resistance, area there so, let's, talk a little more about setting. This up now. As far as the typical. On fade in the gap traders, may look to fade right at the opening, with the expectation. That prices. Will actually, fill, in to. The previous clues or retest, now that's not a give, me to, happen just kind, of zoom in on this so the. Idea, is that prices may. Fade. May. Fade and trade, down ok very odd here. Trade. Down and. Fill. In to. That previous closed. So. That could be a bit of a target now as we stand right now looking, at this market, you know that previous, close was, somewhere in and around. Somewhere. In and around 31. 11 in. Fact it was pretty close to where that weekly pivot, is. Right, now. Now. As far as the price on where it opened, looks. Like the price that opened somewhere, in at around, just.

Shy Of about. 319. Now. That's a difference, of about. In. That case of about seven points now some traders, may determine, if the gap is too large. Whether, it's seven points 10 points you, know they may defer, from, fading, considering. That if prices are breaking out the, likelihood, of prices, fade in maybe less. But. For artists tration where you're going to show you on how this, trade can be set up even though it may not be an, ideal, condition. Don't. Have control over that but. One can go ahead and possibly practice, this each. And every morning on. The paper money and see, what types of results you may have all. Right so, let's go ahead and zoom in and we'll set up on, this particular practice tray we'll do is we utilize the active, trader, tool. The, active trader can be accessed whether from the trade tab or. If you're on the chart you have your little. Task. Bar over, on typically. On the right hand side and there's one that says 80 if. I go ahead and click on 80 that'll. Bring up active, traitor, now. With that we could go ahead and place a trade that. Will, not. Only potentially get us into the trade but, also get. Us out of the trade for, one of a couple of conditions, one. Is setting. A target two, is setting the potential, stop now keep in mind a stop is not going to guarantee to fill at a particular. Price, now. With this there is a template. It starts off with a single. Trade, and if you click on that template. One. Can bring up for instance trigger. With, bracket. A trigger. With bracket, would essentially, create a set. Up where one can't enter into a trade select, however, many contracts, they want and then, also, set. The, bracket on what's, going to get them out of the trade now I have very large, fonts, on here at the moment so some, of the numbers are truncated. Trying, a little bit of a balance so you can see what's on the screen, versus. Also see. The information that you want to look at now. So. We had already positioned size as an example of, three. Contracts. So. We. Have three contracts, that are on there right now actually know is that 4.75, so, let's go ahead and change that to four. If it's, close to five you know some traders may have a tentative rounding, down but, it's relatively close. To five we can go ahead and do five for, this example. All. Right. Yeah. The markets ripping pretty good at the opening not sure what type of news came out I know, there's a lot of positive, news as far as with the Hong Kong elections. There but, there's also still some concerns on trade unless there. Was an announcement before. I came in here. But. There was still a lot of negative talk on on. The tariffs and how that trade may end up going through alright. So we got five contracts, on the screen right now now, it's. Considering, that prices, have gapped. Above. Where the previous closed was the, idea, is that it would fade down. To. That previous close now, that would be a example. Of a short so we'd have to go ahead and select sell. To, do that and looks, like I have some, open. Positions that I may need to go ahead and clear out here so let's go ahead and take care of that real quick. Probably. Should have, check. That out beforehand. I've. Quite a few stock. Positions. In here. So, it allows me to do this here. Now. One thing I did make a little bit of a mistake on here as. Notice. That when I clicked it instantly, went out, that's. Because there. Was this auto send, that. Had a checkbox, on there I typically, don't have that on there so I'm not sure how that popped up when. One goes ahead and clicks on that auto send it'll automatically, send out that trait well that may be fine if you have your set up and it's something that.

Instantaneously. Want to get out there but if you want to review your trade and that's what we're doing here you want to make sure that auto send is off. Now. We're going to do is we'll, change that template again to first triggers bracket. We'll. Go ahead and select. Cell. Now. Notice it's going to bring up the order it's going to bring up the confirmation. Now, the way this is set up right now it looks like it's offset, by. About a point some, traders may wish, to offset, this by a certain number of points before. They place that trait. So. Let's go ahead and we'll do edit and. While. We got that right there one, can go ahead and set that offset, now let's say as a starting, point will offset both, of them by about 10 points, and we can always adjust the, order. Afterwards. There so, let's go ahead and do that. Thanks. For sharing J looks like there's some trade talk optimism, that's out there. It's. Pretty interesting, on how it goes back and forth between optimism. And pessimism. So. What I did I went ahead and offset this by about 10 points, there. Now. Another consideration, here. Is. As. We go ahead and look at the. Initial, setup on the template is it's, basically created, in an order to, fill and. It. Has a bracket, order, where, there's a limit, offset. By about ten points and we, have a, stop. Offset, by about ten points and remember stops are not guaranteed to fill that particular price, once. That's triggered it will compete against other market, orders now the time and force on. The sell orders are day, let's change that to GTC. So, that they'll continue to work although, what some traders may consider, doing is, if, neither. Condition. Is met at the end of the day is to cancel the orders and go, flat, since, this is considered to be a very, short-term. Trade. So. We got that entered in on there and if. We were to go ahead and click confirm.

And Send and send. That. Went. Ahead and, got, filled, now, as we take a closer look at the chart we can actually see those orders, on there. As well, so I'm, going to go ahead and let's close up that active trader here. Is the, five-minute, chart notice. The, orders, are on here we have that offset, by about 10 points each so let's talk about you, know well where, would we have set, the stop now. If you recall when we went ahead and looked at the, calculator. When. We calculated, our size we. Were willing to risk, about, 40%. Of that. Daily. Range, so. Again we went ahead and took it, was about I believe a, point. Some, points there. So. Let's go ahead and double check on that math there. We. Had done a 21. Point. Zero 4. Times. 0.4. So. That'd be a risk of about eight point, four one points. What. We'll do is we'll go ahead and use. That, to identify the stop now we can do it based off of the the entry, price. Where. We got in or average price was thirty, one twenty six. Seventy. Five, let's. Say this would be about eight and a half points. So. That should go ahead and take us to thirty. One thirty. Four thirty one thirty five, point. Two five, so. What we can do is we. Can adjust that, stop. You. Do that right on the board let's. Go ahead and maximize. This, chart. So. We can go ahead and zoom this in. So. We can do is this, is cool thing about on the thinkorswim platform we. Can actually left-click. And drag that. Down. To. Whatever level we want so we're talking about thirty one thirty five point two, five we, can scroll, it approximately, to that and we, can see that that. Is the price that comes up so we, can go ahead and send. That and so, now we, have the stop covered now notice that's a relatively, wide stop, it's. To give room, for, that price to fade if it does and notice. We're attempting to define risk on that trade too now. If we go ahead and identify, where. Our potential target is that could be looking at that previous, close. So, let's go ahead and zoom in. Looking. At that previous close you can do weather from the five minute or let's say from the daily. Chart if I go and put my cursor on, the. Daily bar. Now. That closed was thirty, one eleven point, seven five pretty close to that weekly, pivot. 3:11. 11.75. So. We go ahead and go, to our. At. 5-minute chart. And. Then, we can go ahead and adjust this one as well. We. Do the same thing on the chart you can basically just drag that down. 31. 11.75. Pretty, much going down that weekly pivot fact, what I'll do is I'll just put it right, above, that weekly pivot which, would end up being around 31. 12.25. And, we'll go ahead and we'll click send now. I'll. Be entering to see what the likelihood of the, price actually filling in that was a pretty, good boost, in. The morning there and, certainly. A relatively.

Big. Change of sentiment, from what some of the reports, were coming. Into Friday afternoon, going well into the weekend, as far, as what trade is that lucky. If they come finish with phase one, of the, trade deal let alone even, approach, in what, they consider to be phase two so, a little bit back and forth with that we'll see where we go. But. That's where the setup is now as. Far as adjusting. On to, trade with some traders may consider doing is look. At half, the distance so. Possibly, looking. At this pivot, point this, are level. Which. Is approximately halfway. From. About where we entered to, where we are right now and if, the price comes down to that area possibly. Scale, out of the position, or. Maybe. Even close it entirely since, it was a larger, gap, now. Keep in mind there, are commissions. With. With. Futures there for. Each of those contracts, so that is something to consider before. You trade. Remember. If I go ahead and bring up that active, trader. And. Whether. We're buying or selling notice. There are commissions, there and they could be significant. With. Some of these smaller contracts, even though the contract fees are the same there, is less leverage, and keep mind that can cut into. Your. Gains. As well as impact, any. Losses. There. Now. Look at some of the comments there pan heart says Jeff not able to trade contracts, on this on. Paper. Trade, that's, interesting I believe, you should be able to place these on your. Paper money, account. If. You're having issues with that you. Know please contact customer service there and make. Sure you actually are on paper money you do have to be authorized to trade futures on a real. Account and. Remember. Not all clients are. Approved. For that but. You can go ahead and follow up on that. All. Right what questions, do, we have here. This morning. Don't. See any questions coming across there. Now. Ben, says are those pivot levels s. DS. I'm, not sure I understand. What. You're referring to there. Let. Me go ahead and bring up on a. Bigger, chart let's close up that active trader. Let's. Bring up a little, more of a move there in fact what I'll do here is let me go ahead and actually share. This. Grid. I'll. Go to scratch pad here. Nice. Function to think or swim platform is, you can share things. So. I'm going to go up and click. On the, grid. I'm. Gonna click on share grid. Now. You don't have to do this. But. This is that's a step if you want to share something I'm. Gonna go ahead and we'll paste, this in the. Scratchpad, now. It is case sensitive, keep. In mind. Seven. Characters and if. You want to go ahead and add that just, come up to the.

Set Up. We're. Going to go up to set up in the upper left hand corner of the application go, and point that out to you right up, here far. Upper right corner there should be a gear. That says setup we click on setup, and, that. Second option open, shared item, will, click on that open shared item and this is where you can type in that. Seven. Character. Code now, once you go ahead and do that, that'll. Allow you to share, it. Or. Allow. You to open I should say so, this was an O capital. N. Lower. Case M lower case T. Y. Capital. X and. An. Upper. Case X our. Upper case s. So. There, we go we click on preview and. Open. That. Will open up a grid, chart, if. You, want to save and make this your own. You. Just simply go to the upper. Part of the chart. Where. You see the two little windows. You. Click on that drop-down and, you can select save, grid, as and, name. This however way you want. So. I don't call this a pivot point example, so, we got an example of a daily chart and a, 5-minute chart on top of that. And, looking through some of the other questions there. Okay. So to the. Pivot points been talking about pivot. Points levels standard. Deviations. Not. Really it's actually a little more simpler. Than that although, some. Of these values do come into play when it comes to standard deviation again, if we go ahead and on, the, chart let's say we go, ahead and click, on the, beaker. And. Select. Edit. Studies. You. Know in that list for pivot points. We'll click on the question mark. And. What. Is pivot. Points, well, that's Pearson's pivots which is another variation let's, go back to the original one. As. Far as what it does studies purpose to provide three key support, and resistance, areas using daily weekly and monthly time frames if you. Go ahead and look at, how. These are calculated. It's. Basically, showing how, each, resistance. And support level, is calculated. Above. The pivot add the distance equal to that between the pivot point and the low price of the previous period so, it's comparing, highs and, lows, of, previous. Periods, if you're. Looking at a daily, if you're. Looking at a weekly, pivot, it's comparing, for, the, weekly. Highs, and lows for that period once. Again if you scroll down the bottom and go, to that learning center. That'll. Bring up more of the details there. Again. Fonts are probably a little bit smaller here but, you can see that full break down there for, those pivots, now, the other question that we had is we go ahead and take a look, what.

Time Period on the ATR. So. On the daily, chart we. Were actually looking at a relatively, smaller. Period, and I shared that grid with you so the studies should be on there on. The daily chart that was a 5, period. So, looking at the average range over the last 5 periods, and. Calculating. It off of the previous, day, which, we came up with that 21.0. For, now. On the indicator this is also a Wilder's, ATR, there's a few variations of that but, that's what we came down with now let's. Talk about you, know some of the you know the cons, as. Far as with this strategy with ATR, is when. Prices are going higher. ATR. Has a tendency, of potentially. Being lower, some, traders kind of look at as a variation of volatility, they're. Kind. Of more steady price. Action notice, the ATR kind of around 20, now, when prices had sold off previously. Kazoom. This out a little bit here on the daily chart. You. Know you can see at times when price. Action. Was. Fallen. Usually. In light of those cases some. Longer range days. The ATR. Rising. In. Fact when you go back in October, the average, range of the, SP, was, about twice, as much on where, it is today. So. And some, low vol environments. You, may not be risking as many points. But. You may be leveraging. Into more contracts, and if there is a big negative move, that. Can hit pretty, quickly. Also. Let's. See some of the other considerations, here. Now. Again as far as some of the pros is considering, as far as with, how. Much the price had gapped and. We're. We were kind of on the bubble if someone had a filter around 7 to 10 points, and the, price went ahead and, was. At least a certain. Number of points from that, previous close. That, some traders may defer, on not, doing the gap because price may have ran too far ahead the, likely chance of it filling, in less, likely, or, if, they were to. Go ahead and trade that is the, set a much, lower, target. To do that. Meaning. Looking at some of the pivot, points and looking. To exit, as prices, trade down to, one of those levels. Let's. Say I do not see any other questions there let me know if you have any. And. While that's a looks like it was pretty good time and I guess on whenever, that. Release came out because that was about the longest, range. Period. There at least on the five-minute bars going. Back throughout. The overnight period there. We. Shed a chance of glance the news but our. Topic, was to be fade, in that gap today and that's what we did so. Hopefully you learned something new. It. Looks like I had to leave that fade in the gap so. What, encouraged you to do is go ahead and practice what, you learned here today. Now. Again I use an example of /m. Es there. Are other index, contracts, that someone. May look. At there I use. The the micro. Go. Ahead and identify one. Of these contracts, and practice. And opening. Gap. Determine. What the previous closed was and then. Looking, at close to the open how much is that gap you, know is it less than seven points you, know is it more than seven points or if, you're using ten points, and. Regardless. Go, ahead and, practice, that trade, and see what some of the results are over, a period of time utilize. In your paper money, now. This, was an example of a a bearish. Fade, a bullish. Fade is when prices, go ahead, and. Drop. Lower at the opening and then, trade up in that previous close now one can do a little back testing, here, as well, let's go ahead and share that we'll wrap up with that thought.

So. I'm gonna go ahead and auto zoom. Let's. Go ahead and we'll maximize, this, five-minute chart let's go back a little bit more in time. You. Can go back quite. A bit on these, intraday, charts, so. That's about 20 days. I'm. Gonna go ahead and change, this to a 5-minute. Now. I'm not going to do the math on. On all. Of the the. 80 ARS as far as the risk but, that's something that one can practice, with but. Let's go ahead and take a look. Oh sorry. Dyna didn't see your question there about. Volume. Profile. My. Question about volume profile. Utilizing. In the chart so I haven't. Brought volume, profile, but if one wants to go ahead and do that you. Can simply add that by. Going to style. We're, actually clicking on the beaker. Okay, let's go ahead and bring that up. And. Bring, up volume. Profile. Right. There. Now. With volume profile attempts to do. Is. Utilize. In volume, some traders may use, this to get an idea of. Where. Volume is referencing. To price in a, lot of cases you'll, see where there are clusters, of volume, are probably. Going to appear, at. Some, of these pivot areas so, again, we're looking at a 5-minute I'm just going to highlight some of these pivots, notice, that around the daily pivot there is kind of a peak in volume we're, seeing some. Point of control here at another s level, and just, kind of look into where some, of this volume is at notice, there's a bit of a confluence, with. These. Pivots anyway, so. The short answer is I haven't, used it extensively, in. This class because. Price, is typically. Going to be gravitating. To the support and resistance areas now if you'd like to use volume to help support. Your. Idea, of supporting resistance. Great. Idea great. Idea to go ahead and apply but. Not as used extensively, at. Least I've taught, in, some of these classes here but thanks for the question there. Alright. So going back on a little, bit of the back testing, there. And. Zoom. In on what you can do is go. Ahead and take a look at you know we're the previous, closed was. And. Some, reasons not allowed me to do this here. All. Right one, more time, praise, if I do it on the main board here so. I'm, have a little lag on my platform. So. This is going back to. November. 15th, so. What I'll do is I'm just gonna go ahead and draw a line. Approximately, at the close. So. There was approximately, the close on the 15th. Go. Forward in time. See. If I actually stick, come on there we go. Go. Forward in time. In. This case it. Actually went ahead and faded, prior. To. The opening and. Notice. That prices, actually opened up lower but once again did fade back, up so this would be example, of a bullish faith if one, traded at the opening it, did went ahead and trade up to that previous close. Go. Into another. Level here go, ahead and I'll. Just adjust this, up. Go. Move that up to approximately that close. There's. The overnight. Notice. In the overnight a lot of times prices may fade into that area too. And. Then, right here at the opening price, went ahead and faded down so. There's two for two there now, just because back testing. Some. Results may look great no guarantee, that that will continue. And. Then also you need to see the difference between what your gains are, versus. Your losses. So. Just, going down to that. But, this is a good way of systematically, practicing. Training. Futures. There's. Much more of a down day there. But. Notice even in that case with that overnight did fade and filled. Back into that. Now. Sometimes it could be a bigger move and you may get stopped out prior to that but. This is just an example of back testing. Some. Of those ideas, and theories. And. You go back about 20 days on a five-minute chart and go. Ahead and look to see what. Types of phase notice in the overnight you, know kind of traded, up back and forth act as, support and resistance in, this, case pretty much open pretty well close so one may not have had too much of an opportunity for that. All. Right well looks like that will wrap things up folks. Now. Remember go. Ahead and practice, this maybe do a little back testing, paper. Trade you. Know one or two of some. Of the index. Futures. Utilizing. The daily chart, 40%. Of the ATR, to. Identify. That. Potential, trade risk. Utilizing. The active trader to, set a a, bracket. Order on your paper money and then. Set the target, which would typically be the, previous close or if it's a more of a wider gap you may target a percentage, of that, may be about half of that move so. If you learn something new today folks do appreciate you being here as always, coming. Up next Cameron May with. Getting, started with technical, analysis, and. In. Order, to demonstrate the function out of the platform we had to use actual symbols, keeping. In mind TD Ameritrade does not make recommendations. Or, determine suitability of any security or strategy, through, the use of our tools any. Investment, decision you make and your self-directed account is solely.

Your, Responsibility, so. Thanks for being with us here today, folks and once, again coming up the top of the hour mr.. Cameron May we didn't start with futures take care now. You.

2019-12-01 10:41

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