Emini Trading Blog

Posts Tagged ‘Context’

We started with an approximate 13 point gap to the upside. Without a hint of selling pressure, price traded higher highs and higher lows the entire day. For some, including myself, today was difficult to “get a hold of”. In terms of volatility, today was right at its daily 20 period ATR of roughly 20 points. There is quite a bit we can earn with that kind of swing, at least it would seem. This naturally raises the question: How can I tell when to enter more aggressively?

In real-time I noted the context surrounding today’s price behavior. Clear buying strength through much of Tuesday. Overnight, price rose sharply and held. Large opening gap up, followed by minimal selling. An opening range structure that was decisively traded above, only adds to the bullish reality of today’s market. Yes, the context surrounding any price development in question is pertinent and can be highly valuable to us in our decision-making. You may be wondering, “if context is so helpful, why are you not telling us about all of your buy-entry’s?”

My answer ties back to context. I paused because the voice I have come to trust over years of trading, was asking: “How far is too far?” Yes, when a market trades vertically for a period of days, the probability of continuation decreases. In view of this, I waited for a favorable buy-entry price. But, as you know, such a price was nowhere to be found in today’s ES!

In a less graduated market scenario the context would make today much more trade-able. Today’s highly favorable price structure in terms of trend-likelihood would likely have been of much greater value had less buying preceded it. As it is, I stayed on the sidelines today as market context had me asking, Where Are the Sellers?