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Shorting the NASDAQ Lecture Insights

May 17, 2025

Lecture Notes: Shorting the NASDAQ

Introduction

  • Presenter: Michael
  • Focus: Shorting the NASDAQ using a two-minute chart to identify inefficiencies.

Key Concepts

Market Setup

  • Sell Short Limit: Utilized inside a sell-side imbalance buy-side inefficiency (BI) with a target at the hellside liquidity pool.
  • Stop Loss: Positioned above the first candle in the chart interval (CI), including volume imbalance.
  • Liquidity Raid: Annotated as buy-stop liquidity is purged leading markets to explore lower.

Trading Strategy

  • Turtle Soup Setup: A classic setup indicating a shift in market structure.
  • Risk Management:
    • Defined risk at the high of the CIY (Complex Internal Yield).
    • Stop loss adjustments based on market behavior and price movements.

Market Analysis

  • Shift in Market Structure: Occurs after liquidity runs out prior to the opening bell at 9:30 AM ET.
  • Market Orders:
    • Strategy to add more contracts if the market trends favorably.
    • Key levels noted for potential acceleration of trading activity.

Technical Details

Chart Analysis

  • Two-Minute Chart Advantage: Used for clear visualization of CIY over one or two-minute candles.
  • Inversion Fair Value Gap: Monitored for validation and price behavior analysis.
  • Pre-Market Activity: Monitored from 7:00 AM for indicators of coming market trends.

Execution Plan

  • Contract Management:
    • Initial short was for one contract; added more upon consequent encroachment.
    • Targeting relative equal lows for exit.
  • Stop Loss Strategy:
    • Positioned for risk definition without immediate adjustments.
    • Stop located to cover potential commission costs if market reverses.

Patterns and Signatures

  • Price Behavior: Indicators of unwillingness for price to return to premium side of identified ranges.
  • Fluctuations: Anticipated around opening range; strategy accounts for potential whip saw action.

Conclusion

  • Outcome: Awaited market behavior to achieve a full pull to sell-side liquidity.
  • Execution Reflection: Logic and strategy were demonstrated live, showcasing the importance of strict adherence to market read and structure.

Final Thoughts

  • Emphasized importance of monitoring price action and responding accordingly.
  • Reminder to trade safely and manage risk effectively.

Note: The lecture involved real-time adjustments and annotations which were intended to guide understanding of nuanced market dynamics and strategy implementation.

Full transcript