Elements to a Trade Setup

Jul 16, 2024

Lecture: Elements to a Trade Setup

Introduction

  • Watch introductory video: Sets proper expectations for this course.
  • Focus: Futures index trading mentorship, specifically the Nasdaq E-mini futures.
  • Platform: Trading on TradingView's paper trading module; live data on thinkorswim for comparison

Main Focus

  • Market: Intraday price action for Nasdaq E-mini futures.
  • Comparable Markets: E-mini S&P, E-mini Dow, and E-mini Nasdaq.
  • Key Concept: Understanding price action and predicting market movements.
  • Goal: Find specific trade setups in your demo account.

Setup Structure

  1. Price Action: Watch price action to understand market movements.
  2. Trade Demonstration: Examples of trades and their corresponding market actions.
  3. Trading Environment: Majority of teaching will be through TradingView's paper trading module or hindsight data.
  4. Trade Setup Types: Learn how to identify and execute various trade setups.

Trading Strategy

  • Price Levels: Identify significant price levels: daily lows, highs, and imbalances.
  • Market Bias: Establish a weekly and daily market bias.
  • Liquidity: Focus on buy stops and sell stops as key liquidity points.
  • Market Indicators: Seasonal tendencies, earnings season, Federal Reserve interest rates.
  • Order Types: Examples of reversal orders and their outcomes.

Practical Examples

  • Framework Analysis: Breakdown of daily, hourly, and minute charts to identify key points of entry and exit for trades.
  • Liquidity Focus: Identification of sell stops and buy stops, and how markets react to them.
  • Fair Value Gap: Introduction of the concept and its importance in trading setups.
  • Trade Entry and Exit: Step-by-step process of identifying and executing trades.

Homework Assignment

  1. Chart Review: Go through the e-mini futures contract charts and identify breaks in market structure post-liquidity events.
  2. Backtesting: Log and backtest trading setups, focusing on imbalances and price targets.
  3. Analysis: Use lower time frames to refine entry and exit strategies.
  4. Journal: Document findings and observations for review.

Key Takeaways

  • Precision Trading: How to achieve precision and consistency in trades by focusing on liquidity and imbalances.
  • Independent Trading: Skills to find trade setups without relying on signal services or black box systems.
  • Future Scope: Upcoming lessons will build on this foundational framework.