Day Trading E-mini Futures Trade Setup That Works Daily
Here’s a very specific day trading E-mini futures setup that occurs consistently several times every week. I love that it has a very clear logic to it. In other words, there’s a good reason it’s so consistent.
It’s also one of the easier trades you’ll find (not that trading is ever “easy”).
What you’ll learn from this video can be used by E-mini traders, but also stock market and Forex traders as well.
Enjoy the video and please leave your comments below.
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Welcome to this video on Day Trading E-mini Futures. One of my favorite setups that I look for every single day. This is very, very reliable. I invite you to add this to your trading arsenal. So here it is.
It’s a volatility trade based on the behavior of traders that is fairly darn predictable. So this is not one of those trades that’s based on, oh you know some ancient Phonecian, numerology or something that’s esoteric , or astrology or anything like that. This is based on very real behavior of traders, especially those at the exchanges and on the floor.
I noticed this when I was at the Chicago Mercantile Exchange. Now I was on the floor and they have a real advantage there. A lot of the pits are closed down now but I’m talking back in the olden days when I was getting some training there and so I was down on the floor of Chicago Mercantile Exchange as a student.
THE ADVANTAGE OF BEING ON THE “FLOOR”
It was very obvious that people would trade very actively during the morning and then they would go to lunch. And we all know this that, I am not telling you anything that you don’t know there. But as I was watching the E-mini futures pit, it was very interesting because most people know that general rule. That the market’s most active in the morning and then dies down at lunch time and then volatility can come back in the afternoon.
However it was very interesting because when I was there, you could literally and physically see which traders were leaving and which ones were not. And that’s the real advantage, it really is. You could see whether, you know the whales were leaving or if they were staying into early lunch. Sometimes they wouldn’t leave and then other times they’d leave and they’d come right back. It’s almost like they are trying to fool people, heck I think they actually were. And because they knew, hey everybody knows this general pattern. Once everybody knows something, guess what, it’s going to stop working.
THOSE TRICKY DAY TRADING E-MINI FUTURES FLOOR TRADERS!
Sometimes they’d leave early, sometimes they’d stay late, sometimes they come back to lunch early and so forth. And yeah there’s an advantage of being able to see that. But if you’re not trade at the floor, you know I’m a screen trader myself, then there’s a general rule that we can follow and then we just have to watch the energies and the chart around that time.
So here it is, and again this works for day trading E-mini futures but you can use this for day trading anything. It’s really specifically for day trading, not for swing trading. It’s based around the time of day and that is the end of lunchtime when people are coming back and they start trading actively again.
HOW TO TRADE THIS AS A SCREEN DAY TRADER
Here’s how I do it now as a screen trader. There’s a little range of time so these times down here. These are California Times because I’m in California. That would be noon eastern so you can do this with stocks too by the way. Stock market works exact the same way. So this would be noon eastern and obviously then that’s 11 am central. Futures mostly trade out of Chicago, and so that’s the big futures market there. And you’re looking to for the market to go kind of flat here.
Then to come back in somewhere after 10:00 am PT which would be 1:00 pm ET. Sometimes they take longer than an hour. But it’s usually after this time and I’m looking at it anywhere from like about 10:15 to before 11. So, about 10:15 to 10:45 am PT. Kind of that half hour zone is really the matching zone that we’re looking for.
Okay, so if you look at this, and we’ve done some recent videos on Bollinger bands. Bollinger bands help you with this too because when the market stay down, they go into low volatility, and so you see the Bollinger bands squeezed together here. We’re looking for an expansion out of the contraction. That’s the whole point after lunch is over around this time. So that’s the setup.
HOW TO IDENTIFY THE DAY TRADES ON THE E-MINIS
Now how do we identify those trades? You can tap whatever trading method you use, whatever signals you use, whatever indicators you use. I don’t have time to go into my whole trading method, obviously we just a few minutes here. That’s one of the nice things about this is that you can really apply this to whatever technical analysis method you use.
If I’m using Bollinger Bands, it really helps. You know what I’d be looking for here, just to give you little indication is, you know first of all cycle high. This is a kind of an average momentum exhaustion pattern here for us. And then we look to trade in the direction of the expansion in here, if you watched my videos on Bollinger Bands. Bollinger Bands, we hit the lower band and they move away from each other and that’s a good indication of increased volatility in this direction. So that would be one example.
You can use this for day traiding E-mini futures as I like to do, but it will work with Forex and stocks as well, as long as you’re doing it during the lunch time of the market you’re trading.
Okay lets go the next day, we just do a couple of days in succession here. And let’s see, look around that same time. Alright so here we go, and each one, each setup will look a little different. Setup’s not necessarily the same all the time. What is the same, and we are looking for is the expansion of volatility.
Here we get a cycle high. And then this is the key here. So this time the market comes back up, makes another cycle high, but does not touch the upper Bollinger Band. That shows weakness to the upside. Therefore we are looking to go short, also momentum is decreasing. That’s momentum shift at the high.
Therefore we’d be looking to go short and that’s exactly what happens. Volatility comes in dramatically to the down side. See this is the thing about volatility. It determines the range of your profits. And that’s why this trade is so good is because you are trading inside of low volatility and catching a new high volatility movement in the market.
Let’s look at the next day, we like to catch these big momentum moves. Why? Because well, lot of profits to them. That’s your reward, part of the risk reward ratio. Right here we go again. Around the same time, now you could, this one came a little earlier, came right at the end of lunch time, would be your signal. And you could trade this, a couple of different ways again.
Here we get our momentum signal to go long. Comes up, touches the upper Bollinger Band, alright. Then you can even wait a little later if you wanted to. And just take the first retrace in the trend here. In the sense of going quite a ways, get a nice move again. Big move in the direction of your trade. Which is good for profits, and we like profits.
Alright, and here is yet another one. That’s would you look at this, could be the last one. Because we are already kind of late here into this. So again notice, Bollinger Bands squeeze occurring. We touch the lower Bollinger Band, we do not touch the upper Bollinger Band, and then again Bollinger Band, as they start to move away from each other.
We go into the lower Bollinger Band. We’ve got a cycle high, we’ve got a lower momentum, momentum shift here, and that’s our key to take this in the direction down as it expands. Then again the whole moved, depending on how long you wanted to stay in it. Pretty good move, right. Pretty good profits there.
So that’s the idea, is to look for keys, I’ve given you couple of tips there, but you can use other methods as well. Whatever your trading method is, to look for trades coming out of lunch for increased volatility, for some pretty nice big trades. So that’s one way I day trade E-mini futures, you can use it with stocks as well of course.
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