Notice how, once we dropped below VWAP, selling volume (volume at bid vs offer) dried up around the ES 1060.50 level. I bought the 1061.50 price for a move back to VWAP, once again anticipating that we were seeing a range day in the making. That told me we should hit VWAP at the very least; on a typical range day, we should oscillate above and below VWAP. So my exit was conservative at 1063.50, a bit above the volume-weighted average price. Note within the breakout bar how volume expanded in the direction of the trade, validating the idea. I would have stopped the trade on an expansion of volume at 1060.50. Regular readers will recognize the above as a transition pattern, one of my favorite setups.
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3 comments:
Dr. Bret,
No joke you and I are on the same page today. I took the same exact trades. If you would like to see, they will be in my video tonight. So far those are the only real opportunities the market has offered. I am not going to execute sitting in the middle of this range, assuming we are going to be range trading, I will be looking to fade excess back to the VWAP as my next move.
Good trading
-Matthew Fahmie
BRETT, THANKS FOR ALL YOUR GREAT INSIGHT. Your chart shows a 30,000 share bar chart i think. Is that the optimal chart setting, or do you vary that under particular conditions. I have seen you use a 30 minute chart I think in some previous post. Any thoughts would be appreciated, DON P.
LOL....I took the very same trade.
Link below shown from a candle chart's perspective
http://4.bp.blogspot.com/_GCk1spliaTo/SrOoL4OXp6I/AAAAAAAAAD8/ZtyVBKHw3Vo/s1600-h/ES+12-09++9_18_2009+%281+Min%29.jpg
Dr. S. You're creating monsters.
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