Power Emini Commentary – Notes – Education – Examples
We started a new thing in 2025. The Power Emini “Notes” section. Below you’ll find ongoing commentary, trade examples, charts and general short-form random posts. This page gets updated every few days, so check back soon.
Missed Opportunities
4/28/2025
Whether you’re trading a system, using indicators or just doing it purely discretionarily, there are always going to be “missed opportunities”. Today was an example of a session where the Momentum system had the right idea, but the price behavior resulted in a missed opportunity to catch the “Big Short” that would have hit both Targets.
Without going into a long detailed 30-minute read about what transpired, I’ll summarize it quickly. Aside from the false Long breakout early-on, the system gave a Short alert that hit Target 1 but only got a few extra points in traction before reversing and hitting the trailed stop. That was a 24 point counter-trend move so I think you understand why the Trailing Stop (which had tightened twice) got hit. The net result of that Short was a 2.00 point gain – essentially what we call a breakeven.
But the missed opportunity came later. After that Short alert the price spiked back down 24 points and then back up 22 points in five 5-minute candles. There were no alerts during that “chop”. But then price made another down move which got a lot of follow-though. Enough that it would have hit both targets and then some. But there was no Alert on that one either, hence the missed opportunity.
Why didn’t the system give an alert on that move? The real reason was that the price never rebounded far enough back into the Range to get another Alert in the same direction as the original Short that just hit T1. But there’s more to it conceptually. It’s part of the design of the system logic. Basically when an open alert gets closed because it hit the Trailing Stop, we don’t want it to just turn around and give another Alert in the same direction, unless it’s sensing a *new* trend move. This has to do with support and resistance.
In other words, there were two down moves that terminated at roughly the same level and both times the price rebounded significantly. So on the third down move the system was sensing “support” and didn’t want to chance it. That’s a rough overview of why the logic doesn’t always catch every big trend move. The other thing was that since the original Short hit T1 and then the Trailing stop, it had to wait until other conditions had been met before issuing another Short alert. And the way the price action unfolded, it didn’t meet the criteria.
Which brings me to the most important point. Every experienced trader knows there are going to be TONS of missed opportunities and you can’t let it bother you. It’s just the nature of the business. Every day the market is going to make moves without you being in a trade and occasionally it’s going to make a HUGE move and you didn’t participate. Or maybe you scalped a few points and got out, then the market made the huge move in the same direction as your trade.
You can’t trade every wiggle on the chart. You’ll drive yourself mad trying to do that. Every so often the market is going to make a huge directional move and you didn’t catch it. If that bothers you it’s something you’ll have to work out mentally to be successful in the long run. There’s no point in looking back at the chart at the end of the day and fretting that the market made a move and you (or the system) didn’t catch it. Missing out on moves is inevitable and just goes with the territory.
The funny thing is… Today the MES opened around 5555 and traded down to 5493 before rebounding back to close around 5555 (I’m using round numbers to simplify the point). So that’s 62 points down and 62 points up and a lot happened along the way. In this market environment where we’re seeing 10-20-30+ point ATR’s on the 5-minute chart, there’s a TON of risk staying in directional trades. That’s why the system uses a Trailing Stop and that’s why it has the max stop. With this kind of “all over the map” price movement and huge ranges, you have to have some kind of “stop strategy” or you’ll never make it.
That means sometimes a stop will get hit and then price ends up making the move we wanted without us. That’s just part of trading no matter how you’re doing it.
One of the more frequent things that tends to “thwart” an Alert is when the price hits Target 1 and then there’s a counter-trend move that tags the Trailing Stop – then the price resumes its trend move in the direction of the trade we were in. The alternative is to not have the stop tighten and trust me – that’s not a winning strategy in the long run. So there’s a compromise. If the Trailing Stop didn’t tighten, then there would be some alerts that had a nice profit that eventually turned into a nasty loss. We prefer the strategy of “getting trades to breakeven” and then let the market decide IF there’s enough follow-through to get to T2 and beyond.
It “quants-out” better than way over the long-term.
It Doesn’t Get Better Than This
4/24/2025
Today was one of the best examples of a “strong trend day” that you’ll ever see. And I say that based on the price action in the first hour or so. Even after the market consolidated for a couple hours mid-day it continued higher and closed right at the high of the day.
It was an ideal session for the Momentum System and no matter how you played it, it turned out great. Even a 2 Contract trader just shooting for the 2 Targets scored +31.50 points.
I took this screenshot right around 3:00 Eastern time just prior to the Trailing Stop getting hit up there at 5491.25.
This shows the potential of a strong trend day. I marked the distances from the Entry to the 2 Targets and also the level where the Trailing Stop got hit about 15 minutes after I took the screenshot. I also marked the “high of the day” prior to the trade getting closed out so the indicator would still display the “traction” on the Alert.
Remember, the “traction indicator” in the Alert Banner shows the maximum excursion in both directions from the Alert Price (trade price barrier) once an alert is active. You can see this Alert took 3-ticks of “heat” and then the price moved as much as 94.75 points in the direction of the Alert.
It doesn’t get much better than that.
Here’s the thing about looking at a chart like this in hindsight. It’s human nature to think it would have been easy to play this move, but when the price action is unfolding it’s a different story. I’ll bet a lot of discretionary traders that managed to get long didn’t capture the bulk of that move. And there’s nothing wrong with that. Experienced traders know that you can never look back and wish you had done something differently.
Honestly, I’d say the system did a great job capturing the points it did just hitting the 2 Targets. But as I mentioned a couple days ago, the best way to “stick with a trade that’s working” is to manage it with a Trailing Stop. Today’s session was proof. Take a look at that pullback from 10:35 to 10:50. That was a 22.75 point “counter-trend move”. What’s even more interesting is how the low of that “dip” was 2-ticks below the prior low 4 candles back. I’m sure that took out a lot of stops.
The point is that staying in for a huge trend move like this isn’t as easy as it seems. Using a trailing stop is the best strategy I know of for managing a trade and that’s an integral part of the system. So from the Entry level to where the system Trailing Stop eventually got hit was a +68.75 point move as you can see from where I marked it on the chart.
The thing about sessions like today is that they are relatively rare. Sure the past couple months we’ve been experiencing unprecedented volatility and intraday moves, but remember I said this: Come July and August we’ll all be looking back with fond memories of when the market was providing this many points of potential gains in a session.
As I’ve been saying, this environment is high-risk high-reward and not for the faint of heart. This week in particular the Momentum System is really showing its value. I can’t imagine trying to “wing it” with the types of moves we’re seeing lately. Basically “trading a system” is far superior in so many ways given this type of price action. If nothing else it helps keep our emotions in check and provides a structure to our trading.
Exact Entries, Stops, Targets and Trailing Stops – what more can you ask for?
These type of moves are seldom this clean and we don’t want to get overconfident. At any point during the session the price could have just as easily reversed. That’s why trading a system like this is a much better approach than trading what you think is going to happen.
Thought I’d Seen Everything – Until Today
4/23/2025
First I wanted to add a comment to yesterday’s post. I usually write these later in the day but yesterday I had some things to do in the afternoon so I decided to post before lunch since both targets had been hit. At the time it seemed like a “more normal’ session but by the end of the day it was just another insane day with a 100 point ES move in the cash session. A hundred points up and sixty points down and then another sixty points up… anything but normal.
But that’s just the environment we’re in. Seasoned traders have probably been through a few periods like this but I’m guessing these market conditions are wreaking havoc somewhere.
Case in point: This morning ES moved 55.25 points in a 5-minute candle. Drilling down to the 1-minute timeframe at 9:37-9:38 the range on the 1-minute candle was 47.00 points followed by a 35.00 point candle the next minute. Wow.
So I thought I had seen just about everything but that intraday move in a matter of minutes was insane. What’s even more incredible is how the system handled it. Basically the system gave a Long Alert that triggered 17 points past the Alert Price, then proceeded to hit Target 1 (by just one extra tick) and then reversed and hit the stop. And that all transpired in 2-minutes. On the 5-minute chart above you can see it on candle I have marked.
I can only recall one other time we saw that big of a move in such a short timeframe but I can’t remember the circumstances. It was many years ago. I do recall that ES moved 30 points in 1-minute and that exposed a small “flaw” in the Alert Software at the time. Keep in mind this was several versions ago but what happened is that the price triggered an Entry 30 points over the Alert price and it hit Target 1 and the Trailing stop before the software could even register it in the System Notes.
We had to modify the software to handle that “event” that was such an outlier that it only happened once in years. Today’s 47 point 1-minute ATR was similar. Since the system runs in real-time now it’s able to handle these types of anomalies.
Check this out
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09:38:21 am Trailing stop hit at 5468.25 – System Reset
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09:38:04 am Target 1 hit at 5495.75
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09:38:00 am T1 = 5495.75 T2 = 5518.25
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09:38:00 am Entry Confirmation 5486.25 – Initial Stop 5468.25
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09:37:43 am LONG – Trade Price Barrier 5469.25
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Notice the “seconds” on the timestamps. I’d say the software handled it pretty well considering. The only small glitch was that it didn’t appear to have time to move the trailing stop after Target 1 got hit.
Here’s the thing. It’s one thing for the software to react in real-time, but it’s another for us humans to be able to react to 47 ES points of price movement both up and down in one minute. In theory this would have been an Alert to just pass on. It was pretty obvious the entry was going to be WAY past the Alert price.
But even with this outlier, the second Alert worked out great and scored +41.50 points. So the raw stats show a gain of +33.00 points on the session, but I know individual results will vary. Speaking of slippage, you might consider passing on an Alert that’s going to fill say 10+ points past the Alert price, but that’s just an opinion. Off the top of my head I’d say that might happen once or twice every couple years. But in this market…
This is the most insane market environment since 2020 or maybe even since 2008. It’s hard to remember every little “anomaly” over all these years, but that price move this morning was one for the record books.
Finally, A More “Normal” Market Session
4/22/2025
Why do I say this was a more “normal” market session? Because the initial stop started off on the opposite side of the Range
If you’ve been following along with all these posts the past couple months, you know I’ve been lamenting about how the market conditions haven’t been typical. The ATR’s have been much wider than normal and the volatility and intraday price action has been crazy volatile compared to normal market conditions. We’ve been experiencing a period of significant “range expansion” on all timeframes.
But today’s price action seemed a bit more like what we’d expect in a normal market environment. At least in the early part of the session.
Here’s a 1-minute chart of the first hour. Normally I don’t post 1-minute charts because we recommend that once you take an Entry, you follow the Momentum System on a 5-minute chart. The 1-minute is only used to take the entry and after that it’s just too hectic. Switching to a 5-minute is easier on the nerves and plus the Targets will be visible on the price scale.
But there are a couple interesting things that stand out on the 1-minute chart.
The first thing to notice is that the initial stop started off 1-tick below the Range. That’s how it “normally” is. Recently with all the volatility and huge ATR’s the initial stop started inside the range because the “max stop” meant it fell somewhere inside the range.
The other interesting thing is how the initial stop was at about the most obvious level possible, just a hair under all those lows from about 9:20 to 9:40. It’s not always that clean but it’s easy to see how 5236.25 was the major support level.
The next thing to notice is how the price just “blew through Target 1”. That’s only noticeable on the 1-minute timeframe.
I’ve mentioned in prior posts that it’s entirely possible to outperform the system by getting a better fill on occasion. This is an example of where manually selling to take profits at Target 1 might have scored some additional points. Target 1 was 5260.75 but the high of the 1-minute candle that hit it was 5266.50 so I think you can see how it’s possible to get some “slippage” in your favor. That’s where the debate about placing limit orders at the targets vs. selling manually comes in, but I’m not going to go into that here.
The final interesting thing to note on the 1-minute timeframe was how the price reacted around Target 2. You can see how it pierced the Target and began reversing a couple minutes later, then revisited it. After I took this screenshot the price spent about 20-minutes in that area. Target 2 was 23.25 points from the Entry and the system did a pretty good job of calculating the “optimal distance” in this case.
Here’s a look at the Alert Software this morning when Target 2 got hit.
I wanted to reiterate that fact that the Desktop Alert Software is all you need to trade the system. Sure it’s nice to have the NinjaTrader “companion indicator” if you’re a Ninja user, but in theory you could trade the alerts without even looking at a chart. That’s probably not the best way to do it, but the “audio alerts” would honestly suffice since everything transpires in real-time. It’s an interesting idea because of the “slippage” that would come into play. Some trades you’d get a better fill then the system and some you wouldn’t. But over the long run it would all even out.
It’s funny because no one really talks about “slippage” on trades as potentially being in your favor.
As I’m finalizing this post now just before Noon, the price continued well past Target 2 and the “traction” on the Long Alert is showing +50.50 points now. So maybe it’s not a completely “normal session” after all.
My #1 Strategy for Success – Day Trading Futures
4/21/2025
I got an email today from an gentleman I’ve corresponded with several times in the past. He’s fairly new to day trading Futures and has apparently been struggling for a few months with his “scalping”. In this market environment I’m not surprised because as you know if you’ve been following along with my posts, the current volatility is (almost) off the charts. That’s an interesting figure of speech because there’s no such thing as “off the charts” when it comes to trading. We can always see the price.
But back to the point of this post. To paraphrase his question, he said “I need to work on a winning strategy, can you please point me in the right direction”.
And I immediately thought that today’s session was a perfect example of the “best day trading strategy” I know of. And I’m going to explain it in detail here in about a paragraph. It has to do with Trailing Stops.
But first I wanted to post a screenshot of the MES Momentum System chart I took this morning right as Target 2 got hit. It’s going to help set the stage for discussing the strategy.
What transpired in the first hour of trading today is pretty self-explanatory if you look at the System Notes. Basically the market started breaking down below the Trigger Range and the system gave a Short Alert that triggered-in about 10-minutes later.
Target 1 got hit for +9.75 points and Target 2 got hit for +33.00 points, so trading 2 Contracts just shooting for the two targets scored +42.75 points.
But that’s just the beginning of the story What transpired after the targets got hit is the important thing and what I wanted to focus on here. It’s the “trailing stop moves” I want to discuss as they are the foundation of my “best trading strategy”.
Basically the strategy goes like this. You take a trade long or short and set an initial stop. (I don’t think I need to explain why we always use a stop-loss). If the price moves in your favor you look to tighten up the initial stop. That’s when it turns into a “trailing stop”. Ideally you look to get the trade to “breakeven” as quickly as possible. We do that by taking partial profits at an “easy to hit” Target 1. Then we tighten / trail the stop again. As price continues to move in the direction of our trade, we continue to “pro-actively” tighten the stop periodically based on the price movement.
That’s it in a nutshell. By letting the trailing stop decide when to close the position, we’re able to stay in a trend move longer and score more points. Using this trailing stop strategy prevents taking profits too quickly. Now of course there’s a lot more to it as far as how the Momentum System works because we do have those two “profit targets”. And that’s part of how everything fits together. But apart from selling a partial position and getting a trade to breakeven, it’s the tightening of the Trailing Stop that really matters.
Here’s what I mean. In theory, using today’s session as an example, you could have taken the Short Alert and just managed the trade using the Trailing Stop. As noted on the chart below, you can see the Trailing Stop “tightened” 14 times after the Entry was taken before the price actually tagged the Trailing Stop.
Ironically the system Trailing Stop got hit TO THE TICK and the market continued even lower. But I think you get the idea.
The distance from the Short entry to where the Trailing Stop got hit was 59.75 points which is certainly a respectable gain. The point is that the best way to stay in for BIG point gains when the market makes a BIG trend move is to trail the stop and avoid selling prematurely. If you’re scalping for a couple / few points every trade you’re never going to score huge points. And we know for a fact that on occasion the market is going to make these huge moves. Maybe not every day, but they are guaranteed to happen.
Imagine how many winning scalp trades it would take to score 40-60 points if one was taking profits at a couple / few points. But this strategy can even be employed when scalping. The trick is to “scalp for runners”, meaning that instead of taking profits when you have a few point gain, you use the Trailing stop strategy to try and hang on for a bigger move. That makes sense right?
Back to how the Momentum System handled today’s session. On the chart above I noted that the Trailing Stop “tightened” 14 times. Just so you can see the progression, I reversed the order of the System Notes in the software so you can read down from the top and see all the Trailing stop moves below. (The System Notes record every “event” in real-time throughout the session).
Monday, April 21, 2025 – ES Momentum System – June 2025 Contract
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09:35:00 am ES Momentum System Online RH = 5262.50 RL = 5246.25
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09:37:02 am SHORT – Trade Price Barrier 5238.00
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09:47:00 am Entry Confirmation 5236.25 – Initial Stop 5254.25
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09:47:00 am T1 = 5226.50 T2 = 5203.25
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09:58:00 am Target 1 hit at 5226.50
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09:58:00 am Trailing stop move to 5248.25
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10:01:00 am Trailing stop move to 5238.25
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10:16:19 am Target 2 hit at 5203.25
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10:16:19 am Aggressive Protection Level 5232.25
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10:55:00 am Aggressive Protection Level 5214.00
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10:55:00 am Trailing stop move to 5229.50
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11:02:00 am Trailing stop move to 5224.00
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11:09:00 am Trailing stop move to 5218.50
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11:16:00 am Trailing stop move to 5215.00
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11:23:00 am Aggressive Protection Level 5193.00
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11:23:00 am Trailing stop move to 5212.50
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11:30:00 am Trailing stop move to 5208.75
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11:37:00 am Trailing stop move to 5206.25
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11:44:00 am Trailing stop move to 5202.50
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11:51:00 am Trailing stop move to 5197.00
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11:58:00 am Trailing stop move to 5190.50
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12:33:00 pm Trailing stop move to 5176.50
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12:41:36 pm Trailing stop hit at 5176.50 – System Reset
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12:41:36 pm ES Momentum System Offline
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Note that in addition to the “regular Trailing Stop” the system also incorporates the Aggressive Protection Level, which is just an additional discretionary tighter stop, but I’m not going to go into detail on that in this post since I discussed that at length in a post some time ago.
But the thing to focus on is how the system automatically tightened the stop and stayed in the trade even after the profit targets were hit. That’s what we call a “runner” which I’ve also discussed previously.
The key takeaway here is that the trailing stop strategy is the best strategy for sticking with a winning trade that I know of. And it can be used no matter how you’re taking entries or what style of trading you’re doing. It can easily be incorporated into Scalping strategies because the concept is basically to “stick with a winner” using a trailing stop rather than just “selling with a small profit”. It helps with the decision of “when to sell”.
As you can imagine there’s a lot more to it. For one thing we have to determine the best levels to move the trailing stop to periodically. Fortunately for Power Emini users, the system automatically calculates the optimal trailing stop levels based on the real-time price action and it does a pretty good job. On the chart above you might have noticed an additional dashed horizontal line just above the price action from 10:15 to 11:15. I added that to show how relevant the Trailing stop move to 5215.00 was based on the candles.
One thing to keep in mind is that the software’s Trailing Stop moves are “dynamic”. They aren’t just based on prior highs or lows and the moves aren’t linear. In theory if you were doing it manually that’s probably how you’d have to approach it, but the system is using the intraday market structure and ATR’s to determine where the current TS should be.
I can’t think of a better way to stay in a trend move and capture as many points as possible.
Happy Easter – Holiday Shortened Week
4/19/2025
I hope you enjoyed the market Holiday on Friday and have a great long weekend. I saved Thursday’s chart and figured I’d post it here to expand on my previous post about “choppy markets”.
It’s hard to quantify what constitutes a choppy session but I know one when I see it. Basically it’s when the market zig-zags up and down in a sideways range, crossing above and below a zone multiple times.
The system gave 2 Alerts and both hit Target 1 but there wasn’t a lot of follow-through. Interestingly enough the ATR’s were still pretty elevated which you can tell by the 5-point increments on the price scale. I’d say off the top of my head the average 5-minute price ranges this session were about 10-points which is fairly significant.
But notice how I shaded the “no-trade zone” which extends beyond the pre-market and opening ranges, and past the “Trade Price Barriers”. You probably read in the documentation how one of the original concepts of the system was to help know “when NOT to trade”. So basically the system considered the price action inside the shaded area as just “noise”. When price escapes a consolidation zone like this, it has the potential to break free and clear and run to the Targets. But it doesn’t always get the follow-through needed for a trend move to Target 2. That’s why T1 is calibrated to be a (fairly) easy to hit Target, where we can take some (or all of the) profits and get the trade to breakeven.
In this case, Target 1 was 8.75 points on the Short Alert and 10.00 points on the Long Alert. Those are pretty respectable gains for just selling at T1. And that’s a completely viable option at times even though the “standard” strategy is to sell a partial position at T1 and hold on for T2.
The extremely high “hit rate” on Target 1 makes it a viable option at times even though the R/R isn’t optimal. But if one traded both Alerts with 1 Contract and just sold at T1, the total gain for the session was +18.75 points. Trading 2 Contracts using the “standard” strategy, the total gain was only +7.25 points.
Given the fact it was the day before a 3-day Holiday weekend and the market itself was “choppy”, I’d say either of those outcomes seems acceptable. As I like to mention frequently, we have to trade what the market serves up in any given session and we have no control over how the price action manifests. Over all these years of trading the system, we’ve come to expect the days around a Holiday tend to be choppy overall and once again that’s what the market “served up”.
A Couple More Choppy Days
4/16/2025
The past couple days were similar to Monday in that the market was all over the map and just generally choppy intraday. That’s 3 days in a row where the system gave 3 Alerts. That typically indicates non-trending market conditions and consolidation periods.
So between yesterday and today we had a few stop-outs, a couple Target 1 “breakevens” and then finally a 2 Target winner. The volatility is still extremely high and it seems like at any point in time, the market can make a 20+ point move almost at random. The 3rd Alert today got 100 points in “traction” from the Entry so it’s like the market finally made a decision on which direction it wanted to go, and it was lower.
Tomorrow is the final trading day of the week. It’s closed Friday for the Good Friday Holiday and the system will be offline. Looking at the daily chart it’s hard to say what happens next. There’s about a 500 point range between the highs and lows of the last two weeks and the daily ranges are significant. It really doesn’t matter since we’re playing the intraday price movement but the overall environment is still extremely unstable. It seems like every breaking news story has a big effect. Today it was Powell’s remarks that led to the sell-off, but every day it seems like we are bombarded with market affecting headlines.
Prior to today it seemed like the market was trying to find a consolidation level near the top of the range. Monday and Tuesday were a couple relatively narrow-range days compared to what we’ve seen lately. But today saw a 150 point range and it will be interesting to see what happens tomorrow with a 3-day weekend coming up. Stay tuned…
All Over the Map
4/14/2025
Today is Monday and it’s the start of a new week. The market is closed this coming Friday for Good Friday (just a FYI).
I had a great visit with my Mom and I’m just getting caught up with everything, so I haven’t posted in a few days. Friday was another one for the record books, so I want to post the chart and some thoughts I jotted down. But I’m doing today first because it’s fresh in my mind and it was a pretty interesting session.
There were 3 Short Alerts that filled and we had one of everything. The first Alert hit T1 and then the Trailing Stop for a breakeven. The second Alert hit the max stop. And the third Alert went on to hit both Targets. As you can see on the chart, the net result trading 2 Contracts was +21.25 points.
What’s interesting is that in normal market conditions that would be about what I’d consider a nice winning session for an Alert that hit both Targets. But today was anything by normal as ES traded in about a 100 point range “all over the map”.
Notice the price never moved above the green horizontal line near the top of the chart (Range High). I just wanted to reiterate that in normal markets the initial stop on all 3 of the short alerts would have started off a tick past that level. At some point the ranges will start to contract and the system will be back to functioning “like it usually does”. We’ve been in this period of elevated volatility for well over a month now, but at some point things will settle down and the ranges will contract.
When that happens we won’t see the max stop anymore – or maybe just on occasion. I’ve been talking about the max stop frequently because it’s more of an anomaly than anything. But anytime the initial stop on an Alert doesn’t start out on the opposite side of the range we know conditions are not normal. As I’ve mentioned, the distance to Target 1 has recently been about where Target 2 would be in normal conditions. Just keep that in mind because it’s important. When a majority of the ATR’s are larger than the max stop it’s a high-risk high-reward environment.
Experienced traders know that we go through periods like this every so often and it makes sense to play defense. The max stop is the systems “defense mechanism” because you have to draw the line somewhere as I’ve explained. It doesn’t make sense to use 30-40-50 point stops and that isn’t really feasible (or desirable). So when the volatility is extremely elevated like this max stops are going to get hit. But as you see from today and Friday, when both Targets get hit, it more than makes up for a stop-out.
One for the Record Books
4/11/2025
This was one of the most incredible sessions for the Momentum System in the last 5-years.
As usual (lately) the market itself was insanely volatile and the 5-minute ATR’s in were running 30-40 points in early trading. The system gave a Long Alert that filled 8.25 points over the Alert price and got stopped-out pretty quickly. A 1/2 ATR (-18.00 points) is extremely tight for this type of volatility as I’ve been mentioning in all these posts.
But it’s the 2nd Alert that was the jaw-dropper. Right around Noon (Eastern) the system fired off another Long and it got a better fill than the first one. But it’s the distance to the Targets that was out of the ordinary to say the least.
Target 1 was 21.00 points and Target 2 was a whopping 70.50 points from the Entry.
Both Targets got hit for a total of +91.50 points (assuming trading 2 contracts).
So even including the max stop out of -36.00 points, the net result was a gain of +55.50 points. That’s one for the record books.
The Trailing Stop was never hit during the session and the market closed about a point over T2.
One of the most important things to consider for this session was the fact the 18.00 point “max stop” basically saved the day. That’s because if there was no “fixed” max stop the actual stop-out on that first alert would have been -60.75 points because the system “typically” places the initial stop 1-tick past the opposite side of the range.
So this is probably about the best example of why the system uses a max stop and how it can really work to our advantage in certain cases. Sure there are times where 18 points is way too tight for the ATR’s and volatility, but in the big scheme of things it “quants out” just like it’s supposed to.
The low to high range today was 166.75 points in the cash session. These are extremely large numbers, even trading MES. That’s just the current environment the market is serving up. And you can see how the system handles it pretty well. I’ve mentioned and discussed how the system “adapts” to any environment and we’ve been seeing that playing out recently in real-time.
It was an amazing way to end the week.
Just Another Insanely Volatile Day
4/8/2025
First, a personal note. My Mom is flying into town tomorrow for a visit so I probably won’t be posting the next few days. We live in different States and at her age, every moment we can spend together is important. I’ve mentioned a couple times that when I started this new “blog format” I didn’t intend to make it a daily recap. The plan was to post a couple or a few times a week when something interesting or unusual happened. These posts are intended to help new and prospective users of the Momentum System get familiar with everything, understand the nuances and learn the best approach to trading the system.
But as I’ve been saying, we’re in the midst of an “extremely unusual” market environment. Today definitely falls under that category as far as how the system handled the volatility.
There were three Alerts today (3 is the max number of filled Alerts for a session) and we got one of everything.
A full max stop-out, a Target 1 hit “breakeven”, and “both Targets hit” on the final Alert.
And while those numbers seem big, they are nothing in comparison to the full session.
Here’s a screenshot that shows all three Alerts and the levels.
Notice the ATR of the candle that triggered-in the first short was 29.75 points. I’ve been mentioning how an 18 point max stop is pretty tight in these conditions, even though it may seem like a lot. And it is under normal circumstances.
But here’s something really interesting about the “levels” on that second short. At 11:20 the price came within 2-Ticks of hitting T2 but price rallied back to just a couple ticks under T1 in the next candle. The following two candles hit T2 and the lower bodies of the candles were right smack on T2. Then the most interesting thing was the rally all the way back up to just a smidgen under the Trailing Stop at the time.
Here’s the zoomed-in view.
It was uncanny how close price came to T2 and the Trailing Stop at the time. I’ve mentioned how there are times where price gets within a couple ticks of Target 2 but never quite makes it. “Close enough” could be fine in some cases too. When price is swinging up and down 20+ points every 5-minutes a lot can happen. Some of the candles in relation to the system levels were amazingly coincidental during that time period.
Just for perspective, here’s how the chart looked at the close.
Just another crazy volatile session. The Trailing Stop was never hit, so I marked it where it was at the 4:00 close. That final Trailing Stop was 162.00 points below the Short Entry. The market closed 220.50 points below the Short Entry. It was one for the record books.
Big Risk – Huge Reward
4/7/2025
Today’s session saw some of the wildest intraday price swings since early 2000. I know it’s almost redundant at this point to discuss the volatility because we’ve been experiencing these “extreme conditions” for over a month now. Most of what I mentioned in the previous post Friday was relevant today, but today worked out a lot better.
While the first Alert of the day was a Short that hit the max stop, the second Long Alert hit both Targets.
Target 1 was +15.75 points (which is about the distance T2 would be in a more normal environment).
Target 2 was a whopping 53.00 points.
Together that totaled +68.75 points less the -36.00 points on the stop-out for a net of +32.75 points assuming fills at the system levels.
But that doesn’t even begin to describe what actually transpired. For one thing, there was a 5-minute candle with a 233.75 point range followed by a 99.50 one and then a 158.00 point candle. That’s the most volatility I’ve ever seen (that I can remember). I’ve been talking a lot about ATR’s and the 18 point max stop, so I won’t rehash all that, but 18 points in either direction seemed like nothing looking at today’s chart.
So here’s the good news. The max stop worked perfectly as intended today and if the ranges weren’t so huge it was just another session where the first alert hit the stop and the second one went on to hit both targets – and then some. That’s not uncommon in normal market conditions and I’ve mentioned that a 2 Target winner typically makes up for a full stop-out. But it’s the “and then some” that made today a good day.
Keep in mind that these market conditions are extremely rare. Over the years we’ve experienced a few brief periods of extreme volatility similar to this. And the market always (eventually) settles back down. Is the volatility here to stay? It never is.
This chart provides a good glimpse of just how wild the early part of the session was:
Here’s a few more crazy stats from today.
The cash session low to the high of the day was 419.50 ES points.
The opening 5-minute range was 29.75 points.
The Long Alert got +333.50 points of “traction” (from the alert price to the high)
The system Trailing Stop got hit 102.50 points above the Long entry.
And the ATR’s on those 3 candles I mentioned above – when there was a (fake news) rumor there might be an extension on the “tariffs”.
Here’s a screenshot of the chart when T2 got hit – prior to the 233.75 “rumor candle” that skewed the chart scale. The craziest thing about the Short was that the system gave the alert and 1-minute later it filled and then 1-minute later it hit the max stop. You can see the 5-minute candle where that all transpired had a 41.75 point range.
How often does an Alert play out in just a few minutes? Almost never in normal market conditions.
Ok, so if you read yesterday’s post and clicked the link about “trading the system in extreme volatility” you know there are any number of ways to approach things. Basically there are a lot of different options as far as how to deal with unusual market conditions.
You could choose to sit on the sidelines and not risk anything.
You could choose to skip the first Alert of the session and see how things unfold.
You could choose to trade just 1 MES Contract.
You could choose to trade just 1 MES Contract on the first Alert and 2 Contracts on the second (if there is one).
You could choose to trade just 1 MES Contract and shoot for Target 2.
You could choose to avoid trading if the max stop is in play.
You could choose to use different stops and targets than the system.
I could go on but you get the point. We all knew going into today that it was going to be an “extraordinary” session and there’s no rule that says you have to trade the system “purely mechanically”. If you chose to do it that way it actually turned out great. But it’s possible a user could have done way better than the system – or a bit worse I suppose. A lot can happen in fast markets where the ATR’s are “six sigma events”. Imagine the possibilities of a “runner” contract today.
We’re all grown-ups and the system is a “tool”. It can be traded purely mechanically most of the time, but there are times where it might make sense to use a little discretion or adjust our strategy based on market conditions. It’s not the first time I’ve said that but you can go back and read a bunch of past posts and I think you’ll have a good handle on the concept.
5 trading sessions into April, the MES Momentum System is showing a gain of +109.00 points trading 2 Contracts shooting for the 2 Targets. That seems acceptable given the environment and that’s using the “purely mechanical” levels.
I’m posting the chart of the session at the close for posterity. Just so we can look back in the future and see what a truly wild session it was.
The yellow dashed line up there at 5064.50 is where the Trailing Stop eventually got hit about an hour before the close. It’s amazing to see how the chart got “skewed” by those couple big candles I mentioned. Notice the price scale increments are 20 points apart – Wow!
Surfing in a Hurricane
4/4/2025
The S&P 500 fell 6% today, its biggest 1-day decline since March 16, 2020. As of today, the S&P 500 is down 13.7% in the first 64 trading days of 2025, the 6th worst start to a year in history.
I just wanted to provide some context.
So there’s a lot to discuss and I’m actually writing this post on Saturday because I want to cover some important things about trading the system in this type of environment. And trading in volatile markets in general. There are lots of analogies I could use to describe trading in this recent environment, but “surfing in a hurricane” is the first one that comes to mind. Or maybe surfing those 50 ft. waves off the coast of Portugal. I think you get the idea.
So the first thing to consider is the “size” of the ATR’s and the swings in volatility. That’s an extremely important point when it comes to stops and targets.
Take a look at the ATR’s in the first half-hour of the cash session.
9:30-9:35 35.75
9:35-9:40 34.50
9:40-9:45 27.75
9:45-9:50 36.25
9:50-9:55 23.00
9:55-10:00 39.50
Those are the (high to low) point ranges for each 5-minute candle in the first 30-minutes of trading. That’s an average price move of 32.75 points up and down every 5-minutes.
What do you think would be an appropriate stop-loss to use in those conditions?
I’m thinking if we used a 1-point stop (even if we were scalping) that would be too tight. The stop would most likely just keep getting hit over and over. When the price is swinging around 30+ points, normal fluctuation is going to be way more than just a point. For the same reason it doesn’t make sense to use 1-tick stops, there’s a certain sweet spot for stops, and it’s based on ATR’s. I’ve written a lot about this, but today’s session is probably the best example in a long time to drive home the point.
So today was a case where the 18 point “max stop” was way too small for market conditions. As I mentioned recently, if there was no max stop set in the software, the initial stop would have started off at the top of the range, like it does normally when the numbers aren’t so big. In that case it would have set the initial stop 56.75 points above the Short entry. That doesn’t really seem feasible does it?
If the max was 43 points instead of 18, it wouldn’t have been hit, and the Short would have hit both Targets for a total of 82.25 points. But I’m sure you understand that we have to draw the line somewhere. The fact we’re trading Futures on margin means there are limits. You’re always free to use a different stop than the system, but 18 points max is optimal based on our testing.
Amazingly enough, even with the max stop outs last week the system was a little over breakeven. And so far 4 trading days into April the “raw stats” show a +76.25 point gain for the month including today. Honestly the past couple weeks, anything better than losing a ton of money and blowing up your account is probably better than many people did.
Take a look at how minuscule 18 points looks like on the chart.
The arrows I drew in the upper-left of the chart show the Entry and Stop. The red dashed line is the Alert price and the red line below that is the Entry Confirmation. Notice the Entry was a whopping 9.50 points below the Alert price, which is highly unusual. But everything about this session was unusual.
Seems like a good time to mention that you can always choose NOT to trade a particular session. Just like a surfer might take one look at the waves and decide it’s probably better not to risk his life.
Here’s a visual representation of my analogy:
Surfing that wave is similar to what it’s like trying to navigate market volatility like we saw today.
When the market goes through a period of extreme volatility the numbers get HUGE and the risk / reward reflects BIG numbers. It’s just math. Everything is relative to current market conditions. So it’s important to have perspective. Just like a hurricane isn’t “normal weather conditions” here in Florida, these periods of volatility eventually come to an end and the market settles down.
During these type of conditions it might make sense to use a little discretion. I know lots of people don’t like that idea, but I always say you can trade the system purely mechanically and over time it will do just fine. But using a little common-sense discretion here and there under certain conditions should make sense.
With that said, here’s a page that’s worth reading that goes into more detail:
Trading The Momentum System In Volatile Markets
A Reasonable and Perfectly Acceptable Win
4/3/2025
So today was the day the S&P 500 plunged -4.84% from the prior close due to the “tariff news”. Just to put things in context.
The Momentum System gave a Short Alert about 30-minutes into the session and it triggered-in about 5-minutes later.
But here’s the important thing about today. Target 1 was 15.75 points from the Entry. That is roughly about where we’d see Target 2 in “normal market conditions”.
So Target 1 got hit for +15.75 points and the Trailing Stop ratcheted a couple times and eventually got hit 2.00 points above the Short entry. Trading 2 Contracts shooting for the 2 Targets the net gain was +13.75 points (excluding commission).
That’s perfectly acceptable in my opinion and quite frankly, in normal market conditions that would be considered a reasonable gain on the session. In dull markets we’d be happy to snag 3 points at T1 and 10.75 points at T2. That’s probably about average for “typical” market environments.
I marked the Short Entry and where the Trailing Stop got hit on the chart with arrows. I also left the System Notes on the chart. A reader emailed me about the timing on the example a couple days ago and was confused on where the Entry and Stops occurred because of the horizontal lines. I’ve been trying to mark the charts so it’s easy to see the timing of everything, but I can see where it can be confusing without the time stamps. Basically I try to make the notations on the charts right next to the candles where the event happened, but it’s not always that easy to squeeze everything in the right place.
If you ever have any questions about any of these posts or how the chart is marked up just let me know.
The thing about the Trailing stop is that I typically just have one or two lines because it would be even more confusing to have every trailing stop move on the chart. Some days the chart would be covered in horizontal yellow dashed lines where all the TS moves occurred. And other days I remove the system Notes because they can clutter up the chart too if there’s a lot of activity that day.
Anyway, back to what transpired today. I think that early morning Short worked out just fine and that was probably a good place to just call it a day. Some of you may wonder why there was no second Alert, given the fact the market rallied back up into the range and then eventually fell again – that time hitting BOTH Targets.
Here’s why: In order to get a second Alert in the same direction as the previous Alert that hit the Trailing Stop, the price has to have a 1-minute close at least a tick past the mid-point of the range. I’ll bet you didn’t know that. There are several reasons we have the system programmed this way but I won’t bore you will all the details. Suffice it to say that we want it to behave that way because it works best like that. Everything “quants out” best with that little “buffer” in the logic over a broad spectrum of market conditions.
Today, the mid-day rally came extremely close to meeting those conditions, but didn’t quite make it. No big deal.
Sometimes I think maybe I should mention that you are always free to re-take a trade even if the system didn’t give an alert, but that falls under the category of using discretion. Not that there’s anything wrong with that. As a matter of fact I heard from a user today that actually grabbed some extra points on that Short in between T1 and T2. Nothing wrong with that either.
Most of you that have been trading for a while understand that we are experiencing “atypical market conditions”. So things are going to be a little different until the market settles down a bit. We’re only 3 days into April and so far the system has been handling things very well. These insane ATR’s mean we want to “play defense” and it wouldn’t be a bad idea to make some judgement calls here and there.
This volatility is likely to persist for a little longer, but eventually the price action will return more to normal conditions. When that happens a +13.75 point day will seem perfectly acceptable.
Best Day of the Year (so far)
4/2/2025
One Long Alert hit both Targets today and a 2 Contract trader would have scored +57.75 points trading the ES / MES Momentum System.
But that’s not really what I’m here to discuss. There are a number of things about today’s session that provide good examples of the system “dynamics”. Remember, these posts are designed to be helpful to both new and prospective users to better understand all the ins and outs of the Momentum system. As I mentioned yesterday, there are a lot of “nuances” and today I’m going to mention a few more.
First one is this. It’s extremely difficult to hold on to a winning trade to score HUGE points like we saw today. So many traders are conditioned to think that scalping and “base hits” are the best strategy. And while I’m not saying you can’t be successful doing that, it’s a TON more work and racks up a lot of commissions. And in the end, imagine how many small gains you’d need to match this +57.75 point gain in just one trade.
The fact that the software provides EXACT Stops and Targets means you don’t have to second-guess where to sell. It’s a mental thing and can help prevent you from taking profits too early. When you have a specific number as a Target you are more likely to stick to a plan.
Instead of thinking “Wow, I’m up 25 points and this is a huge winner, should I go ahead and take it?”. The software kind of forces you to think “Well Target 2 is way up at 5691.00 and I can’t imagine price making it all the way up there, but that’s the number for the Target so I’m just going to stick with what the algo says”. That’s why “trading a system” is preferable to discretionary trading. (Though you can still use however much discretion as you want with the system).
So anytime we look at a chart like this it’s easy to think about what you might have done “in hindsight”. But in the heat of battle when the price action is unfolding it’s a different story.
The first thing I wanted to point out on the chart was the pre-market “resistance zone” I have marked. I haven’t talked much about how support and resistance levels come into play with the Alerts. That’s because you don’t have to worry about that type of thing because the software is doing all the hard work behind the scenes. But it’s interesting to see how the Entry level was right at the juncture where price was clearing that prior resistance area.
The next thing I wanted to point out, which is more of a coincidence than anything, is how the lows of those two candles I have marked with yellow arrows coincided exactly with the Alert price and the Entry price. That’s most likely due to the market structure and price respecting “support levels” at the time, but it’s uncanny how those lows matched up almost to the tick. That’s why I even decided to add them the chart.
By the way, I took that screenshot before lunch today shortly after Target 2 got hit. By the time you read this you’ll know what the rest of the session looked like. Looking at the chart it’s hard to imagine how much extra “traction” price got past T2. I talked about the concept of a “runner” recently and this was a session where that could come into play. Basically the idea is that occasionally the price will just blow through Target 2 and keep on going. That’s where the system Trailing Stops help keep you in a strong trend move as long as it persists.
Which brings me to another “nuance” of the system. One of the basic concepts of the Momentum System is that it was designed to “stay with a strong trend move” via the Trailing Stop. So on strongly trending day we can stay along for the ride. But there’s a “little trick” the system has built-in the logic. The later we are in the (cash) session the more aggressive the Trailing Stop moves are. In other words, on days where the trend is extremely persistent, the Trailing Stop tightens up faster and more frequently in the last couple hours of the session. Those often turn out to be days where the TS never even gets hit by market close. Picture a daily candle that closes at the high or low of the day.
I wanted to point something else out in case you missed it last time I mentioned it. Just because I’m posting NinjaTrader charts here for illustration purposes doesn’t mean you need Ninja to trade the system Alerts. The software is completely platform independent and it’s simple to trade along with the Alerts on any platform using any broker. We have quite a few ToS users and many others trading the Alert software on various other platforms.
Just so you know, the Alert Software is all you need and here’s a screenshot I took this morning when T2 got hit.
If you’re using a different platform you don’t need to draw all the lines in the charts like I do here. They are just for illustration purposes. All you really need is a couple horizontal lines and the rest show up on your chart when you place orders on your platform. I have a lot more on that if you need it, just ask.
By the way, it’s important to realize that this system provides EXACT Entries, Stops and Targets. You can see the numbers in the screenshot above. So many “services” out there I stumble across like to throw out a bunch of “levels and zones” which may or may not be useful – especially with the type of volatility and ATR’s we’ve been experiencing. I’m not knocking what anyone else is doing, but I don’t see much in the way of specific precise numbers for entries and exits like the Alert Software provides. Just saying something like “We should see some support in this area and the overhead resistance zone is in this zone” doesn’t really help you in any specific way.
That’s the big benefit of a system like this.
Our system is different than just about anything else out there. And once you’ve worked with it a while you really come to appreciate it’s simplicity and all the little “nuances” that are built-in.
As I mentioned yesterday, April has historically been a great month for the system “seasonally speaking” and we’re off to a great start.
No April Fool’s Joke Today
4/1/2025
It was a good start to April for the Power Emini Momentum System. As I mentioned, this has historically been an excellent month over the years, probably just due to “seasonality”.
I’m trying to avoid just doing session recaps here, so the idea is to bring information that will help new users and prospective users understand the system and some of the nuances. Occasionally there will be some repetitive information on these posts, but that helps reinforce things. And I don’t expect many people will go back and read every post since the beginning of the year.
But today I wanted to point out something that I’ve only mentioned in passing.
The distance to the Targets can vary based on whether it’s a Long or Short Alert. And that’s because the system is “intelligent” and takes the larger market structure into account. On the chart below I marked the distance from the Entry Confirmation to the Targets for both the early Short Alert and the subsequent Long Alert. Notice the point differences.
That’s an interesting concept right? So the system was calculating different Targets based on the “bigger picture”. It was basically saying that a Long trade had a better chance of hitting larger Targets than a Short trade. Don’t ask me to explain exactly why or how it decides because certain aspects of the system like this one are a little mysterious and I’m not sure I can pinpoint the exact logic to explain that behavior.
There are so many various sets of logic programmed in the system that it kind of takes on a life of its own and has its own sort of “personality”. No it’s not AI. But it is “dynamic”.
Anyway, the Short Alert hit Target 1 for 6.50 points and came real close to Target 2 but didn’t quite make it. No big deal because the Trailing Stop had ratcheted a few times and the trade ended up +4.00 points to the good. But in the big scheme of things that actually worked out better because the Long Alert that hit both Targets scored a total of 36.25 points. If the Short Alert had hit both targets it would only have been a total of 28.75 points.
So that difference is a little “nuance” of the system that’s a behind the scenes thing. And it doesn’t work like that all the time. It depends on the ATR’s, the larger market structure, the size of the Range and the fill in relation to the Alert. Some days the distance to the Targets is the same and some days it’s significantly different. You could trade the system for months and not even realize it was calculating them differently.
If the distance to the Targets seems huge, it’s because the market itself has been crazy volatile. If you’ve been reading my prior posts, you know I keep mentioning how we’re experiencing a period of extreme market conditions – and this is just a temporary phenomena. It always is. Over the years we’ve been through these type of market environments and things always settle back down eventually. Enjoy it while you can because when we return to more “normal market conditions” we’ll be looking at something like 3.50 and 12.50 points for the Targets.
PS. The Short Alert was the first to trigger-in at 10:07 and the Long Entry triggered-in later at 10:44. Just so there’s no confusion on the timing of the Entries.
The Momentum System Provides a Statistical Edge
It’s similar to the house odds in Vegas.
The “edge” comes from a combination of the software logic itself and the strategy we developed for trading the alerts.
More specifically, the edge comes from a combination of the trade setup, the Entry Trigger and the strategy of using Targets and Trailing Stops. In addition, the way the system is designed to “get trades to breakeven quickly” puts the odds in our favor even more. All these parts fit together and are what gives the System a “statistical edge”.
However, there are considerations that come along with trading this (or any other) system. It sounds easy but you have to make sure you have the right mindset and take the correct approach.
You have to think in terms of probabilities. The outcome of any one Alert or trading session is purely random and at the mercy of how the price action manifests after we take a trade. It’s important not to be swayed by short-term results and take a longer-term perspective.
There will be stop-outs and there will be breakeven trades. There will be winning days and losing days. Focusing on the immediate wins and losses are not consistent with trading a system that has a statistical edge. If you think in terms of probabilities, it doesn’t matter whether the next trade is a win or a loss or a breakeven. Focus on the long-term statistical advantage rather than individual results.
Wins and losses are mere data points and there’s no need to be overjoyed or disappointed.
Short-term results are random. The law of probabilities works over a large sample size to bring out the system’s edge.
Interesting Things On Deck for April
Last month was a good month for the ES / MES Momentum System and April has been one of the best months of the year for the system over the years “seasonally speaking”.
As we get into April I’ll be using this page to post commentary, notes and charts relating to our trading strategy and whatever else comes to mind. This “notes section” of the website isn’t intended to be a daily recap, but usually get updated with new material every couple / few days. It’s a good way for me to be able to post educational material and examples of our trading strategy to help new and existing users make the most of our system.
Additional Useful Information
Moving Beyond the Trade Setup – Futures Trading Strategies to help Increase our Odds – In-Depth Article
March 2025 Commentary – Notes – Education – Examples
PowerEmini Day Trading Futures – Automated Alert Signals