Power Emini Commentary – Notes – Education – Examples
This is 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.
Big Numbers – And Lots To Unpack
2/5/2026
I’m starting this post early today because there’s a lot to say about how the morning session played out and a a bunch of stuff I want to cover. This morning before Noon (eastern) there were 2 Alerts that triggered-in, a Long and a Short. Both hit Target 1 and then the tightened Trailing Stop.
The distance to Target 1 on the Long Alert was 12.50 points. The distance to Target 1 on the Short Alert was 9.50 points.
That’s what I meant when I said “big numbers”. That’s 2-3x the distance to T1 in normal market conditions.
So this morning’s price action ties into what I was discussing in yesterday’s post in a couple different ways. Actually it’s a good example of what I’ve been talking about all month so far. The first thing is the “extreme volatility” and (much) larger than normal ATR’s. And also the max stop and the mid-point of the range and all the things discussed in previous posts.
So the first thing I want to talk about is the idea of “just shooting for Target 1” when the market conditions are crazy volatile. Yesterday I mentioned the section in the Help about “Trading Extremely Volatile Market Conditions”. One of the strategies mentioned on that page is “just trading 1 MES Micro Contract and just shooting for Target 1”. That strategy resulted in a +22.00 point gain this morning and at that point it probably would have been a good idea to call it a day. That’s about equivalent to a Target 2 winner on a more normal day where the ATR’s weren’t so big.
The other thing was something I mentioned yesterday about using the mid-point of the Range for the initial stop if the 18 point max stop scares you or seems to large for your taste. Both the Alerts this morning hit Target 1 without any “negative excursion” back to the mid-point of the Range. But here’s the crazy thing. On the Long Alert the mid-point of the Range was 24.50 points below the Entry – more than the max stop. But on the Short Alert the mid-point of the Range was only 13.25 points above the Entry – a bit less than the max stop.
But the idea is exactly what I said yesterday. The “majority” of Alerts that go on to hit the Targets tend to have very little “negative price excursion” and that’s just something to consider during periods of extreme volatility.
It also seems like a good time to reiterate that the Momentum System will issue a maximum of 3 “filled” Alerts per session. You should already know that from reading the Help, but that’s one of the nuances that doesn’t always get picked up right away by new users.
And that’s something else I wanted to talk about. Over the years we’ve considered changing the “maximum number of filled Alerts per session” to 2 instead of 3. But here’s the dilemma. When price volatility is low and the Range is say 8-12 points, it’s not uncommon to have a couple Alerts that both hit Target 1 or one hits the stop early-on and then eventually the major trend of the day reveals itself. In those cases the third Alert of the day often goes on to hit both Targets.
If we limited the max number of filled alerts to 2, there would be sessions where the system missed out on the big moves. On the other hand it would eliminate the possibility of getting stopped-out 3 times in a session when price action is extremely choppy and just zig-zags all over the range. That’s not really a big deal when the numbers are small and honestly it’s extremely rare to take 3 full stop-outs in a session. It usually only happens a couple / few times a year.
But when the numbers are big, it’s a big deal. So on days like today when the max stop is in play, you might consider only taking 2 Alerts and calling it a day. We can’t assume that if there’s a third alert it will go on to hit both Targets. Sometimes the price action is just rotten and that makes for sub-optimal trading conditions. And by the way, in crazy volatile markets like we’ve been seeing, it’s ok to choose to skip an Alert here and there or sit on the sidelines. Or trade really small. Or use different stops.
Rather than suppress Alerts or have the system go offline, we’ve always thought it best to just run it wide-open no matter what. That way the user can decide to use some discretion and we aren’t forcing the system to make judgement calls. That’s why we don’t shut it down early on Fed Days.
But it’s important to realize that periods of high volatility are different than normal, average market conditions and that’s when it’s not a bad idea to consider using some discretion – consider playing defense. Today was a good example of when it might be beneficial to “just shoot for Target 1” or “just take 2 Alerts and call it a day”. I know I’m saying this in hindsight but these are strategies we’ve included in the documentation for years and can be useful in periods of extreme volatility.
Too Much Volatility To Handle
2/4/2026
The past two days were stellar days for the system so it was due for a rough session. The big difference was really market conditions. Monday and Tuesday the market made huge directional trend moves, while today it was excessively “choppy” in early trading.
Choppy is ok except when price is zig-zagging up and down 15-20 points every 5-minutes. It’s a coincidence that a couple days ago in the post below I talked about this exact thing. We know the price action manifests differently every market session, but there are “market environments” where the ATR’s / ranges / price moves are abnormally crazy. And we’ve been seeing that lately.
So after two great sessions to start the month, today the system got chopped up by the excessive size of the ATR’s. There was a full stop-out, an Alert that hit Target 1 and then another stop-out. It happens, but what’s worse is that the third (and final) Alert got knocked-out by the fact we have a set “max stop” and if it hadn’t been for that it would have ridden the trade all the way to Target 2.
But we have to draw the line somewhere. A few years back around the time of Covid if I recall, we decided that the system needed a “max stop” because without it, there were sessions where it just wasn’t feasible to set the “initial stop” on the opposite side of the Range. As you know, the initial stop on any given alert always starts off 1-tick past the opposite side of the Trigger Range. If you think about it and experience enough sessions you’ll see that level makes perfect sense because it’s basically the point where a directional move is invalidated.
But back then we started seeing sessions where the range might be 25 or 35 or more points. And like I said, setting a stop that wide just isn’t feasible, even for the Micros. So we set out to figure out what the best “max stop” would be and came up with 18 points after testing years of data and all sorts of different scenarios.
But it’s important to realize that sometimes 18 points is “too tight of a stop” for the price action. Seems crazy right? But as I said, you have to draw the line somewhere and that’s the value that quants out best over the years based on our testing.
So when I say that sometimes using an 18 point max stop is “too tight for the price action”, here’s what I mean. Just look at the ranges on these 5-minute candles this morning.
ES Futures 5-minute ATRs on 2-4-2026
The arrow points to the candle that hit the max stop and knocked-out the Short trade. Price never moved back to the top of the Range subsequently and eventually hit Target 2 about an hour later. In other words, having a “max stop” thwarted this trade. The alternative would have been using a 25.25 point stop that – as it turned out – would not have been hit. But we never know… what price will do next.
So should we do away with the max stop?
Well I suppose if you really wanted to, you could choose to use the standard “opposite side of the range” initial stop when the max stop is in play. After all, the system notes showed everything you needed to do that. But we chose to program the system with “fixed risk” on any given Alert and sometimes that thwarts a trade.
I’ve talked about this a lot in the past, but it seems like a good time to bring up the idea that “the tighter the stop, the more likely it is to get hit”. Look at those ATR’s again and imagine trying to use a 1 or 2 point stop. It would get hit (probably) every time. To say it another way, the likelihood of a stop getting hit is a function of the distance from the entry and the ATR’s of the timeframe you’re trading. That’s why it’s not feasible to use 1-tick stops.
But here’s a little something that I almost never talk about. I’m reluctant to even mention it but I suppose you should know… The NQ / MNQ Momentum System doesn’t have a max stop. The reason is that when we first introduced the fixed max stop into the ES system we wanted to see the difference it made between the two symbols.
In other words we wanted to see how many times the max stop would get hit on one instrument as opposed to the other instrument without a max stop. Also we wanted to determine the optimal max stop for NQ before we set one and never really decided on one. Somewhere in the 100-150 range seems about right, but we never actually settled on an exact number. So the NQ system runs wide open with no max stop and today was one of those days where it made a difference.
Take a look at the Traction Indicator at the top of this screenshot from today and notice NQ took 114.25 points of “heat” prior to the Short Alert going on to hit both Targets and then some.
As you know I almost never post about NQ here because I try to keep things simple. If I start posting about different symbols here and get even further into the weeds discussing the scalper then it could get confusing really quick for new users. And as you know, we originally created the system based on ES before the Micros even existed and we recommend new users start off with MES. (Also NQ tends to trade more erratically). But I just wanted to point out how employing a max stop on ES while running NQ with “no guardrails” made a difference.
Over the past year I’ve discussed the idea of using a different stop than the system at times but it’s always been in the context of using a “tighter stop” than the system. I don’t think it’s a good idea to ignore the max stop on MES and use the wider stop (on the opposite side of the range) but if the 18 point max stop is “too much” and causes anxiety I have a suggestion.
Based on my observation over the years, the mid-point of the Trigger Range is typically a viable level to set the initial stop “much of the time”. If we programmed the system to use the mid-point of the range as the initial stop, the result would be a much lower win rate because we’d get stopped-out of a lot of trades that went on to at least hit Target 1. But then again I can say that a good majority of the alerts that go on to hit T1 never reverse past the mid-point of the range in the opposite direction. If one were to employ this advanced strategy, it would require re-entering the trade after a stop-out if price triggered again in the original direction.
What I’m trying to say is that a good majority of the Alerts that hit Target 1 take almost no heat. They have very little or no negative traction. But it’s a double-edged sword. Because… the tighter the stop, the more likely it is to get hit.
We actually have a page in the Help that gets into “discretionary tactics” for periods of extreme volatility so I won’t get into that too deep here. Basically when you see the initial stop inside the range that means the max stop is in play and that should send up a caution flag. You might choose to trade a little differently under those circumstances and we have a lot of good tips in the Help for that.
There are a few other things that are relevant to the topics I’ve mentioned so far but I don’t want to make this post too long. I’ll save them them for future posts. I have some good educational and conceptual topics to cover that are directly related to everything I discussed above.
More on that next time.
February 2026 – New Month – Updated Version
2/2/2026
About a week ago we released an update to the Power Emini Alert Software and indicator. Your software (and companion indicator) should show v4.8 now and if you still have the old v4.7 please email me and I’ll send the update instructions.
It’s actually a minor update that improves the “connectivity protocol” on the back-end to make the data faster and more stable. As I mentioned in last month’s notes, it also lays the foundation for an upcoming “upgrade” that’s going to be a big deal. We’re improving the user interface to be more modern and it will have some really cool new bells and whistles. The upgrade is coming later this Spring.
For now, The Alerts in this recent v4.8 “update” haven’t changed at all. We did make some tiny changes to the look so that if you have the “Color Tabs for Alerts” checked in the Settings, you’ll notice on Long Alerts the active tab will be green and you’ll see a green border around the main section of the software like this:
For Short Alerts you’ll notice the tab and borders are red. So that’s just a tiny little visual change to help differentiate this update.
We’ve had the Momentum System running about 10 years now so I have a pretty good idea of what the average month looks like as far as the market’s “personality”.
The nominal ES price level is more than twice what it used to be just a few years back. So the point moves and ATR’s and general price volatility near ES 7000 are going to be extremely elevated compared to when it was trading in the 3000’s. But keep in mind that a 1-point ES move is still $50 no matter what the price level is.
It’s a good thing we have the Micros.
It makes sense that the market moves more points these days, but I also attribute some of the increased volatility to the news cycle. Some of the wildest price moves we saw last year were based on news releases that just came out of the blue and hit the tape. Recently we’ve seen the 18 point “fixed max stop” in play more than normal and it’s important to realize that means the market conditions aren’t really “normal”.
Some new users see that 18 point stop in play on a given day and that kind of startles them because hey, 18 points used to be a big move.
But just keep in mind that even with today’s “elevated” nominal price levels, we’re still probably only going to see the max stop on occasion like today. The numbers you see in the screenshot above are not normal. Those huge distances to the Targets and the max initial stop are likely to be temporary.
When the market settles down things will return to normal (if there is such a thing) and we can go weeks or months and never see the max stop come into play. On sessions where it is in play it’s important to keep things in perspective. More risk – more reward. The numbers can get really big when the market is abnormally volatile. There are times where that max stop is less than 1 ATR and we’ve seen instances where 18 points is “too tight of a stop” for the price action. Keep in mind there’s no upside limit to the Targets.
Today, the first trading day of February, Target 2 was 37.50 points away from the Entry. That’s not typical, but the system adjusts everything based on the current ATR’s.
Now that we’ve started a new month, I’ll be using this page to post commentary, notes and charts relating to the ES / MES Momentum System, 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 gets updated with new material every couple / few days. It’s a good place for me to post educational material and examples of how the Momentum System handles different market sessions.
Check back every couple / few days for updates.
Additional Useful Information
Moving Beyond the Trade Setup – Futures Trading Strategies to help Increase our Odds – In-Depth Article
January 2026 Commentary – Notes – Education – Examples
PowerEmini Day Trading Futures – Automated Alert Signals