Power Emini Commentary – Notes – Education – Examples
We’re starting a new thing for 2025. The Power Emini “Notes” section. Below you’ll find ongoing commentary, trade examples, charts and general short-form random posts. This page will get updated with new material frequently, so check back soon.
Not Every Alert Triggers-In an Entry
I wanted to point out a couple things about the functionality of the Momentum System that will be especially useful to new users.
Not every Alert triggers-in.
The chart below provides a good example of how some Alerts will not actually get filled on a trade. Notice the Red arrow I drew from the first Alert of the session to the level on the chart. In order for that Alert to “trigger” the price would have had to have a 1-minute closing price bar “a tick or more” past the Alert price. As you see, the price never even made it to the Short level, so it’s an example of an alert that didn’t get a fill.
Next, look at the Green arrow where a subsequent Long Alert fired off. The green dashed line is at the Alert level which we also call the “Trade Price Barrier”. When we get an Alert, the very next 1-minute price bar / candle that closes a tick or more PAST that level triggers in the trade. You can see that occurred at 10:00 where the orange arrow is.
The takeaway here is that this specific entry strategy is designed to help prevent getting sucked into false moves. Sometimes the price just pokes above or below the Alert price for a split second but doesn’t close past it. The 1-minute “close past” strategy also gives us time to react. That way we have at least a minute from the time we get an Alert to when we pull the trigger and enter a trade. This makes sense for a lot of reasons and we have an entire page devoted to this entry strategy in the documentation.
Notice in this case the Long Alert fired at 9:45 and didn’t trigger-in until 10:00.
It’s also a good example of how the system “reacts” to price movement rather than trying to “predict” anything. If price breaks out of the Range and starts trending down, the system will look to get short. If price breaks out to the upside, the system starts looking for a Long entry. However just because price breaks out of the range doesn’t mean we are going trade the breakout (it’s not that simple). The system waits for the range break and then computes an optimal entry point – assuming the price has enough “momentum” to carry it to at least Target 1.
Another thing to notice is that the actual “Entry Confirmation” on the Long Alert was 1.00 points above the Alert price. That’s perfectly normal. Some “fills” are a tick or two past the Alert price and some fills can be several points past it. The Stops and Targets are computed off the actual Entry Confirmation price (fill) and not the Alert price. This “slippage” evens out over a long series of trades and it’s the same thing with your actual fill. When you click to enter a trade you may get a slightly better fill than the system – or a little slippage yourself, but it will all even out over the long run.
The Most Volatile Market Session in Ages
I’m sure you know the story, but the short version is that over the weekend a Chinese company released an AI app that was just as good as AI developed by US tech companies at a fraction of the cost. This caused a lot of market turmoil and the most volatile session so far this year.
What I want to focus on here is how the Momentum System handled the session.
First, some basic stats:
On Friday 1/24/25 ES closed at 6132.00. Sunday evening it reopened at 6102.25
12 hours later at 5:50 eastern it put in the overnight session low at 5948.00
the cash session open at 9:30 eastern was 5998.00
the first 5-minute cash session opening range was 33.25 points
Do the math – that’s crazy volatility.
Here are the 5-minute candle ATR’s (ranges in points) in the first hour of trading:
33.25 (9:30-9:35)
16.00
11.25
8.50
10.25
7.75
12.50
9.75
8.00
13.50
14.75
13.25
Good luck trying to trade that based on intuition or gut feel.
While the system provides a good framework, we can / should choose to use some discretion in extremely unusual circumstances like this.
In fact, in a situation like this where the ranges and volatility are magnitudes larger than normal – and the max stop is in play – we have a simple strategy we recommend – Trade 1 Contract and just shoot for Target 1. That worked well and resulted in a 13.75 point gain on both Alerts.
Here are the final results for the session:
Unusual Trailing Stop Activity
Quick note – I didn’t intend to make this page a daily recap or post every day. The idea is add new material a couple / few times a week when something interesting comes up.
So this particular session qualifies for a couple reasons. The first is that it’s a great example of how the Momentum System trailing stop works. It’s designed to hang back just far enough to allow for normal price fluctuation and not get knocked-out of a trade on (relatively) small counter-trend moves. If I posted this chart without any notes on it, you might assume that the Trailing Stop got hit at some point in the session (after T2 was hit).
But amazingly enough, the Trailing Stop ratcheted higher gradually enough to keep this trade live for the entire session. Honestly it was a fairly dull session right up until the last 10 minutes. But the unusual thing about the Trailing Stop moves this day was that it ratcheted higher a total of 17 times. That’s honestly WAY outside the normal behavior of the system. There’s usually only a handful of “ratchets” even on strongly trending days. But one thing that’s often overlooked that we don’t mention much is that the Trailing stop is programmed to tighten more aggressively as we get closer to the session close. Besides being price-based, it’s also time-based.
I have another chart where I placed a horizontal line at every trailing stop level, but it’s kind of messy and doesn’t add much value so I won’t post it here. But quite frankly, I was even surprised that the Trailing Stop didn’t get tagged on several occasions this session. But that’s the beauty of how they are calibrated. I always joke the system “has a mind of its own”. That’s because all the different logic components react to the price action in various ways – and the price action manifests in an infinite number of ways from session to session. Sometimes I look at the chart and think the Trailing stop should be tighter (and you’re always free to use a different trailing stop than the system). But this is an example of how and why it’s designed to “stay with the trend” and how it can work out better that way.
Done for the Day by Lunchtime
One interesting characteristic of the Momentum System that often gets overlooked is that it’s frequently “done for the day” in the morning session. This happens when an Alert hits both Targets before lunchtime and is really the ideal session. I frequently reiterate the idea that we have no control over how the price manifests, but long-time users of the system are familiar with the type of session we see on this chart.
Over the years I’ve talked to a lot of traders that are only available to trade during certain hours, and others that don’t want to sit in front of the screens all day. While it’s impossible to say that the Momentum System is primarily a “morning session” system, it’s not uncommon to have days where it is. The reason is that once both Targets get hit, when the price eventually tags the Trailing Stop, the system will go offline for the rest of the session. There are several reasons we have it configured that way, but the main take-away is that a 2 Contract trader that’s just shooting for both Targets is “done for the day” once both targets get hit.
The market itself doesn’t always cooperate with this “ideal situation” because it doesn’t respect our preferences. We see plenty of sessions where price hits the first target and then meanders around for hours, eventually hitting the trailing stop or the second target. But over the course of say a month – it’s fairly common to have days where the market trends early in the session and we’re able to just wrap it up early.
Anything Can Happen Next
The price action Friday got me thinking about the idea that as traders – we honestly never know what price will do from any given point in time. The first hour or so was a perfect example of “noise” that should be avoided. Random up and down price action that just chops around in a 15+ point range is extremely difficult to trade. We can’t pretend to know what’s going to happen next.
Here’s a screenshot of the session I took at the close.
Fortunately the Momentum System kept us out of that early morning chop and you can see everything that transpired in the session on the chart. The Trailing Stop was what made this a reasonably good session for the system. More about that below.
Automated Trailing Stops are a Wonderful Thing
I probably don’t need to get into a long explanation of why Trailing Stops are the cornerstone of a good trading strategy. I get into that more here in this “strategy article“.
But I wanted to show you an example of how “finely calibrated” the trailing stops can be in the Alert Software. If you glance through the System Notes below you can see everything that transpired in sequence, but the note at the top is what I wanted to draw your attention to.
Notice how just at the right time the Trailing stop moved to just a couple ticks under that perfect pivot low candle. I couldn’t think of a better place to ratchet it up, other than maybe the body of that candle. The interesting thing is that after I took this screenshot and the price got a little additional “traction” higher, that’s where the next trailing stop move was. a little while later it moved up to just underneath of the bod of next higher candle.
But the point is that Trailing Stops are the best way to stay in a trade as long as the price keeps moving in our favor. Using a trailing stop is how we can stay in for the big moves – while still protecting profits. Creating an automated trailing stop is no easy task and if you analyze the stop moves closely you’ll see it’s not just as simple as it might seem. Sure our inclination is to set it under the low of just a couple or a few bars back – or even under what we’d assume is support. But the system is finely-tuned to keep the trailing stop at the ideal level so that we don’t just get knocked-out of a trade that goes on to work. The idea is that trailing stop moves need to be a balance between protecting profits and attempting to stay in a trend move.
After I took this screenshot, the trailing stop moved higher 3 more times before it finally got tagged at 6040.75, just a little above Target 1. Since at any given point in time we have no idea what the market will do next, trailing stops provide the best solution for managing trades.
Everyone recommends using tight stops. So why don’t we just set our stops at 1-tick? Because that guarantees that our stops will get hit every time (try it). So in theory the ideal stop placement provides just enough wiggle room so we don’t get knocked out of a trade by normal price fluctuation But we want it to be tight enough so we don’t take big hits when a trade goes against us. The science of managing stops is a cornerstone of a good trading system.
Crazy Volatility is a Feature – Not a Bug
I often refer to what I call “normal market conditions” and it’s usually in the context of discussing something which I consider to be an anomaly. Occasionally we see a market session that is not “typical”. What i sometimes refer to as an atypical market session can the result of any number of things, but it’s usually based on the idea that the ATR’s, ranges or price action is highly unusual – compared to what’s normal.
Sometimes I joke – “is there actually anything that qualifies as a normal market session?” Well, yes. In my opinion, a normal market session has an opening 5-minute ES range of about 6-10 points and the average 5-minute price ranges are about 3-6 points. Those are just rough numbers off the top of my head because overall market conditions vary a lot over time and through different environments. For instance the market tends to be dull in the summer months and around Holidays. So in theory we have to view “normal” market conditions in the context of how it’s been acting lately.
Which brings me to an example of a recent “anomaly”.
Here’s a screenshot of the Power Emini Alert Software where the volatility, ranges and ATR’s seemed pretty “atypical”.
If you’re not familiar with it, a 19.00 point opening 5-minute range on ES is HUGE compared to what’s normal. And since the system uses the current session ATR’s to determine the targets and stops, right off the bat I knew this was going to be a crazy session. And this was just a few days after the one you see in the post below.
Instead of making this a long post and going through each step of what transpired, just glance through the System Notes from the bottom up and ask yourself “When’s the last time I held for a 36 point move?”.
The great thing about using a “system” is that it (potentially) forces you to stick to a plan. It gives you specific numbers for entry, stops and targets and helps eliminate emotions from your trading.
Here’s a fact: We know that the market is going to (occasionally) serve up these long-range days. If we have the right mindset and the right tools, we can score more points in one session that we could in a weeks worth of scalping for peanuts. We just have to be patient and realize the market is going to do what it does and we have no control over it – so we wait patiently for these type of days and trade what the market decides to serve up on any given day.
I hate it when the price action doesn’t respect the laws of technical analysis. But I guarantee you this – it will always respect the law of physics. In other words, for the price to move from point A to point C, it must pass through point B.
Trading Through a 10:00 News Release
Over the years I’ve had more than a few new users ask about how to deal with those occasional 10:00 (eastern time) “economic news releases”. My basic answer is that “typically” they aren’t all that important and a good percentage of the time they don’t really affect price all that much.
However some do. And that’s where I explain that it’s a double-edge sword so to speak. In other words, if the system happens to be in a trade at the time, sometimes the stop is going to get hit and other times the targets are going to get hit. In the long run it will all even out. And honestly since the majority of 10:00 news releases don’t have all that much of an affect on price, we’re better off just holding through them. They are pretty frequent.
Every now and then we see something like this:
That’s pretty much of an anomaly, but you can see how sometimes the 10:00 news can occasionally affect price dramatically. The chart is an example of a good reason to have a hard stop in place in case it doesn’t go in your favor. Another interesting thing to note about that “reaction” is that it happened so fast – there was a lot of opportunity to capture more points that just the 2 targets. If you took a deep breath you might have been able to cash out big. Of course the idea of having the targets pre-set or choosing to close trades manually falls under “discretion” and I’ll have more to say about that in another post.
Additional Useful Information
Moving Beyond the Trade Setup – Futures Trading Strategies to help Increase our Odds – In-Depth Article
Forensic Analysis of a Max Stop-Out from November 2024
PowerEmini Day Trading Futures – Automated Alert Signals