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.
A Fake Out and A Break Out
10/8/2025
There were two Alerts today and as you can tell by the title, one hit the stop and the other hit both Targets.
That’s fairly typical and just one of the potential outcomes of any given session. Trading the basic strategy “by the book” they tend to even out and usually result in a breakeven session. The second Alert had a lot of potential to more than make up for the early stop-out.
Avoiding the occasional fake-out move is difficult. The problem is that many sessions the market picks a direction near the open and never looks back. So any fancy footwork to try and avoid fake-outs would lead to lots of missed trades where the market makes a significant directional move.
This morning price started moving lower right from the start of the cash session open and as you see on the chart, it looked to be breaking through several hours of support. But it turned out to just be a “poke” through support and then price reversed. Check out the candle that hit the stop at the top of the Range.
But the great thing about the system is that it “reacts” to what the price is doing, so it gave a Long Alert when price started moving higher. Notice how the Long Alert and Entry were right above the pre-market and early highs.
The most interesting thing about today was how far price made it past Target 2 and where the Trailing stop ended up getting hit.
The Trailing Stop managed to stay in the trade even through all that choppy price action around T2. What was really interesting is where the Aggressive Protection Level (tighter discretionary stop) was at the time. I was thinking about yesterday’s post and “holding past T2” as the APL stop was tucked right under that spike low around 10:30. At the time it seemed like the ideal spot to protect gains between T1 and T2 if we were choosing to hold a Contract past T2.
So the regular system Trailing Stop got hit an extra 7.75 points above T2 which seems reasonable. Prior to that the Trailing Stop was just under that previous pivot low.
The longer you work with the system, the more you come to appreciate how the Trailing Stops move. We even saw the Parabolic Stop appear today since the initial “impulse move” that hit T2 was so strong. There’s plenty of documentation on the various stop moves so I don’t want to get into lengthy explanations here now. I wanted to keep today’s post short and sweet.
I don’t normally post every day but since we have some new users I’ve been working extra hard to try and explain things and show some examples. Plus the cable company is working on my street and every day I’m enjoying a little “offline interruption” with my cable and Internet. So I figure I might as well take advantage of the opportunity when things are working. Generally speaking, you should expect to see a new post here every couple / few days when I have something interesting to say. Some days writing is easier than others.
Anyway, so far so good. October is off to a great start considering the volatility in the market is still a bit tame. I saw someone mention that SPX hasn’t had over a 1% move since August. And I’ve mentioned how the price behavior tends to be a bit different when the market is right up at all-time highs.
It’s a crazy market and could write a lot about that, but the only thing that’s really relevant here is the intraday price action. That’s what we’re trading so I’ll spare you from having to read too much off topic stuff.
As I always say, every session is different and there are multiple scenarios that play out with the Alerts and on a long enough timeframe you’ll see them all. But on a long enough timeframe you’ll also see that everything “quants out” and that’s why the results of any one Alert or market session aren’t all that important. Your football team doesn’t score a touchdown on every possession. They just need to play well and score enough points to win the game.
How to Maximize on Trends That Go Past Target 2
10/7/2025
Yesterday I talked about some ways to take advantage of Alerts that just hit Target 1 and today I wanted to expand on that with some thoughts on Alerts that go past Target 2 – because today provides a good example of how we might accomplish that.
Both Targets got hit fairly quickly which is great, but price ended up going a considerable distance past Target 2. The Short Alert that filled about 30-minutes into the session hit T1 for +4.00 points and T2 for + 13.25 points. That’s a very respectable trade, but the price ended up going an additional 31.00 points PAST Target 2 at the lows of the session.
So how can we capitalize on that?
Well as you know we recommend starting out with small position sizes and then scaling up over time. This means you’d start off trading 2 MES Contracts and just shooting for the 2 Targets. Sell one at T1 and the other one at T2 and you’re done for the day.
Trading just 2 Contracts kind of limits things to some degree because with 3 Contracts we can sell one at each of the Targets and hold 1 for a “runner”. That would have worked pretty well today because the trade finally hit the tightened Trailing stop at 6763.75 about 15-minutes before the close. That was an additional +14.50 points past T2 and +27.75 points below the Short Entry.
But as I mentioned yesterday, the best strategy for trading 3 Contracts is to sell 2 at Target 1 because that insures any Alert that hits T1 will have a profit. So it’s kind of a conundrum. The more Contracts we’re trading the bigger the risk and we know there are going to be stop-outs. That goes with the territory of trading.
The number of Contracts you trade is one of the main “discretionary” aspects of the system
It only makes sense that Position Sizing is left up to the individual because everyone has different account sizes and drawdown limits. And results will vary based on how you choose to scale out of trades.
As I mentioned, the recommended starting point is just 2 Contracts shooting for the 2 Targets but as you see on the chart above, it would have been possible to “not sell at T2” and instead use a different stop than the system (at the time). I marked a couple places on the chart where I thought it looked reasonable to set the stop to “protect” most of the gains while still hanging on to the 2nd Contract.
I don’t want to get too far into the weeds on these discretionary tactics because it’s perfectly acceptable to trade the Alerts “by the numbers” and you’ll do just fine over a long series of trades. But we have some very smart and experienced users and they approach using the system as more of a “tool” and find plenty of ways to maximize on the system by using a little judgement here and there.
So there were several possible ways to score more than the +17.25 T1+T2 numbers today. I think you can see that on the chart.
But we know that every session is unique and the price action unfolds differently. Some days price hits T2 and reverses and you’re better off selling there. It all comes down to what the candles look like at the time. As it so happens today, price kind of “blew through” T2 which presented the opportunity to “stay in for a bigger move” as I noted on the chart.
The “speed” at which price hits the Targets and whether it just rips right through them is a big consideration and that varies session to session. I’ve mention how sometimes it’s easy to score more points than the Targets when price just blows through them quickly.
Regardless of whether you trade the system “purely mechanically” or choose to make some judgement calls here and there, it just goes to show how flexible the system is. As I’ve mentioned here numerous times, there are really only a couple main decisions a user has to make – how many Contracts to trade and whether to use a different stop than the system. There are lots of possibilities as far as scaling out too, but we’ll dig into that more in the future.
Sometimes Target 1 is All We Get
10/6/2025
Actually what I meant to say is “sometimes Target 1 is all the market gives us”.
But that’s okay. Because part of the basic strategy of the system is that we’re assuming the market will move from point A to point B and as Sir Isaac Newton said, “an object moving from one point to another must pass through all intermediate points along its path”.
So we set 2 Targets along the price “path” and the first Target (1) is meant to be a “fairly easy to hit” Target. And the reason for that as you know is so we can take partial profits and get the trade to breakeven.
Then it’s up to the market what happens next. As I mentioned in the previous post, getting a trade to breakeven quickly is an ideal risk management strategy. By now you should have a good idea of how all the pieces of the puzzle fit together. By that I mean the logic and trading strategy of the Momentum system. But I want to reinforce the idea that any alert that hits Target 1 is considered a “win”.
That’s because at that point there’s virtually no risk of a loss other than a couple / few ticks or points on either side of exact breakeven depending on the “fill”.
But there are some important points I want to make about when “just Target 1 gets hit” on an Alert.
Trading 2 Contracts and selling one at T1 puts the trade at breakeven. But trading 3 Contracts and selling 2 at T1 guarantees a profit usually about equal to the distance to T1. Trading a bunch of Contracts and selling most of them at T1 guarantees more profit than that.
So that’s something to think about.
As you know, the distance to T1 is less than the initial stop, so the idea of just shooting for T1 doesn’t really present a good risk / reward ratio. However we have the system calibrated so that Target 1 will get hit roughly 75% of the time. So you have to take that into consideration.
It’s actually a viable strategy to “just shoot for Target 1” even with a sub-optimal r/r because of that. But it’s acceptable to use a tighter “initial stop” than the system in certain cases (just shooting for T1) which would improve the r/r.
The majority of the Alerts that hit T1 have very little adverse price excursion or “negative Traction” as we say. In robust market conditions Target 1 tends to get hit pretty quickly. This mornings Short Alert hit T1 93-seconds after it triggered-in.
And there’s another strategy that can make sense.
We go into the trade assuming that we’re going to hold for both T1 and T2, but if the price “stalls out” or if it’s nearing the end of the session, or if price just gets stuck between T1 and T2, we could just close the trade with a profit and be happy with that.
We actually saw both of those scenarios today.
The first Short Alert hit T1 at 6774.00 and made it fairly close to T2 which was 6764.25. The low came within 2 points of T2 then price reversed and went all the way back up to the Trailing Stop for a breakeven trade. But there’s no hard and fast rule that says you can’t either take some profits between T1 and T2 or use a tighter stop (at any point in time).
We could always choose to protect profits on remaining Contracts at T1 when price doesn’t quite make it to T2.
Of course ideally we want to trade the system as mechanically as possible and that’s fine. But to repeat myself, using a little discretion can really improve the results. It really comes down to what the candles look like in any particular situation when we choose to use discretion.
The Long Alert in the afternoon session hit Target 1 and then price just basically “stalled out”. The funny thing was that price came within 1-tick of T1 a couple times in the 30-minutes before it finally hit it. After T1 was hit price spent 45-minutes bouncing around between the Entry and T1 and the Trailing Stop never got hit before the market close even though price pulled back enough to make that another “breakeven” trade.
So the point is that today was one of those days where the market didn’t serve up a big enough trend move to hit both Targets on either of the Alerts, but the fact T1 got hit on both trades is perfectly acceptable.
As I said earlier “any Alert that hits Target 1 is considered a win”. Every Alert so far in October has hit T1.
In past years we’ve seen strings of 8, 10, 12 Alerts in a row that hit T1 (18 in a row is the record). It’s not uncommon to see strings where 8 out of 10, or 12 out of 15 Alerts hit T1.
So it’s important to realize that price hitting T1 is the main goal. There are multiple ways to capitalize on that as I mentioned.
And we have to realize that the price action in the market will ultimately dictate whether T2 gets hit. We know for a fact that the market will make big trending moves and have long-range directional days, but that doesn’t happen every day. The idea of taking profits at the “easy to hit” T1 puts us in the perfect position to capitalize when it does. But that’s just how the market itself behaves.
Some days it only provides a little bit of “traction” in the direction of the Alerts – just enough to hit T1.
And that’s fine.
A Closer Look at the System Trailing Stops
10/4/2025
An integral part of the Momentum System logic is the automated Trailing Stops. It’s a big part of what makes everything “quant out” over a long series of trades.
It goes without saying it’s imperative to place a stop-loss order for every trade. In the Futures market price can move enough points to wipe out an account in the blink of an eye. Setting a stop-loss as soon as we enter a trade means we’re protected when price moves against us. That’s what we call the “initial stop”.
When an Alert fills in the Momentum System the initial stop always starts 1-tick past the opposite side of the Range. That provides the optimal amount of “wiggle room” so that a trade doesn’t get knocked-out by normal price fluctuation. Since we’re trading in the direction of the range breakout, if price reverses all the way back and goes past the opposite side of the range, there’s a good chance the directional bias has changed.
(Keep in mind that the system has a “max stop” of 18 points, but it’s fairly rare to see the max stop in play.)
While the conventional wisdom is to “use tight stops”, as I’ve mentioned here in the past, if the initial stop is too tight then it’s just going to get hit over and over. Statistically speaking, the tighter the initial stop the more likely it is to get hit. The tighter the stop the lower the win rate.
That’s why we can’t use 1-tick (or even 1-point) stops.
So there’s a trade-off – a “compromise” if you will. We want the stop to be as tight as possible while still allowing for normal price fluctuation.
The beauty of the Momentum System is that the initial stop starts off in the most logical place (as I described above) and it’s designed to tighten quickly when price makes forward progress in the direction of our trade. So as price gets a little traction in our favor the initial stop “ratchets” quickly and turns into a Trailing Stop. Typically that occurs prior to Target 1 getting hit, but not always. It depends on the approach.
Regardless of whether the initial stop tightened prior to T1 getting hit, it always tightens (again) as soon as T1 does get hit. The idea is that when T1 gets hit the trade is right around “breakeven”.
So yesterday’s Alerts provide a good example of how the Trailing Stops are designed and why they work so well.
There were 2 Long Alerts during the session. The first one hit T1 and then the price reversed and hit the tightened Trailing Stop for a “breakeven”. The Stop tightened once prior to T1 getting hit and then again after T1 got hit. That’s how it got the trade to breakeven.
At the point in time where the first Alert hit the (tightened) Trailing Stop there was no way of telling if price would continue down or not. At any point in time during the trading day it’s impossible to know for certain what happens next. So closing that trade at breakeven was good risk management.
As it so happens, price rebounded and the system gave a second Long Alert that went on to hit both Targets. The Trailing Stop actually tightened 5 more times in between Target 1 and Target 2 but only the final one is marked on the chart (Trailing Stop 2). It’s interesting to note the Trailing Stop didn’t get hit on that counter-trend move between 11:00 and that spike-down to 6786.00 around 11:45.
If you’ve been trading the system for a while you know that every session is different but it so happens that in this case when T2 was hit, the Trailing stop had tightened to just above the T1 level which seems ideal. However if one were still holding Contracts at the point T2 got hit it would have been a good idea to use a tighter trailing stop than the system.
Which brings me to an important point. You can always use a different stop than the system That’s the main discretionary tactic that can improve results. Generally speaking, the main scenario under which we’d want to consider using a tighter stop (than the system) is when price is in between T1 and T2. Especially if price gets within a couple points or a couple ticks of T2.
The system Trailing Stop is designed to avoid getting hit by normal price fluctuation and minor counter-trend moves. That’s accomplished by using ATR’s and key price levels. In the case above it worked out great because the trade didn’t get knocked-out by the counter-trend move between 11:00 and 12:00 which allowed price to work its way up to T2.
The number of times the Trailing Stop tightens is a function of how the price action manifests after an Alert fills.
Take a look at the Alert from the previous day October 2nd, 2025. Notice how the Trailing Stop only tightened twice between T1 and T2.
The trend was stronger that prior day and the move from Target 1 to Target 2 had quite a bit more momentum.
In fast markets where price moves from T1 to T2 quickly, the Trailing Stop typically ratchets 2-3 times. If price drifts around and trades sideways and takes a lot of time the Trailing stop can tighten lots of times. The price action itself dictates how the Trailing Stop moves.
The Trailing Stop is the best way to stay in a trade that’s working and removes emotional bias from the exit strategy. Coupled with our strategy of taking profits at pre-determined Targets it’s a winning combination in the long-run statistically speaking. While the logic that drives the Trailing Stops in the Momentum System is extremely accurate, it’s programmed to be “universal” to work under all sorts of different market conditions.
Trailing stops enforce disciplined risk-management by helping get trades to breakeven quickly and then ensuring we never give back more than a predetermined amount of profit. They are a cornerstone of the Momentum system logic and strategy.
A Good Start to October
10/1/2025
I’ve had a few days of Internet issues here which has been extremely frustrating. Long story short, we went to the Comcast store to upgrade the wife’s phone and renegotiated our mobile plan and cable TV / Internet package. I was paying for a land line which we never use and dropped that. What they didn’t tell me was that my modem was going to go offline while they processed the changes. Anyway I spent the last several days with barely functional and intermittent Internet.
So today was a good way to start the new month after a couple rough sessions at the end of September. The last couple days of September was extremely choppy and we had more stop-outs than usual. But over the years we’ve seen numerous rough patches that can last a couple days or so and then things tend to improve. October is typically a great month for intraday trading because it’s historically the most volatile month of the year.
And today is hopefully the start of something good. We want to see more trending days and less sideways chop.
I took this screenshot this morning when Target 2 got hit and you can see it was a bit unusual based on the number of times the Trailing Stop tightened between T1 and T2.
Normally we’d see two or three, maybe even four Trailing Stop moves after price hits Target 1 on its way to target 2 but today it tightened eight times.
That was primarily due to the fact that Target 2 was a whopping 31.50 points past the Entry and the amount of time it took to get there. With T1 9.25 points past the Entry, the “tolerances” were extremely wide today compared to most sessions last month. So as price stair-stepped from T1 to T2 there were a lot of “steps” in between. That’s why the Trailing Stop ratcheted so many times.
It was also interesting that the Trailing Stop ended the session within 1-tick of T2 and got hit just 10-seconds before the cash close. But the first day of a new month and a new Quarter tend to be unusual.
And the funny thing is that today is the 1st day of the “Government Shutdown”. It’s ironic the market rallied and it turned out to be a strong up day with the S&P closing at the all-time high in the history of the world. It will be interesting to see how long the shutdown lasts.
I’ve been commenting that the market seems to act a little differently when it’s up near all-time highs so we’ll just have to see how things unfold. What we really want to see is some “range expansion” and increased volatility.
Dull sideways range-bound markets make for tough conditions.
October – Q4 2025
It’s finally Autumn and seasonally speaking it’s a good time of year for trading.
October is historically the most volatile month of the year and the more “action” the better. September is historically the weakest month of the year for the overall market but this year it bucked the trend. And the volatility was extremely tame compared to prior years. There were more dull days than usual and some narrow-range choppy days.
As we get into October 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 way for me to be able to post educational material and examples of how the Momentum System handles different market sessions.
Additional Useful Information
Moving Beyond the Trade Setup – Futures Trading Strategies to help Increase our Odds – In-Depth Article
September 2025 Commentary – Notes – Education – Examples
PowerEmini Day Trading Futures – Automated Alert Signals