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.
Happy Halloween – October is Over
10/31/2025
It’s Friday and it’s the last day of October and it’s been an interesting week. I posted on Tuesday and figured I’d wait until today for the final post of the month.
So if you read my previous post you know that I gave a heads-up about how we recommend treating Fed Day (which was two days ago). But what transpired is worth commenting on because it shows how quickly price can moves can happen and how amazingly well the software handles it.
So to review, on Fed Day there was a Long Alert in the morning that hit Target 1 (then the tightened stop for a breakeven), then there was a Short Alert still open going into the announcement. And exactly as I described in the previous post, in a few milliseconds price exploded both directions and it hit the stop. That’s why we don’t recommend holding an open trade when the announcement hits the wires.
But the most interesting thing was that another Short Alert triggered just a few minutes later and was open going into Powell’s press conference. I know I said I wouldn’t recommend trading over that either, but just for fun I wanted to post the chart so we can see how fast the market can move in a minute.
Here’s a 1-minute chart that shows what I mean.
Check out how fast the market and software reacted to Powell’s comment about how “A December rate cut is not a foregone conclusion”.
So 25 seconds after the decision / announcement hit the wire the prior open Short hit the stop. And then 15 seconds later it gave another Short Alert as you see on the first line here.
02:00:40 pm SHORT – Trade Price Barrier 6932.00
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02:06:00 pm Entry Confirmation 6931.75 – Initial Stop 6944.50
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02:35:28 pm Target 1 hit at 6926.75
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02:35:28 pm Trailing stop move to 6938.25
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02:35:30 pm Target 2 hit at 6915.25
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02:35:30 pm Aggressive Protection Level 6929.50
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Price meandered around for about 30-minutes between that Alert triggering and Powell’s comment that sent it plunging. But the thing to notice is that in the span of 2-seconds, price hit T1, the system tightened the Trailing stop and then T2 got hit. 2-seconds is not enough time to react to anything so it’s impossible to know where one would have been filled. Even limit orders get slippage in these cases.
These occasional instantaneous price spikes are tricky.
We actually had one today that knocked-out the second Alert of the session and price proceeded to go directly to Target 2 shortly thereafter.
Check it out:
So you can see there were 2 Short Alerts today that both hit Target 1 (for +6.75 points each) and then the “tightened” Trailing Stop.
But the second time was insidious as you can see on the chart. That spike-up that knocked-out the second trade happened in less than a minute and was way out of range for the prior and subsequent price action. I’m not sure if it was news or some rogue algo, but you can see how uncharacteristic it was. I’m having trouble describing it but the point is that these things happen.
Erroneous spontaneous price spikes out of nowhere (in either direction) are just part of trading and come with the territory.
This brings up the question of whether it’s better to trade manually with sell orders or set limit orders. That’s a subject I’ll discuss more in the future here.
Tomorrow is Fed Day – And A Couple Other Things
10/28/2025
I’m sure you’re aware that tomorrow is the Fed interest rate decision day, but I just wanted to mention a couple things about that for the benefit of new users.
We don’t recommend holding a position over the Fed interest rate announcement. We also don’t recommend trying to trade an Alert that fires off immediately following the announcement if there is one. I’d also say to avoid any Alert that might fire off when Powell is doing his presser.
Last month on Fed Day (9/17/25) the system gave an Alert in the morning that hit both Targets, so it was “done for the day” prior to the announcement which is ideal. But over the years there’s been plenty of Fed Days where the early session is dull and there’s not a lot of price movement. It’s hard to know what to expect tomorrow.
Some Fed days there’s an open trade going into the news and the direction of the “initial price reaction” is basically a crap-shoot. So it’s just not a good idea to risk it because the market can move extremely fast immediately following the news hitting the wire. There’s no real edge and most traders avoid trading over the Fed announcement.
The reason we recommend avoiding holding a trade over the announcement is that there’s not typically time to react. If there happens to be an open Alert at the time, price will either hit the Stop or both Targets within a minute or two. Not really ideal and it could go either way.
Another scenario we’ve seen over the years is that an Alert “fires off” when the market goes haywire immediately following the announcement. And that’s another situation we recommend avoiding. The market reacts differently each time and it doesn’t really matter if the news is exactly “as expected”, the volatility almost always spikes and the market immediately goes into a period of extreme “range expansion”.
Back in the good old days it was common for the market to make HUGE moves quickly, both up and down. More recently the price action tends to be a bit more subdued after the news hits, but you never know. Over the years I’ve seen some crazy volatility like the price will spike higher 20 points and then drop 30 points in a couple minutes.
It’s always best to be flat going into the Fed Announcement, even if there’s an active alert going into it or if an alert fires off afterwards.
With that out of the way I wanted to mention a couple other things.
Take a look at the 1-minute MES chart from today. Notice that the “fill” on the Short Alert happened just 1-tick below the Alert Price / Trade Price Barrier (red dashed line).
As you know, the “fill” on an Alert happens when there’s a 1-minute closing candle at least a tick or more past the Alert price. There are several reasons for this which are explained in detail in the help, but basically the idea is the 1-minute “close past” helps confirm the Entry.
But a lot can happen in a minute. In other words we can get an Alert and then in the minute (or more) it takes for price to close past the barrier it can move quite a bit. We saw that yesterday on the first Alert of the day that hit the stop. But the second Alert got filled just a tick away and went on to hit both Targets.
Normally it’s not a big deal unless price is extremely volatile and even then the system compensates for everything. We’ve seen alerts get filled 3-5-7 points away from the Alert price and still go on to hit the Targets. But it is a consideration and occasionally a fill “too far away” compared with current ATR’s can thwart an Alert.
That leads into the idea that Target 1 is calibrated to be a ” relatively easy to hit” Target where we can take partial profits and the system gets the trade to “virtual breakeven” by tightening the Trailing Stop. But there are certain market conditions where Target 1 is all we get. That’s typically a function of the price action and market behavior itself.
I mention this because that’s exactly how things played out last Friday up until the last 5-minutes of the day. I wanted to post this chart because there are a few relevant things we can glean from it.
Notice how choppy the price action was early on. The system gave a Long Alert that filled and managed to avoid the Trailing stop. Price hit Target 1 for the first time about 2-hours into the cash session.
From then until just before the close, price basically “traded sideways” in between the Long Entry and T1 for 4-hours. In that time it poked at Target 1 six more times.
But the point is this. It wasn’t your fault or my fault or the system’s fault that the market chopped around sideways all afternoon. That’s just how it was. And the only reasonable thing to do was close the trade sometime before the market closed – either up there at Target 1 or somewhere in the shaded box above the Entry.
Even if you’re trading the system purely mechanically / by the book there are sessions where the Trailing Stop never gets hit and you have to close the trade before the market close. Based on the price action this day it wouldn’t have made sense to wait until the last 5-minutes to close it so “sometimes Target 1 is all we get”.
That’s what the market decided to serve up this session. And as I mention so often here, we can only trade what the market decides to present us with on any particular day. My suggestion is on certain days where the price action is just “grinding sideways” for a long period of time, you might choose to just close the trade, get flat and call it a day.
This was an unusual session too since the sideways action was in a tight range. Notice the price scale of the chart is only in 2 point increments and that’s something I would expect to see in the middle of Summer when things are dull.
Honestly, there’s nothing worse than a sideways market and they’re rare this time of year.
Happy Fed Day to those that celebrate!
A Few important Lessons From This Week’s Alerts
10/24/2025
It’s Friday and it’s been an interesting week. Most interesting is the way the Momentum System reacted to the past few sessions and what we can learn from it. There were some unusual scenarios that provide some good insight into the system and how we can approach trading it.
First, let’s take a look at Wednesday because it was one of those sessions where Target 1 got hit and price came within a couple ticks of Target 2 but didn’t quite make it. And T2 was substantial.
So we can see that the distance to T2 was 22.00 points but price only continued down 21.50 points from the Short Entry and then reversed. So what do we do in that situation?
Well there are a few options.
We could say “close enough” and try to quickly grab the bulk of the points as we saw the price reversing.
We could say “the Target is the Target” and maybe we had a pre-set sell order there that didn’t get hit.
We could look at the candles and choose to use a tighter stop than the system to protect existing gains (above the high of the green pivot / reversal candle would have been a good spot).
Or we could even decide to set the stop back up at the Target 1 level which would guarantee we at least locked that in.
Since we never know what price is going to do next, any of the above options is valid. But since the Trailing Stop at the time was all the way back up at the Short Alert level, trading it “strictly by the numbers” gave back a lot of points. So as I’ve mentioned here before, using a wee bit of discretion here and there is usually the best choice.
If you don’t want to have to make any decisions and trade the system purely mechanically, that’s perfectly fine too. Everything will work out great given a long enough series of Alerts. But in certain cases like this you might think about using just a little judgement. And as I mentioned recently, the best time to think about using a little discretion is when price is in between T1 and T2.
So what happened next after what you see on the chart above is that price went back and hit the Trailing Stop to the tick, then reversed back down, hit the T2 level and continued down substantially. The low of the session was 70.25 points below the Short Entry.
Think of it this way. If the system’s job was just to provide the Short Alert and Entry level – and the stops and targets were up to the user – there was 70 points of potential profit. But that’s not really a realistic way to look at it. I do however see a lot of services and indicators that just provide “zones” or potential support / resistance levels and the rest is up to the user.
The fact that the Power Emini Momentum System gives the EXACT stop and target numbers makes it different than just about everything else out there. And that means an Alert can occasionally get thwarted because calculating levels to the tick is a tall order. But just about every other tool or indicator requires constant judgement calls and discretion on every trade.
So here’s the funny thing.
After a couple sessions where price makes it 99% of the way to Target 2 but misses by a few ticks I’m thinking “Maybe we should set the distance to T2 ever so slightly closer to the Entry”. But as I just mentioned above, T2 was a mere 22.00 points and the price ended up going 70 points. If it wasn’t for that pesky Trailing Stop move (that got hit to the tick) we would have grabbed T2 and then had a huge “runner” on top of that. Maybe we should loosen the Trailing Stop a bit.
Ok, enough of that and I think you get the idea. We don’t want to “curve fit” things just because price occasionally thwarts an Alert by hitting a stop or missing a target by a tick or two. I won’t go into a long explanation of why re-calibrating everything is not a good idea, but I think you understand my point.
Which brings me to the chart from Thursday.
You’ve heard me say over and over how “every session is different” and how price action manifests differently and that’s an important consideration when it comes to understanding the system.
Notice how price did hit Target 2 with a couple ticks to spare and then that was it. There was no more follow-through.
There was a small window of opportunity to take profits at T2 and you can see how “accurate” it turned out to be in this case. Remember, the idea of the Targets is that they are “high probability levels” that will get hit on trending moves where price moves from point A to point B. We want the Targets to be accurate enough to capture as many points as possible while still maintaining a reasonable hit rate.
It’s actually kind of unusual for price to “react” so close to Target 2 like it did these two days. It’s more common to see continuation past it.
I also wanted to point out how quickly things can play out certain sessions. And both of these sessions qualify.
In this case on Thursday a Long Alert fired off, filled, and hit both Targets in 14-minutes. The system was basically “done for the day” at that point.
You can see how quickly everything transpired on the Time Stamps in the System Notes of the Alert Software.
On this Alert the distance to T1 was 5.00 points and the distance to T2 was a respectable 16.75 points which was actually similar to the previous session.
But both these examples show how price reacted right around Target 2 and how relevant that level turned out to be. I’m going to say that kind of confirms the “accuracy” even though it didn’t quite get hit Wednesday.
But as I’m writing this on Friday, we have a completely different type of situation.
Price hit Target 1 before lunch and has been grinding in a sideways range for over 3-hours now.
We’ll see how it goes into the close.
Close But No Cigar
10/21/2025
I wanted to do a quick post about yesterday’s session since there were a couple points of interest. As you probably know, yesterday half the Internet was down intermittently due to an an outage with Amazon Web Services, but our software ran just fine and we didn’t experience any issues at all.
So the first interesting thing about yesterday was the huge pre-market run-up and ES / MES opened the cash session about 30 points higher. When I see a big gap up like that in the back of my mind I’m thinking “fade it” – it’s probably not going to just keep rallying straight up. So it’s a good thing the system is “purely objective” because that’s basically what happened.
The fact that the system has no sort of preconceived mental bias is one of the seldom mentioned benefits. It’s working based strictly on price action and I was kind of surprised to see the follow-through higher right from the open.
But the thing I really wanted to point out was how the price “almost” made it to Target 2 and how to look at it when that happens.
So you can see where the price continued higher until it got within a few ticks of Target 2 and then the next couple candles made it look like a reversal was likely.
You can see the distance to Target 1 was 7.00 points and the distance to Target 2 was 24.00 points. But when T2 got missed by a few ticks a counter-trend move ensued. When that was completed the Trailing Stop tightened to just under the lows of that counter-trend move and that’s where it got hit – to the tick.
The fact the Trailing Stop got hit to the exact tick just proves how accurate it is. It basically locked-in 10.00 points of profit even though it ended up “giving back some”. But that’s the nature of trading because at any point in time we never know what the price is going to do next. The entire move higher could have easily been over as we see a lower high and a lower low at the point the Trailing stop got hit.
It turned out to be a wide sideways consolidation and price eventually made it up to T2 but the trade was already closed. But the way to think about it is to be thrilled with the fact that the trade scored 17.00 points (trading 2 contracts) and not second guess or worry about the fact the price came within a few ticks of T2 or hit the stop by a tick. The correct mental approach is to be content with the fact it was a nice winning trade.
Significant Volatility – Big Numbers
10/18/2025
Yesterday was OPEX day and with the increased volatility, ranges and ATR’s we saw all week, I expected a pretty wild day.
The numbers were huge. There were quite a few 5-minute candles with ranges over 20 points and lots with 10+ point ranges. And as I mentioned Thursday, that makes for both increased risk and reward.
So the system gave 2 Long Alerts and the first one got knocked out at the max stop because of the volatility. It we didn’t have a max stop it would have hit Target 1 and ended up a breakeven trade. But as I’ve mentioned quite a few times here this year, you have to draw the line somewhere. That’s why the ES / MES Momentum System has an 18 point max stop. That’s the number that quants out best over years worth of data.
But sometimes an 18 point stop turns out to be too tight for the price action as we saw on the first Alert. It seems kind of crazy if you think about it, but if the price is swinging up and / or down 20-30+ points every 5-10 minutes, 18 points is tight.
You can see on the chart where the first Long hit the stop on a candle just like what I mentioned. It got nicked by just a couple points. But the second Long Alert of the session worked out and price hit both Targets. That more than made up for the full stop out.
The distance to Target 1 on the Long Alerts was 11.00 points and the distance to Target 2 was a whopping 36.75 points.
On that second Long Alert it’s interesting to see that the Trailing Stop was never hit on the counter-trend move back to the top of the Range. I took that screenshot about an hour before the close and the Trailing Stop on the second Alert never got hit into the close.
I’ve written a lot about the max stop this year, mostly back in the Spring when it was in play almost every session, so I won’t get into all that again. You can go back to March, April or May’s notes and see what I mean. But the point is when the max stop is in play – meaning an Alert fills and the “initial stop” gets set at 18 points – that means the market volatility itself is extremely elevated. And you know I’m all about taking market conditions into account.
As you see, the system automatically adjusts the distances to the stops and Targets based on the volatility, so when the max stop is in play, the distance to the Targets is always significant too. The market goes through periods where the conditions are what I’d consider “normal” and the distance to Target 1 is around 4-6 points. We’ve seen days where the “11.00 points to T1” yesterday was equal to the distance to T2 in calmer more normal sessions.
So it’s all relative. If you think about it, with the ES / MES up in the 6k’s a 10-20 point move isn’t all that much. Back in the old days when the index was half what it is now, 10-20 points was a huge move. So it makes sense to adjust our mindset to realize that these large point moves are a function of the higher nominal level of the indexes themselves. 100 Dow points used to be news, now it’s just normal fluctuation.
Every day this week was an “inside day” from last Friday’s huge daily range so it will be interesting to see what next week brings.
Honestly this “range expansion” is a good thing because the system tends to do well in fast markets with lots of action. But sometimes there’s a point where it’s just too volatile and let’s hope it doesn’t come to that.
An Unusually Volatile Week So Far – And There’s Still a Day Left
10/16/2025
I haven’t had a chance to post in a few days, so I wanted to make a few comments about how things are going this week.
The market has been unusually volatile. As you know it all kicked off last Friday with the big “tariff sell-off” and so far this week each day has traded inside Friday’s daily range.
Price is consolidating that massive down move and trying to decide which direction to take. We’ve seen 4 inside (Friday’s range) days in a row. And the intraday price action has been wild. We’ve experienced a lot of intraday “range expansion”.
Of course I’ve been anticipating this for a while, but there are things to consider when the environment changes like this. The distance to the Targets and Stops expands with the increased ATR’s and Ranges and the risk / reward expands significantly. We’ve seen the “max stop” in play several times this week and that means we want to exercise some caution and take that into consideration.
The intraday volatility that accompanies this enormous range expansion makes things a bit more challenging.
For example today there was an early stop out and then two Alerts that both hit Target 1, but the second one hit the tightened Trailing Stop by a tick and then price went on to hit T2 shortly thereafter. So the tightened stop thwarted the trade and then to add insult to injury, price went significantly past T2. But as I’ve mentioned here on occasion, over the longer series it makes sense to have the Trailing Stop tighten at T1 to reduce risk rather than taking the chance of a full blown reversal. Especially when the ATR’s are really wide like they’ve been this week.
So out of the 10 Alerts so far this week only 6 have hit T1 and 2 have hit T2 which is a bit uncharacteristic. But there’s still tomorrow – OPEX day. I’m not sure if that’s a positive or negative so we’ll have to see.
Yesterday the first Alert hit the full stop and then the second Alert hit both Targets. The day before the first alert hit T1 and then second Alert hit both Targets. It’s fairly common to see each of those scenarios because the first Alert of the session tends to fire off quickly after the cash open. And it’s not uncommon for the market to make a move in one direction and then reverse and make a move in the opposite direction. But as I’ve mentioned, there are also lots of sessions where price picks a direction shortly after the open and never looks back.
So one strategy we can use is to go into the first Alert with a smaller size, knowing it has a slightly higher chance of getting stopped out or just hitting T1. Position sizing and scaling of Contracts are one of the things that are always variable and there’s no set rules to that. We could go in with just 1 Contract and shoot for T1 or even T2. If there’s another Alert we could use the standard 2 Contract strategy and shoot for one or both of the Targets. Honestly the possibilities are endless.
I’ve even mentioned “just shooting for Target 1” in volatile conditions is a viable strategy. On Tuesday the distance to Target 1 was 9.25 points on the first Alert.
One thing we do recommend is to consider taking a maximum of just 2 Alerts per session. The system itself will give a maximum of 3 “filled” Alerts per session, but we have it programmed that way because under normal conditions it makes the most sense. But in volatile markets with big distances to the Stops and Targets I think only taking 2 trades makes more sense.
Which brings me to the idea that it’s even viable to skip the first Alert of the day in some cases. But we take the risk missing out on one of those sessions where the market picks a direction at the open. Be sure to read the section in the Help about Trading Extremely Volatile Market Conditions because there’s a lot of good information on that page that seems relevant to where we are now.
You know I’m always talking about taking market conditions into consideration and the system actually does that by itself, but if things really get wild then it makes sense to adapt our approach with the things that are beyond the scope of the software – such as position sizing and scaling of Contracts. Sometimes it can be beneficial to use a different strategy than just the standard “shoot for the two targets”.
So getting knocked-out of a trade that went on to be a huge winner like today seems disheartening, especially after getting stopped-out on a prior trade, but things like that just go with the territory. Certain times little things just thwart an Alert and it’s important to take a longer-term perspective. We see Alerts that come within a tick of a target and we see Alerts that go way past T2 and Alerts that hit the Trailing stop by a tick. Then we see Alerts that go way past the Targets and offer tremendous points if we’re able to stay in for the move.
So it’s important to realize that all these different variations will occur and it’s a matter of keeping the proper perspective, especially in rough patches or when an Alert gets thwarted by the price action. It’s really the same whether the numbers are small or large, but it’s mentally more challenging when the numbers are big in volatile markets.
But it’s nothing to worry about because over all these years the numbers always work out and the system prevails. But when the market is extremely volatile it’s not a bad idea to think about playing defense.
You’ll find lots of good ideas for that in the Help page I mentioned.
Potentially One of the Best Days of the Year
10/11/2025
The reason I say “potentially” is because the price action was moving so fast everyone would have had different results trading the system. Yesterday was a huge down day and I’m sure you know the story.
The system gave an early Long Alert that didn’t quite make it to T1 and hit the Trailing Stop, but the real story was the subsequent down move. And it happened FAST.
At 10:57:56 eastern time the system fired off a Short Alert that triggered-in and hit both Targets in about 15-seconds.
Since price was moving so fast, there’s no telling where your actual market order Entry would have filled (due to slippage) and by the time we had a chance to realize what was happening, price was WAY past Target 2.
So this is one of those rare cases where the system handled the trade perfectly since it runs and registers everything in real-time, but as human traders it would not have been possible to execute at the exact system levels.
Which actually worked to our benefit.
Basically, trading this Alert would have yielded much better results than the system. And as you know, the chart above just shows the beginning of the down move. After T2 got hit the Trailing Stop tightened another 18 times by the cash close and never got hit.
MES closed 181.25 points below the Short Entry by the 4:00 close.
So this was another one of those cases where price went WAY past Target 2 and the fact it happened so fast meant no matter where your entry and exits were, it was “potentially” one of the best days in a long time.
And as I’ve been saying for a while now, this is exactly what the market needed. Going forward the ranges and ATR’s and overall volatility should make for great trading conditions. I said things are likely to heat up in October and here we are.
Directional Move Off the Open
10/9/2025
Today is an example of what I talked about yesterday when I said “sometimes the market picks a direction at the open and never looks back”.
That’s why the system is designed to Alert us into these trend moves early. Days like this the market makes a big impulse move shortly after the open and hesitating means missing out.
After the Entry triggered, price hit Target 1 in 2 1/2 minutes. Nine minutes later it hit Target 2. Notice how price consolidated around T2 for a while before the next leg down. We see that a lot and it kind of confirms the system calculates the distance to T2 levels pretty well.
Looking at just the next few candles after T2 got hit, it could have gone either way. There have been plenty of times where price hit T2 and consolidated and then reversed. But not today.
So it goes back to what we’ve been discussing. Whether it’s best to sell at T2 or hang on for a bigger move and that all depends on the number of Contracts and how you prefer to scale them. There’s no set perfect way and over dozens of trades some will continue way past the Targets and some won’t.
But if you watched how the Trailing Stop moved today you saw how it kept the trade open until about 30 minutes before the close. I took the screenshot above about an hour before the close and marked the level where the Trailing Stop eventually got hit. The Trailing Stop got tagged an extra 14.25 points past Target 2 and exactly 25.00 points below the Short Entry.
The thing to keep in mind is that the distance to the Targets is calculated based on the pre-market and early session ATR’s. Sometimes the market makes an extended move that makes the Targets look a bit too conservative. But it goes back to the idea that at any point in time we never know what the market is going to do next and today it could have just as easily reversed back up after hitting T2. We’ve seen that happen plenty of times too.
So the system is designed to get us into directional moves early in the session and calculate an optimal Entry level and Targets based on the available data at the time. How we choose to play it leaves plenty of options.
Selling at the Targets and calling it a day in the first 30-minutes was one. Hanging on for a bigger move past T2 was another.
As I mentioned in one of the posts below, the system is very flexible.
It was another good day.
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