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.
An Unusual Session to End the Week
9/25/2025
Today was the last Friday of September and even though there are a couple more trading days, that might have had something to do with the fact it was an unusual session. Or maybe it was the inflation numbers that came out pre-market.
But the early price action was wild and the ATR’s were massive compared to the other sessions this week. The “max stop” was in play and the distance to Target 1 on the two Long Alerts was 9.00 points. To put that in perspective, the distance to Target 1 this week prior to today ranged from 2.75 to 5.00 points. So the volatility was definitely elevated.
And to add to that, the price was “all over the map”. MES moved 45.75 points from the 10:00 high of the day to the 10:30 low of the day.
The system gave 2 Long Alerts that filled and 1 Short Alert that didn’t trigger-in.
Check out the chart:
You can tell by that chart it was a pretty wild day. Unusual compared to the rest of the week. That 20+ point move in pre-market kind of set the tone for the session.
There were 8 filled Alerts this week and 7 of the 8 hit Target 1. Every one except that last one you see on the chart above that came within a tick of it. It was interesting that price closed exactly mid-way between the Entry and T1 at 4:00 and then of course drifted up past T1 in extended hours.
The “fill” on the two Long Alerts had a 1-tick difference and that’s why there are two lines at Target 1. The second Long calculated T1 1-tick closer than the earlier one and it’s ironic it missed it by 1-tick.
There were several other interesting things about today’s session, one being the level on the potential Short that never triggered-in. There was a lot of price action between the bottom of the Range and that “Trade Barrier” level and the distance between them was significant.
And of course the “max stop” was in play on both Alerts given the wide ATR’s. It seemed like kind of a dangerous day because price thrashed around a lot and as I said, was all over the map. Notice the price scale on the chart is in 5-point increments.
So the week was relatively dull prior to today. I didn’t post yesterday but there were 3 filled Alerts and all 3 hit Target 1 then the “tightened” Trailing stop. As you know the system issues a maximum of 3 filled Alerts per session, so it was basically just a breakeven day using the default strategy.
It would have been a good week to just shoot for Target 1 but I don’t want to get into that now. The default strategy of shooting for both Targets was slightly better, but that’s just a function of how the price manifested throughout each session this week.
I’ve been talking about the “market action picking up” and we did see a bit of that this week and especially today.
So I think it’s going to be a good trading environment going forward.
Everything is a Compromise
9/24/2025
I just wanted to post a quick note for the benefit of new users to provide a little insight on today’s Short Alert.
So the system gave a Short Alert this morning that triggered-in and hit Target 1. The Trailing Stop tightened a couple times and then got hit when the market bounced.
The bounce (or I suppose you could call it a counter-trend move) lasted about an hour and the high tagged the Trailing Stop by a point. That knocked-out the trade and then the market rolled back over. So the trade basically resulted in a breakeven (actually +2.50 points).
But the software didn’t fire-off another Alert and the reason for that is the important point here.
In order for the system to give a new Alert in the same direction as one that just hit the Trailing Stop, the price has to close back up in the upper-part of the Range. That’s a logic rule I didn’t mention in yesterday’s lengthy post. It’s one of the “nuances” as I like to say.
It makes perfect sense if you think about it because if we just got knocked-out of a trade because the trailing stop was hit we wouldn’t just want to turn around a couple minutes later and get back in another trade in that same direction we were just in.
The market could be testing and bouncing off a significant support level and we wouldn’t want to just short it, get knocked out and short again and get knocked out and keep repeating that.
So the system has a “rule” that says in order to get a new Alert in the same direction of the previous Alert that hit the stop, the price has to get back up into the upper section of the range (in the case of a Short).
While that rule appears to have “thwarted” things today by missing out on the subsequent sell-off, you’ll see plenty of sessions where it makes perfect sense.
So the “compromise” was this. The system “protected” the gain by getting the stop to breakeven instead of taking a chance price was going to experience a full-blown reversal.
In other words, say the initial stop hadn’t tightened to put the trade at breakeven after Target 1 got hit. The price would have gone on to hit both Targets. BUT when that counter-trend move / bounce was underway we had no idea how far it would go. For all we knew the low of the day was in and the price was going all the way back to the highs.
The compromise is that system tightens the stops quickly to reduce risk rather than take the chance of letting a profitable trade turn into a loss.
Sometimes that means it gets knocked-out of a trade where it had the direction right, but better safe than sorry. And sometimes it means missing out on a move, but we all know that you can’t trade every wiggle on the chart and missing out on a price move comes with the territory.
What’s important is that Target 1 got hit and the system eliminated all the risk. That’s part of what makes the system “quant out” over a long series of Alerts.
A Dull Choppy Morning That Turned Into Something
9/23/2025
I usually post here every couple / few days because it’s not intended to be a daily recap. But since we have quite a few new users I thought today’s session would help reinforce something I mentioned yesterday and something that’s important when trading the Momentum System.
Not Every Alert Fills
And today was a perfect example of that. The first hour of the cash session was basically just a dull sideways chop where price clanged around in a 7-10 point range with no directional bias. Price poked out of the top and bottom of the range multiple times before finally picking a direction almost an hour into the session.
That’s actually kind of rare.
The system created “Trade Price Barriers” around the price action and finally there was enough follow-through to the downside to trigger in an Alert.
Basically the systems “entry strategy” of waiting for a 1-minute close past the Barrier was helping to avoid pulling the trigger on a trade until we got some “confirmation”.
It’s not foolproof but nothing is. The idea is that it’s common to see price “poke” through a level for a split second then reverse. In this case it was probing both the upside and downside and there were lots of pokes through the Long and Short barriers. But the 1-minute close finally came at 10:25 and that was the beginning of a significant sell-off in the market.
Since the first hour 5-minute ATR’s were fairly minuscule (3-6 points) the distance to the Targets was relatively small. Honestly it was an abnormally dull early session, but the downtrend picked up momentum a short while later. Then Powell started speaking and things really got going to the downside.
From the Short Entry to the low of the session the “traction” on the Alert was about 45 points. The Trailing Stop kept the trade open and tightened periodically all session before eventually getting hit just 7-minutes before the close. If you watched the progression of the trailing stop moves today I’m sure you were impressed. It managed to stay in the trade mid-day through what looked like a significant counter-trend move and then once price rolled back over it tucked the stop right at the high of the counter-trend move.
If you’re new here, I want to mention that you are always free to use a different stop than the system. While the system Trailing Stop and the Aggressive Protection Level do a great job, that’s one little discretionary tactic that makes sense from time to time. Today it wasn’t really necessary but there are times where it can make sense. That’s usually when price is in between T1 and T2 and there are some examples if you dig back far enough in these notes.
But I wanted to keep today’s post brief and just point out an example of how not every alert fills. That kind of goes hand in hand with the Entry strategy and it’s one of the most important things for a new user to understand. Believe it or not, over the years there have been a couple people that thought getting an alert meant you just take a trade.
That’s why I like to spell it out and reiterate the “entry strategy” from time to time.
The system handled today’s session well and the action really picked up in the afternoon.
Hopefully that’s a sign of good things to come.
A Complex Strategy Made Simple
9/22/2025
We have some new users just getting started with the software so I thought it would be a good idea to cover some basics and maybe discuss a few concepts.
I’ve been working on an in-depth article to explain how some of the key concepts of the Momentum System are based on scientific principles and “Laws of Nature” if you will. Since this isn’t the time or place for that I thought I’d just list some of the main bullet points here.
1) The only way to make money on a trade is directional price movement
2) Every directional move starts with a Range Breakout (even if it’s just 1-tick away from the last price)
3) Inertia / Momentum – when price is moving in a certain direction has a tendency to continue in that direction
4) Price moving from point A to point B must pass through other points – (place 2 Targets along the path)
5) Getting a trade to Breakeven at the first “easy to hit” Target reduces risk quickly
6) Trailing stops are a key strategy for staying in a trend as long as it persists
7) Tolerances are based on current ATR’s so the strategy adapts to current market conditions and ever changing environments
8) The system logic creates an “edge” similar to the house edge in Vegas – however the outcome of any one trade or session is random
You can imagine what will go into a comprehensive explanations of each of those points.
But today I just want to show how all the complex logic built into the system is “dead simple” to actually follow when you’re trading.
It honestly wouldn’t matter if one understood how or why the system was doing what it was to use it. But it certainly makes sense to have a deep understanding of any system you’re trading. And there’s a lot of good material in the documentation that covers all that. Plus I try to post educational content here to help new users understand all the “nuances” of the system.
But the point of this post is to show how the Alert Software and specifically the real-time System Notes make it easy to trade the Alerts on any platform.
Here’s a screenshot of the Alert Software I took this morning.
The System Notes are in the bottom section of the software as you see above. Each note gets appended in real-time as the session unfolds and there’s an “event”. So you always want to read the System Notes from the bottom up.
Prior to the cash open (9:30 Eastern) the only line in the Notes is today’s date and the Contract the system is trading – the line you see at the bottom. The system comes online and assesses the opening range for the first 5-minutes and then writes a new line with the Range. The range is basically just a “visual reference point” / zone that the system uses to gauge directional movement away from the area of the open.
When price starts escaping the Range in one direction or the other, that’s when the system starts looking for an optimal entry point in the direction of the price movement.
You can see by the time stamps in the system notes it was about 17-minutes into the session that the system fired a Long Alert. Notice the time stamps have “seconds” so the Long Alert was given at 9:51:47.
It’s important to know that not all Alerts “fill”. It’s possible to get multiple Alerts in either or both directions that don’t actually trigger-in. The “entry confirmation” or fill on an Alert comes when there’s a 1-minute closing candle or price bar at least 1-tick past the Alert Price / Trade Price Barrier. That’s covered in-depth in the Help.
So you can see at 9:54 this Long Alert triggered-in and the system notes appended the Entry Confirmation line. A split-second later it posts the 2 Targets on a separate line. T1 and T2.
The Targets and Stops are EXACT numbers. That’s pretty unique when you consider most trading strategies tend to be ambiguous and deal in “zones”.
So once the Alert triggered-in the very next thing that happened was the Trailing stop tightened – prior to Target 1 getting hit. Sometimes it does and sometimes it doesn’t, it all depends on the price “approach” to T1.
Target 1 got hit and the Trailing Stop ALWAYS tightens once T1 gets hit. It tightens by roughly the same distance from the entry to T1 so a 2 Contract trader can sell one contract at T1 and the trade is now at “breakeven”. Getting a trade to breakeven quickly is the #1 goal of the system. That eliminates the risk of a loss.
As price continued higher past Target 1 you can see the Trailing stop tightened a couple more times and then Target 2 got hit. At that point a 2 Contract trader is “done for the day”. Sold a Contract at T1 and the other at T2 and that’s it.
The system won’t be issuing any new Alerts that day, but it continues to keep the trade open and continues to tighten the Trailing Stop. That’s because not everyone is trading just 2 Contracts and selling it all at the Targets. Today is a good example of how the market can make a significant trend move that goes way beyond Target 2.
A trade only gets closed when price eventually hits the (tightened) Trailing Stop.
The “Aggressive Protection Level” line just above the line where T2 got hit is a discretionary “tighter stop” and you can read all the details about that in the help – along with the Parabolic Stop which we also saw today.
Here’s the bigger picture look at how today’s session turned out.
I took that screenshot about an hour before the cash session close and you can see that the Trailing Stop never got hit and price extended well beyond Target 2.
I don’t want to get into the weeds here and start discussing advanced strategies, but you can probably imagine there are various tactics we could use to catch “runners” past the Targets. As a matter of fact, the system is extremely flexible and while it’s simple to trade what you see in the System Notes, there are lots of different ways to trade the Alerts. I’m writing an “advanced strategies” post that gets into all that.
But my suggestion is to stick to the basics when you’re first getting started with the system. Concentrate on understanding the strategy and all the little “nuances” built into the system and software.
Such as….
Here’s a list of important points to help you get started with the Power Emini Momentum System.
Concepts:
The system has a built-in statistical edge similar to the house odds in Vegas. The “edge” is revealed over a long series of Alerts.
The outcome of any one individual Alert or market session is purely random.
The final result of any given Alert is a function of the price action that manifests after we take the Entry.
The system doesn’t try to predict anything, it “reacts” to the price action as it unfolds and gives alerts in the direction of the current price movement.
The distance to the Stop and Targets are based on the current ATR’s in today’s session.
Targets and Stops are calculated based off the Entry price – not the Alert price.
The Initial Stop always starts off 1-tick past the opposite side of the Trigger Range – with the exception of the 18 point “maximum stop”.
The ES / MES Momentum System has a max stop of 18.00 points. There is no limit to the upside potential.
The Entry Trigger on an Alert is a 1-minute price bar or candle that CLOSES at least 1-tick or more PAST the Alert Price / Trade Price Barrier.
Not all Alerts will trigger-in or “fill”. It’s possible to see a series of Alerts that never get filled based on the above Entry Trigger rule.
As soon as an Alert “triggers-in” the system calculates and displays the Initial Stop and the 2 Targets.
When Target 1 gets hit, the Initial Stop tightens to get the trade to “breakeven”. (a couple points either way is considered breakeven)
Target 1 has a “hit rate” of roughly 75% (over the last 2-years).
An Alert that hits both Targets will make up for an Alert that hits the full stop.
It’s not uncommon for the first alert of the day to hit the stop or just Target 1, then the second Alert hits both Targets.
Results vary considerably based on the number of Contracts traded and the scaling strategy.
It’s perfectly acceptable to use a bit of discretion here and there based on the price action and the charts.
Every market session is different and the system reacts to how the price action unfolds differently.
Software:
The Momentum System comes online at 9:30 Eastern when the cash session begins and goes offline at 4:00.
If there are no active Alerts at the time, the system goes offline at 2:30 Eastern time.
If an Alert hits both Targets and subsequently hits the (tightened) Trailing Stop, the system goes offline for the remainder of the session.
There are a maximum of 3 filled Alerts per session.
In order for the system to give an Alert, the price must be inside the Trigger Range and break out in either direction.
Ok, that’s enough for today.
I got a little carried away because I started this post with the idea of helping new users get acquainted with things.
And while the software is “dead simple” to trade, you can see there’s a lot more to it. I don’t expect anyone to soak all this in at once so it makes sense to take a slow steady approach and work with the system for a while and get the hang of everything. I always say that you have to experiences a number of different market sessions to see how the system reacts to the price action.
Every day is different.
A Strong Finish to the Week – OPEX Day
9/20/2025
September Quarterly options expiration day (yesterday) is different than other trading days. There’s all sorts of institutional “positioning” and things happening behind the scenes and under the surface. Quad Witching as they say.
But aside from all that, the Momentum System did exactly what it’s programmed to do and it worked out quite well.
All the complex mechanics that drive the market simply reveals itself in directional price movement.
So after a fairly erratic open, in the early part of the session the trend was down. The system gave a Short Alert because the market was making a directional move lower. That Alert hit the first Target and the Trailing Stop tightened a couple times. As you see on the chart the buyers stepped in around 11:30 and began driving price higher. The tightened Trailing Stop was hit and the Alert resulted in a “breakeven” trade. Every Alert that hits Target 1 is considered a good trade. Because at that point there’s no risk of a loss.
You can see the Trailing Stop on the early Alert was down towards the bottom of the Range at 6700.00 and everything above that was basically overhead resistance all the way back up to the early morning highs. The buyers had a lot of firepower and managed to drive it back up to the early session highs and that’s where the system fired off the Long Alert.
Now you can look at the chart and assume it would have been easy to catch the reversal, but as I frequently say, it’s easy to look at a chart in hindsight and assume you could have traded all the wiggles and zig-zags perfectly. But as the price action is unfolding in real-time it’s a different story. That could have just as easily been a counter-trend move that stalled out and reversed back down.
So the system waited until price “broke out” above the early congestion and the highs of the early session. That’s where the blue-sky territory was. But for a period of time the price just went into a sideways grind for about 2-hours before finally breaking out to the upside. And I’ve been talking about how the market has a different sort of “personality” when it’s trading at all-time highs so this was an interesting case.
Besides being quad witching options expiration day, the zone of that two hour consolidation was right up near the all-time highs too. If you’ve been doing this a while you know that the market tends to see some real action and movement towards the end of the day on opex. And sure enough the impulse move higher came in the last hour of the cash session and the Long Alert managed to hit Target 2 about 5-minutes before they rang the closing bell on Wall Street.
So aside from the fact is wasn’t just a typical Friday, the system had what I’d consider a fairly typical day given the price action. And it wasn’t really a typical week at all since the Fed Announcement was just a couple days ago.
Now with the Fed and opex behind us I’m looking forward to market conditions returning to more normal. Even though it was a good week for the system there were a couple relatively dull days where things seemed to be on-hold for news. The system thrives on “action” and fast markets and that’s what I’m looking forward to.
Things Worked Out Perfectly
9/17/2025
Given the fact it’s Fed Announcement Day, we couldn’t have asked for a better situation.
That’s because the Short Alert this morning hit both Targets and was basically “done for the day” prior to the Fed announcement. That’s ideal.
As mentioned below and so many places in the system documentation, we don’t recommend holding a position over the Fed interest rate announcement. And we don’t recommend trying to trade an Alert that fires off immediately following the news. I’d also say when Powell is doing his presser.
The software doesn’t take “news” into account. It reacts to directional price movement.
On Fed days there are a few different possibilities as far as the Momentum System status.
Ideally there’s an Alert that hits both Targets prior to the news like today. Trading 2 Contracts just shooting for the 2 Targets you’re done for the day once T2 gets hit.
Some Fed days there’s an open trade going into the news and the “initial price reaction” is basically a crap-shoot. So it’s 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.
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 much time to react.
Another common scenario over the years is that an Alert “fires off” when the market goes haywire immediately following the interest rate decision. 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 pick up 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.
UPDATE:
I posted everything above early in the day before the Fed decision. As I suspected the market was “all over the map” after the Fed announcement and I just wanted to reinforce everything with a chart of the subsequent price action.
This is the 1-minute chart from the announcement until the close.
While that may look like a fairly normal chart, it’s not.
Notice the price scale is in 5-point increments. And notice I have the 1-minute ATR’s displayed at the bottom.
So basically after the Fed decision, price was moving roughly 6-12 ES points every minute for the next hour and a half. Those are extremely tricky and volatile conditions to trade despite the fact it might appear easy in hindsight. When ES / MES is moving 10 points a minute it’s probably best to stand aside.
The 5-minute chart looks pretty crazy too and the ATR’s on that timeframe averaged a little over 20 points.
But now that that’s behind us, maybe the day to day price action will pick up a bit.
Tomorrow is Fed Day
9/16/2025
So we’re half-way through September and honestly the market conditions haven’t been nearly as exciting as I expected. Yet.
Typically over the years the market “action” picks up after Labor Day and things start getting back to normal as far as price action. But the past few weeks have been relatively dull. Lots of low volume narrow range days and just generally suboptimal intraday trading conditions.
Take yesterday for instance. In order to get a better look at the ATR’s and ranges I squeezed the chart down so that the price scale was in 5-point increments. This is the “cash session” on a 5-minute chart.
That’s what you call narrow range, sideways price action.
The price scale increments on the intraday chart are important. They give us an idea of what to expect given the ATR’s the market is serving up that session. So basically yesterday the entire ES / MES range for the cash session was about 18 points total. That’s WAY below normal and probably due to the market “on hold waiting” for the Fed announcement tomorrow.
I’m thinking the action will pick up after tomorrow’s Fed announcement.
What we want to see is some “range expansion”. Meaning that we get some long-range days and some decent trending action on the intraday timeframe. There’s nothing worse than a sideways trading range and we just want to see the price action pick back up and the ATR’s expand. A day like yesterday where the ATR’s are averaging 2-3-4 points much of the day are just “suboptimal” trading conditions as I said.
But experienced traders are well aware that there are periods of time like this and it’s no big deal. We just have to be patient and trade what the market provides. We know for a fact that range expansion is coming and the market doesn’t trade sideways and stay dull for long.
Over the years I’ve seen the market change character right after a Fed interest rate announcement. Lots of times in the past it’s been an inflection point and the market sells off afterwards and experiences a correction. Honestly I think a significant correction is what this market needs to improve day to day trading conditions and introduce some volatility to this market.
Today’s action was a bit better but you can see by the distance to the Targets the ATR’s are still quite narrow.
To give you some perspective, when Target 1 and Target 2 both get hit, the total points scored is typically 20 points or more. The total this morning was a mere 14 points which was similar to the distance to T1 back in the Spring when the market was more volatile.
So it’s important to maintain perspective and realize that market conditions have a big effect on trading no matter what the strategy. And we have no control over market conditions. It almost goes without saying but I really think it’s an important aspect of trading that’s not discussed much (except here).
But fear not. The volatility will pick up – it always does.
And what better time to kick off some volatility and “range expansion” than tomorrow’s Fed Announcement.
But before I forget… As you know we don’t recommend holding an open trade (if there is one) over the actual announcement. Or trade an Alert that might fire off when the news hits the wires. It’s fun to watch how the software reacts so we leave it online, but it’s generally best to be flat for the day prior to the news.
Let the dust settle and see what the next couple days bring.
A Quick Refresher From Today’s Session
9/11/2025
Every now and then I like to reiterate one of the most important points when trading the Momentum System – how to take the Entry.
This is for the benefit of new users and prospective users and just to make certain everyone understands how it works. This is actually the first thing to know when you start using the software.
Some Alerts don’t get filled. Not every Alert “triggers-in”.
It’s understandable when a new user first gets the software and sees the first Alert fire off to think that it’s a trade. But it’s not. There’s a very specific “entry strategy” the software uses and it only takes a minute to understand it. But I like to reiterate and clarify it from time to time because it’s such an important aspect of the system.
And today was a good example to show an alert that didn’t trigger-in.
So here’s the “entry strategy”.
When the software issues an Alert, the very next 1-minute that closes at least 1-tick past the Trade Price Barrier (Alert Price) triggers-in the trade. Simple as that.
Here’s the play-by-play in the System Notes section of the Alert Software.
So this morning there was a Short Alert at 9:45 as you see in the screenshot above, but there was no 1-minute candle that closed at 6552.25 or lower. (6552.50 was the Short Alert level).
Price poked through that level, but never closed at or below it on the 1-minute timeframe.
Price then reversed higher, that Short Alert went away and 7-minutes later the system issued a Long Alert that did fill.
There are 2 main reasons the system uses the “1-minute close past the Alert price” to trigger-in a trade. (Entry Confirmation)
1) That gives us time to react. You can see it took 2-minutes from the time the Long Alert was issued for it to fill. Some Alert fill on the very next 1-minute closing candle and others can take 5-10+ minutes to fill – or not fill at all.
2) It helps prevent getting sucked in to a false move. When price closes a tick or more past the “barrier” on the 1-minute chart it helps confirm momentum in that direction. Sometimes like today price will just poke through the Alert level but there’s no 1-minute close. Sometimes price will poke through the barrier multiple times and sometimes there’s just a millisecond poke through it.
This is an ideal way to confirm a trade and it’s discussed in more detail in the Help. When an alert fills the software instantly prints the line “Entry Confirmation” using the close of the 1-minute price bar that closed at least a tick past the Alert Price.
So here’s the chart where we can see the Short Alert level that didn’t trigger-in and you can see how price just briefly poked through that level.
(That’s a 5-minute chart but when you get an Alert you want to monitor the 1-minute chart for the Entry. After an Alert gets filled we recommend switching to a 5-minute chart to follow the trade as it plays out.)
So you can see the dashed red line where the Short Alert fired off at 9:45 and that was the one 1-minute candle that “poked” below the Alert price for just a few seconds. The Alert never filled and price reversed quickly and 7-minutes later the Long Alert fired off and filled a couple minutes later.
The Long Alert then went on to hit both Targets and it turned out to be a great session for the system.
In the post below you can see how yesterday’s session differed because the first Alert of the session did trigger in even though the primary trend of the day ended up being in the opposite direction.
However, (and this is the beauty of the system) the first alert hit Target 1, the trailing stop tightened and even through price reversed the trade was just a “breakeven”. Then the second Alert of the day basically caught the major trend.
I don’t want to get too far into the weeds in explaining all the nuances of the system in this post, but it’s important to know how the Entry strategy works. It’s kind of a unique way to confirm which Alerts fill and which don’t, but it makes a lot of sense if you think about it.
Anyone that’s been using the software for any length of time knows exactly how the system takes an entry on a trade, but occasionally there’s some confusion and I wanted to clarify things so no one makes an execution mistake.
So Far So Good
9/11/2025
I meant to post this yesterday evening but I got tied up with other things. Fall is finally in the air and I’m looking forward to turning off the a/c and opening the windows. Autumn is a great time of year here in N. Florida because we typically get about 3-4 months of perfect weather. And the market conditions tends to improve. The “action” picks up.
So far this week has been just ok, but now that the important economic numbers have been released everyone’s looking forward to next week’s Fed announcement. That’s sure to spark some action since it’s debatable on whether they lower by 25 or 50 bps. I’m thinking the market action really heats up after that.
The reason I’m posting yesterday’s chart is because I wanted to point out something important.
So there were 2 Alerts and both hit Target 1. That’s about par for the course.
But that second Alert got triggered-in mid-session and price took about 2-hours to meander its way to Target 1. And then another hour and a half to get within 1-tick of Target 2.
Close but no cigar. Missed it by 1 lousy tick.
But looking at the chart from a common sense perspective, it would have made perfect sense to go ahead and close the trade somewhere around where I drew that shaded box. After all, the market was 20-30 minutes away from the cash close and there was a good 15 or so points of profit to be had.
It’s perfectly reasonable to say “close enough” and close the trade in a case like this where the market is going to be closing soon anyway. Especially after the “slow drift” that took half the day to make it to the Targets. The fact the market has been sort of in slow drift mode so far this week was another good reason to call it a day early.
It’s actually pretty interesting that Target 2 was literally right at the level the market made it to and found support before reversing into the close. That means the distance to T2 was calculated pretty darn accurately, but not exactly precise enough apparently.
This is the second time recently that price came within a tick or two of T2 but didn’t quite make it. And in those cases I think it makes sense to use a little judgement and think about protecting profits rather than being a “stickler” for a tick.
That’s where gauging market conditions comes in . In fast markets where there’s tons of action and price is moving with purpose, the Targets or stops typically get hit quickly. In slower markets where price just “drifts” it can meander around for hours. That’s a “low momentum” environment and it might make sense to use a little judgement. This was a good example of where that would have made the difference between a breakeven day and a decent winning session.
Weekend Update and Random Thoughts
9/5/2025
It sure seemed like a long week even though there were only four trading days.
The market action also seemed particularly choppy even though there were a couple decent trends that developed. What was a bit out of the ordinary was that there were 10 Alerts even though it was a short week and only 5 of them hit Target 1. And only 2 hit Target 2. Needless to say that didn’t lead to a spectacular week overall. There was a trailing stop that got hit to the tick and a stop-out that got hit by just a tick and those made a difference.
Usually price hitting Target 1 is like shooting fish in a barrel but occasionally the price action thwarts an Alert here and there and that’s just the nature of a system that provides exact numbers. I always talk about using tighter stops and then we get a situation where the stops are too tight by a tick or two. When the initial stop tightens at Target 1 getting hit it reduces risk. But some Alerts get knocked-out by the tightened stop that wouldn’t have otherwise.
I’ve been pondering that dilemma this week. As I’ve said here many times, trading is all about compromise and over the long run it’s preferable to reduce risk by having stops tighten as quickly as possible. So the compromise is that the tighter the stop the more likely it is to get hit. It’s like that regardless of what strategy you’re using. As I like to say “that’s why we don’t use 1-tick stops”.
Statistically speaking, the closer a stop is to the current price action the more likely it is to get hit. That’s just math. Same with Targets. If we wanted a 90% or higher “hit rate” on Target 1 we could just set it at a few ticks. But the idea is that we want to maximize on the point gain while still maintaining the “easy to hit” distance and that’s why the system is calibrated so that Target 1 gets hit 75% of the time.
The other 25% of the time that T1 doesn’t get hit doesn’t mean it’s a full stop-out because the Trailing Stop tightens prior to T1 getting hit about 75% of the time. It depends on the approach. In other words if price meanders and slowly approaches T1 the stop will tighten when it gets about three-quarters of the way. This reduces the risk on the trade but also moves the stop closer to the price action which means it has a higher chance of getting hit.
In normal market conditions T1 is generally 4-7 points away from the Entry. Once Target 1 gets hit the Trailing Stop tightens an equal distance so that the trade is at breakeven (assuming trading 2 Contracts shooting for the 2 Targets). So all in all this strategy works great over a long series of trades but the outcome of any one trade is essentially random and at the mercy of the price action that manifests after we take the trade. So it’s important to realize that any system with an “edge” requires a large sample size for the edge to be revealed.
Conceptually, the system eliminates the risk of a loss by tightening the stop to breakeven and that’s what provides the edge over the long-run.
So the proper mental approach is to avoid getting discouraged by rough patches where the Targets don’t get hit as frequently as they will over the long-run. This past week coming off a Holiday weekend T1 only got hit 50% of the time instead of the average 75% going back 2-years. That’s why sample size is important. In the past we’ve seen streaks where T1 gets hit 8-10 times in a row and the record is 18 in a row. It’s not uncommon to see streaks way above the 75% hit rate.
Winning streaks frequently follow periods where the system just spins its wheels or has a drawdown.
So on both the Alerts that went on to hit Target 2 last week the first Alert of the session got stopped-out.
Here are the charts.
On the chart above there was a sharp down move caused by 10:00 economic news that got just enough follow-through to trigger a Short but price quickly reversed, hit the stop and the system then went Long. The dashed lines are the levels where the Alerts were given and the thin red and green lines are where the Alerts triggered-in. Even on trending days it’s possible to get sucked into a false move, but the system is good at catching a move in the opposite direction when that happens.
While playing the exact numbers in the software with 2 Contracts resulted in a small loss for the session, a little fancy footwork could have resulted in a gain. In other words trading a larger position on the 2nd Alert or holding past T2 are a couple strategies that could have worked out. The Trailing stop never got hit and the closing price was +34.50 points past the Entry.
Here’s the chart from Friday where the market opened above the all-time high and then had a significant sell-off in the early session.
There’s a lot going on with this chart but you can see I drew a white box around the 5-minute candle that traversed the entire range and caused the first Short to hit the stop by 1-tick. Just two candles later the system re-fired the Short Alert which went on to hit both Targets very quickly. But the Targets were a bit closer-in than normal based on the ATR’s of the prior candles. At the time it was impossible to know that the sell-off would pick up that much momentum.
As you can see in the Alert Banner, price actually got +80.25 points of “traction” to the downside past the Alert price at the low. What was really interesting was where the Trailing Stop eventually ended up just above the base the chart pattern formed. That’s where the Trailing Stop eventually got hit prior to the close.
This was another situation where the system had the right idea and did its job, but the way the price action unfolded wasn’t ideal. In other words the initial ATR’s and the Range were relatively small so all the tolerances were a bit tighter than normal. The distances to the Stop and Targets were fairly small based on the prior candle ranges.
Regardless, these couple examples got me thinking about how it would have been possible to take advantage of the huge trend moves that eventually developed. And the main idea I came up with was that you would have had to stay in the moves past Target 2. In most cases that’s easier said than done because frequently price hits T2 and doesn’t make much additional forward progress or reverses. But in both these cases it appears that trailing a stop just past the low or high of the candle that hit T2 would have kept the trade open for what we call a “runner”.
Of course that’s a discretionary tactic and I wouldn’t recommend trying that every time, but it does illustrate what’s possible. Especially on Friday’s sell-off where there were ten 5-minute candles in a row with lower highs than the previous candle. That’s actually pretty uncommon and requires a lot of directional “price momentum”.
Anyway, it’s encouraging to see the volatility pick up and this coming week we get the CPI and PPI numbers and those are very likely to create some good action in the market.
September – Summer is Over
Summer market conditions weren’t all that bad this year. There were some dull periods and a handful of choppy sessions, but overall it seemed like a better trading environment than lots of past years.
September is traditionally when market participants and institutions get back to their desks and the market action picks up. We should start to see increased volume, participation and “range expansion” and that’s ideal for trading. Actually the first trading day of September saw this exact type of action and that’s a good sign.
As we get into September 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
August 2025 Commentary – Notes – Education – Examples
PowerEmini Day Trading Futures – Automated Alert Signals