As you probably know, the months of July and August are often called the “Summer Doldrums” in the market and that’s particularly true this year.
Through much of July and into August here, we’ve seen some of the tightest ranges in the market for some time – actually since last July / August. Most days during the Summer Doldrums are dull, low-volume tight trading range days and this is not the type of environment conducive to our Momentum System, which is calibrated to capture 4-6+ point moves in the ES.
So many days recently we’ve been lucky to see a day here and there where the market even moves in that type of range – all day. In other words, if the total trading range of the ES on a given day is 6-10 points, it’s not the environment where trading quick 4 point moves makes sense. It’s like surfing – if the ocean is flat and there are no waves you just can’t surf.
Check out this graph of the rolling 12-day percentage range for the S&P 500.
As E-Mini day traders we don’t care if the market goes up or down, we just want as much movement as possible and you can see from the graph above the exact opposite of that has been the norm recently.
To compensate for this we’ve introduced our Super Scalping Day Trading Algorithm into the Alert Software.
This system fires off different types of alerts than the Momentum System and gives us plenty of trading action in this dull environment. The Super Scalper algo has a very high win rate and is extremely accurate. It’s designed to capture small moves and take profits at 3 ticks.
We have a special Trade Configuration just for the Scalping Signals and here’s how it works.
We Use A 1-Tick Trade Entry Trigger
When the Alert Software gives a signal, the entry is 1 tick past the trade price barrier price (shown in the software). Simply place a a Buy-Stop-Limit Order 1 tick above the Trade Barrier in the case of a long and 1 tick below The Trade Barrier in the case of a short.
Once the market begins to trade normally (usually after Labor Day) – in wider daily ranges and with more up and down intraday movement we will go back to trading the Momentum System and capture bigger point gains on larger moves. For the month of August and probably a week or two into September, the Scalper Signals are the way to go – until the market picks up.
Here’s the good news. Since we’ve refined the Scalper Algo to be so highly accurate, we’ve decided to make it a permanent part of the Power Emini Alert Software. So going forward the software will provide both scalping signals and the Momentum Alerts, however we won’t be trading the Momentum Alerts until the daily trading ranges and market action picks back up.
The great thing about the Alert Software is that it will let you know which signals we are trading when both algos are running at the same time.
For now, and through the month of August we are going with scalping and seeing plenty of action, even in this dull market.