Fed Day Trading
The new ZoneTraderPro indicator did a tremendous job for June 14, 2017 which was Fed Day. Normally I would avoid Fed Day Trading because it has a tendency to trade sideways up to the announcement and after the news breaks, things just get crazy. But yesterday I identified approximately 20 tradable winners and just 1 loser.
This 1st series of trades begin about 0950 hours. Looking at just winners doesn’t really teach anything, so I want to talk about the long tick divergence trade at 1015.
The trade was initially good for 10 ticks, however it is unlikely you would have exited 2437.75. As price was trading there, the indicator was solid dark green and the target was 6 ticks away. Then we had a pullback, which did not take out the previous low. But the indicator had heavy selling while trading at the intermediate support zone and the TICK filter (red dot) appeared.
The market tested the high and the TICK could not make a higher high. Again price traded back and the indicator showed stronger selling and again we got a TICK filter red dot. The last chance you had to exit the trade for a profit occurred when the market traded to intermediate resistance. Even as price traded 6 ticks higher, the indicator was displaying solid red in what is now essentially a trend short trade.
Every indicator on the chart was telling you to exit the trade and reverse it to a short.
Strong Trend Short Trade
It is important to understand all of the known ZoneTraderPro patterns. One such pattern that is not coded into the script is the strong trend trade. In the trade that occurred at about 1443 hours yesterday the price trades to strong trend support then retraces to minor resistance. The reason this is not coded into the NinjaTrader script is because it is difficult to determine where your stop should be.
A strong trend trade when price trades to the pink strong trend support zone. In a strong trend, price will retrace to minor resistance, which is exactly what happened. The trend will then resume and in this case price traded only to the blue countertrend support zone and a Tick Divergence Exhaustion trade. You can also see from the indicator that the selling percentages are not as strong.
However in this instance the indicator was dark red and going sideways. Price is in a strong bear pattern and again trades to strong trend support. It also illustrates why you would not take the long exhaustion trade.
Losing Trend Trade
There was one trade that had a near perfect setup going into it. $TICK had made a higher high and the indicator was dark green going into the trade. There are instances of the indicator on the chart, with 3 different settings. The 7 setting is in the pane closest to the price chart. 6 is next and 5 is on the third instance of the indicator. The Accumulation Distribution indicator is in the lowest pane. The 7 setting encompasses 7 levels of price, so it is taking more data into account. The 7 panel had fallen from 59% to 51% when price traded at the zone, so it was clearly selling off, but the percentage of buyers was still positive.
The only clue that the trade would fail is the Accumulation Distribution indicator which indicated there was more sellers than buyers. After the trade loses, that indicator again clearly shows an accumulation and we see a winning long exhaustion trade.
After that the market trades up nearly 10 points, however there was only two more clearly defined winning long entries per my trading rules. There was a short Tick Divergence trade that was good for 7 ticks, but would have been a scratch trade. But as you can see from the indicator, it was clearly showing a lack of sellers and strong buying into the close.
What was important about this day was that if you waited for a good setup, you didn’t have to wait very long. While this many trades is unusual, what is not unusual is how the indicator combined with the ZoneTraderPro patterns performed.