Trade Review - ALGS
When stock showed up in screener showed a bullish continuation pattern on daily timeframe and a potential failure test / pullback on the higher timeframe downtrend, a bit near mean but was added to watchlist.
Execution chart.
Trade Overview
• Structure: Bullish Continuation (D)
• Position: Near Mean (D)
• Entry Trigger: Breakout (D)
Entry Details
• Entry Price: 11.13
• Stop Price: 9.38
• Target Price: 12.96
• Expected Risk/Reward: 1.05R
Exit Strategy
• Exit Price: 14.47 / 1.91R
Meanreversion
Trade Review - LUNR
When found in the screener, the stock showed a decent continuation pattern on the weekly chart. It was added to the watchlist to track a potential move, still were some distance to prior swing high.
Execution Chart.
Trade Overview
• Structure: Bullish Continuation
• Position: Near Mean
• Entry Trigger: Range Expansion
Entry Details
• Entry Price: 9.38
• Stop Price: 8.30
• Target Price: 12.36
• Expected Risk/Reward: 2.65 R
Exit Strategy
• Exit Price: Closed 50% into 1R and rest at 12.18.
Watchlist - Nov 17, 2024Here’s my weekend watchlist from the passive screener. The list is short, as many stocks have already made their swing moves higher. Both the market and some stocks show temporary indication of exhaustion, so it might be a good idea to be selective.
Bullish List: PLCE
Bearish List: UPST, SMLR, AMSC
Trade Review - WEST
When the stock showed up on the screener there was a bullish continuation setup on the daily chart and a potential overextension on the higher timeframe downtrend. Thus added to the watchlist to monitor for a move.
Execution – Entered late on a debatable Failure Test.
Trade Overview
• Structure: Bullish Continuation (D) / Downtrend Pullback (W)
• Position: Near Mean (D) / Far from Mean (W)
• Entry Trigger: Failed Breakdown (Late)
Entry Details
• Entry Price: 6.90
• Stop Price: 6.40
• Target Price: 8.46
• Expected Risk/Reward: 3.12 R
Exit Strategy
• Exit Price: Closed 75% of position into 1R and rest hit stop at breakeven.
Trade Review - NPWR
Found this stock on the screener showing a bullish continuation setup on the daily chart. On the higher timeframe downtrend, looked like the pullback had been played out. Despite it was added it to the watchlist to monitor.
Execution – Later Entry.
Trade Overview
• Structure: Bullish Continuation (D) / Bearish Pullback (W)
• Position: Near Mean (D) / Near Mean (W)
• Entry Trigger: Breakout / Range Expansion
Entry Details
• Entry Price: 9.92
• Stop Price: 8.91
• Target Price: 12.34
• Expected Risk/Reward: 2.36 R
Exit Strategy
• Exit Price: Closed 75% at 11.34 and 25% at 12.34.
Trade Review - DNA
When this stock was added to the watchlist, it displayed a bullish continuation setup on the daily timeframe. On the higher timeframe, there was also a potential for downside overextension, suggesting a possible pullback within the larger downtrend.
On the next chart, executions are shown. In anticipation of the trade, I look for a failed breakout against the trend—a failure test—where the price moves outside the lower boundary of an established consolidation. If it then closes back within the range, I sometimes enter before market close. For these trades, I often close a partial position as the price nears the upper part of the range, in case the range holds without a breakout.
Trade Overview
• Structure: Bullish Continuation (D) / Bearish Pullback (W)
• Position: Near Mean (D) / Extended from Mean (W)
• Entry Trigger: Failed Breakout (Opposite to Trend)
Entry Details
• Entry Price: 7.77
• Stop Price: 6.73
• Target Price (Range): 8.72
• Target Price (Measured Move): 11.62
Exit Strategy
• Exit Price: Closed 50% into 9.03 > Rest hit SL at 7.95.
Trade Review - KRUS
This stock was added to the watchlist based on a bullish continuation setup on the daily timeframe (noticeable upward move followed by a pullback or consolidation near the mean price).
The higher timeframe, we observed that the stock has been moving within a range, even shown a failed breakdown / failure test to the downside. Its now inside range, without interference.
Trade was entered as a breakout.
Trade Overview
• Structure: Bullish Continuation (D) / Range (W)
• Position: Near Mean (D) / Inside Range (W)
• Entry Trigger: Breakout
Entry Details
• Entry Price: 86.45
• Stop Price: 80.50
• Target Price: 103.10
• Expected Risk/Reward: 2.8 R
Exit Strategy
• Exit: Closed 50% at 1R, rest at or near target price.
Trade Review - AIRS
Daily chat showed a bullish continuation structure and weekly chart within a larger range (price inside of structure).
Above chart shows execution, showed up on active scan instantly but decided to enter with some reservation.
Trade Overview
• Structure: Bullish Continuation (D) / Range (W)
• Position: Near Mean (D) / Inside Range (W)
• Entry Trigger: Range Expansion / Breakout
Entry Details
• Entry Price: 6.42
• Stop Price: 5.54
• Target Price: 7.56
• Expected Risk/Reward: 1.3 R
Exit Strategy
• Exit Price: Closed all into 7.56 (Measured Move)
Performance Summary
• Result: 1.3R from a 17.75% move
Watchlist - Nov 10, 2024This is my weekend watchlist selected from the passive screener, primarily for monitoring potential setups. I didn't find many proper opportunities this time— few setups and most were lower quality, so mainly for observation. Most proper movers are already on the run.
List: PLCE, KYTX, DNA, NPWR, TTGT, OUST, ALGS, SNAP, EYE, APLS, LSCC, DHI, IBTA
Trade Review - IBTA
Trade Overview
• Structure: Bullish Continuation (Daily) / Bearish Pullback (Weekly)
• Position: Near Mean (D) / Extended from Mean (W)
• Entry Trigger: Range Expansion / Breakout
Entry Details
• Entry Price: 65.38
• Stop Price: 59.55
• Target Price: 76.33
• Expected Risk/Reward: 1.88 R
Exit Strategy
• Exit Price: 76.24
Performance Summary
• Result: Total 16.5% move with a 1.88 R
Drop after Election Pump with FOMCMy trading idea for next week is as follows. I will be watching the price action very closely on Monday, the day before the election. This will prepare the price for the volatility of the election. I expect the price to move to the EMA50 on the 1D time frame next week. That would be around $64k. Then there is the FOMC meeting on Thursday, which could lead to a significant rise in the price. Next week is very important. The use of leverage should be taken carefully.
Rising Euro until the end of next WEEK | FOMC & ELECTIONI could see a rising EUR/USD until the end of next week which could lead into a mean reversion on the 1D timeframe. After this run we will see the continuation of the overall downtrend again. This will only be a small retrace. Right now it also looks like we are making a local short term bottom.
25% Possible Gain on WIFWe have made a reversal down to the EMA50 in the last few days and it looks good so far if we hold it. An interesting point is the $3.2 zone, where a lot of liquidity is expected. This could lead to a price increase of up to 25%. Mark the zone on your charts. You will see how the price will soon interact with it.
MEME CYCLE TRADE GUIDEIt's very easy to do. You just need to follow how the price interacts with the EMA50 on the 4hr timeframe. This is a trend continuation strategy. Right now we are in an uptrend so the theory of price reversing to the mean can be applied. Check for scenarios where price gets closer to the EMA50 (purple cloude/line).
Retrace before BTC All Time High?I could see the price going back to the EMA 50 or EMA 200 on the 1 hour time frame. Many people could get into high leveraged long positions just before the all time high. This could cause price to reverse and make a mean reversion before the continuation of the uptrend pass the old all-time high.
EURUSD Swing longWe've had a nice long downward move on this pair and I think it's about time for a new leg upward. Start to buy this pair around here. As you can see from pervious lows there's no real rush, it tends to wallow before making a a bigger move. DCA / Grid (Mean reversion) entry approach to this trade.
Gold roll over?It looks like Gold is about to roll over and correct after a huge run to the upside. I am still bullish about the long term of gold. We might see much higher prices, but for now I think cold might cool of because many investors seek for riskier assets such as tech. Central Banks are starting to print money again and give the market money infusions. We saw what happend since china decided to start the printer again.
3 Standard Deviation Setup on Micro 10-Year Yield FuturesIntroduction
The Micro 10-Year Yield Futures contract has caught the attention of many traders recently, as its price action reached the upper 3 standard deviation of the Bollinger Band® in the daily time frame. This rare occurrence presents a potential mean reversion setup, where the price could revert back toward its historical average.
This article explores what mean reversion is, why it matters in trading, and how the 3 standard deviation Bollinger Bands® setup may indicate an opportunity to short this market. We’ll also discuss key price levels, contract specifications, and a potential trade setup for shorting Micro 10-Year Yield Futures.
What is Mean Reversion in Trading?
Mean reversion is a trading concept based on the idea that asset prices fluctuate around a central value or mean over time. When prices move too far away from this mean, they often correct or revert back toward that average. This is particularly useful in markets that experience high volatility or extreme price movements, as those extremes tend to reverse at some point.
In simple terms, mean reversion strategies involve selling (or shorting) assets when they are significantly above their historical average, with the expectation that prices will return to normal levels. Conversely, buying when prices are significantly below the mean can also be a valid strategy.
The 3 Standard Deviation Bollinger Band® Setup
Bollinger Bands® are a popular technical indicator used to measure volatility and price extremes. The bands are plotted a certain number of standard deviations away from a moving average. The further away prices move from the average, the more extreme the movement.
Reaching the upper 3 standard deviation Bollinger Band® is a rare occurrence that suggests extreme overbought conditions. Historically, when an asset reaches this level, the likelihood of a price pullback increases, as market participants may see it as an unsustainable level. In the case of Micro 10-Year Yield Futures, the recent rally has pushed prices to this rare zone, setting the scene for a potential mean reversion.
Key Price Levels and Resistance Zones
As the Micro 10-Year Yield Futures price approaches extreme levels, there are two key resistance zones which traders should be aware of: 4.174-4.021. These levels represent areas where selling pressure might intensify, pushing prices down and aiding in the mean reversion process.
Traders looking to capitalize on this potential mean reversion setup can consider initiating short positions within this resistance range. These resistance zones act as psychological and technical barriers, providing an opportunity for traders to place their entries. Additionally, these levels help to manage risk, as they define a clear area to set stop-loss orders just above the upper resistance.
Contract Specifications and Margin Requirements
Understanding the specifications of the Micro 10-Year Yield Futures contract is crucial for traders looking to execute any trade. Here are some of the key details:
Tick Size: The minimum price fluctuation is 0.001, which equates to $1 per tick.
Margin Requirements: Margin requirements vary. Currently, the initial margin for Micro Yield Futures is around $320 per contract, making it accessible to a wide range of traders. Check with your broker for specific margin amounts.
This knowledge is essential in calculating potential profit and loss in dollar terms, as well as determining the appropriate position size based on your available margin.
Trade Setup Example
Let’s now move on to a practical trade setup based on the discussed conditions.
Entry Point: Shorting Micro 10-Year Yield Futures within the resistance range between 4.174 and 4.021.
Stop Loss: A stop should be placed just above the upper resistance, say around 4.175, to protect against further price appreciation.
Target: The target for this mean reversion trade would be around the mean of 3.750, where prices are expected to revert based on historical behavior.
Reward-to-Risk Calculation:
If a short entry is made at 4.021, with a stop at 4.175 (154 basis points risk) and a target at 3.750 (271 ticks potential gain), the reward-to-risk ratio would be approximately 1.76:1. A higher entry point closer to the upper resistance at 4.174 would significantly improve the reward-to-risk ratio, but it also increases the likelihood of missing the entry if the market reverses before reaching that level.
In dollar terms, each tick (0.001) is worth $1, so the 154-tick stop loss represents a risk of $154 loss per contract, while the potential reward of 271 ticks equates to $271 worth of gains per contract.
Risk Management Considerations
Risk management is a critical aspect of any trading strategy, especially in futures trading. While the 3 standard deviation Bollinger Band® setup provides a compelling case for mean reversion, it's essential to manage risk carefully to avoid significant losses.
Stop-Loss Orders: A well-placed stop-loss is crucial to protect against unexpected market moves. In this case, placing the stop above the resistance zone (around 4.175) ensures that risk is controlled if the market continues to rally instead of reversing.
Position Sizing: Given the volatility of futures contracts, it is important to adjust position sizes according to the trader’s risk tolerance and available margin. Overleveraging can lead to large losses if the market moves against the trade.
Moving Averages Can Shift: It’s important to remember that the moving average (the mean) can change as new data comes in. While the target is currently around 3.744, this level may adjust over time, so traders need to monitor the mean as the trade progresses (which is why we have set the target to initially be slightly higher at 3.750).
Resistances as Reinforcements: The resistance zone between 4.174 and 4.021 can act as reinforcements to the mean reversion. Traders should observe price behavior at these levels to confirm rejection signals before entering the trade.
Conclusion
In conclusion, the Micro 10-Year Yield Futures contract presents a unique trading opportunity as it has reached the rare 3 standard deviation Bollinger Band® on the daily time frame. This extreme price level indicates potential overbought conditions, making it a candidate for mean reversion back to the mean at approximately 3.750.
The trade setup involves shorting within the resistance range, with a well-defined stop and target, and offers a favorable reward-to-risk ratio. However, as always, caution is advised, and traders should manage risk effectively using stop-loss orders and appropriate position sizing.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Bitcoin is holding the EMA50 on the 1D - This is bullishBitcoin is holding the $60k level pretty well. It's also the lowest region of the EMA50. We are currently in a big mean reversion in my opinion. Check out my other Bull Market Idea why a Mean reversion to the EMA50 on the 1D is 1/3 dips you will get during a bullrun.
1D CHART BITCOIN BULLRUN GUIDEThe Idea is simple. We will have 3 hits to the EMA50 on the 1D timeframe on Bitcoin. We saw this price action during the 2021 Bullrun aswell. Check the 1D chart back then. We flushed the many longs positions out of the market yesterday. It was crystal clear imo that we flush on the 1st day of uptober. We can also say that 3 is a psychological number - google it. So 3 hits to the 1D chart EMA50 seems possilbe. Time will tell. Trade SAFE!
4hr Bitcoin mean reversionIt looks like Bitcoin is doing a mean reversion on the 4 hour time frame at the moment. We dumped in the opening of the Asian session tonight. Liquidations are also seen above the current high that we could take out. Let's wait and see what the London and New York session brings and how price reacts. We should be watching closely for a break through the EMA50 on the 1 hour time frame to confirm a continuation of the trend.