Friday, December 19, 2014

Is There One E-Mini Trading Set-Up That I Trade Without Fail?

I chart all of my trades on an Excel spreadsheet, which gives me an approximate success rate on all the e-mini trading set-ups I initiate. Of course, you might counter with "Well, no two trade set-ups are exactly the same" and you would be right. So I have to classify trade set-ups into reasonably narrow classifications to extract any meaning from the data. In short, it is an inexact science but one that can give you meaningful insight to which general categories of trade set-up work the best under given situations.

Having said that, there is one trade I depend upon and arises several times a day. It is a reversion to the mean trade with the trend or when the market is neutral. I should caution that trading reversion to the mean against the trend is a 50-50 proposition best, at best. However, when the market is trending and flat you can rack up some dough with this trade.

The trading methodology for this trade is fairly simple; you basically set up a channel around a median moving average. For example, I use a 225 period simple moving average and chart a 2 standard deviation line and 3 standard deviation off the moving average. For clarification purposes, I fill in the channel between 2 and 3 standard deviations in yellow opaque color. The color doesn't really matter, I happen to like yellow.

On most occasions, the market will venture beyond the 2 standard deviation line and into the channel. When the price is in the channel I wait for the order flow to give me a clear indication of a reversal of movement. I do not wait a whole bar to make my trade because you end up leaving a good number of ticks on the table; I just want to see an increase of trades hitting the bid or ask side of the order flow chart. When that turn occurs, I initiate a trade back toward the simple moving average.

For me this trade has an 86% winning average. Again, remember that I referenced this trade earlier as being a trade that you should take with the trend or in a bracketed market. The market is loath to venture 3 standard deviations from that centerline simple moving average. I prefer to use a channel of this nature in my e-mini trading as oppose to Bollinger bands or a Keltner channel because I get a better smoothing effect with both the standard deviation bands and the Simple Moving Average.

In summary, I have described a high probability trade that is so simple that any beginning trader can use it to bolster their e-mini trading arsenal of set-ups. It's been a good one for me, as I have well over 1,000 trades recorded using this methodology.

Would you like to start earning 300% every week? So would I... yet you see this type of hype on many sites these days. I don't promise astronomical returns, but 25 years of Wall Street trading experience has helped churn out solid e-mini traders for 5 years. Come see me trade. Real trading doesn't lie. Click here for a free visit to my trading room and see for yourself.

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