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.
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