Early this morning around 2AM I placed a short trade on the /MES which is the Micro SP mini future contract! It earns $1.25 per tick, which is relatively small compared to it’s big bro the /ES which will earn $12.50 per tick. It is a good market to trade for new futures traders because the risk is so small. To compare, If you set a stop on the /MES for a whole point, you will lose $5, where as, if you lose a point on the /ES mini it would be a loss of $50 bucks.
Anyway, the trade worked out really well but required patience to finish out. This trade was made in the “off hours” of the market, so there was very little volume. My very first concern when thinking of placing a trade would be the Day chart, and then reviewing multiple time frames thereafter. I basically am looking for points of interest whether they be to the upside or the downside. I then check any news or any possible news to be released within the timeframe I want to trade in. This is to ensure I do not get caught in a reversal based off of any new news.
The Day chart was looking very bullish with a huge multi day run to the upside! With this particular trading session, the price action had pulled back off of the previous market high and settled out. In addition to that it was looking a bit weak so I waited for an opportunity to go in short.
In the chart above we can see just how strong this market has been recently. I took advantage of that small pullback right at the top of this trend. For future trading I will be monitoring price points as it relates to the market high for future trades. The image below shows a better overview of this trade with my personal trade notes, and entry and exit of the trade.