Learn how to find low risk, high probability trades in the Futures. Video Shows 11+ Points Profit in S&P
There are Three Main Ways for Successfully Trading the Futures
Method 1) Trend Following -
Trading With the Trend, Anticipating Trend Direction and
Using Retracements / Entering on Pullbacks.
Method 1) Trend Following - How to Know in Advance Which Way the Market is MOST Likely to Trade
Breakthrough Concept - Use the Stocks that Makeup the Futures/Sectors to PREDICT Market Direction in ADVANCE!
One of the most useful tools in TopGun Software for Futures and Stock Traders is the Balance Point Sectors group of tools. We have this tool for all the major Indexes (S&P, NASDAQ, Dow, and Russell) as well as the major Sectors (Semiconductors, Technology, Biotechnology, Drugs, Banks, Retail, Oil, Housing).
Here's how it works:
Every stock has a higher probability (of various degree) of going up or down. Without revealing our secret formula, and it is very complex due to analyzing every trade in every stock throughout the day, we show you if each sector and index is more likely to go up or down. We calculate each indexes and sectors balance level and our tool shows how far they are above or below balance.
Easy to interpret, these set of tools will let you know when to buy, when to sell, and just as importantly when the market is likely to be choppy and directionless. Knowing when not to trade or to trade more cautiously gives you an incredible edge over other traders who trade the same way day in and day out. And as you will see, these tools are one of the few leading indicators in existence and frequently predict futures movements 3 to 15 minutes before they occur!
Here's How to Immediately Profit from Knowing ahead of time which way the market will go.
Rule 1) Look to BUY
when 3 out of the 5 sectors are Above their Balance
In the example below you can see our Balance Point Semi, Tech, Drugs, Banks, and Retail tools. All Sectors have gone Below Balance immediately into the day and about 15 minutes BEFORE the market has a tremendous sell off. Also note that they remain below balance all day long, keeping you short and catching you an amazing 20 S&P points ($1,000 Profit per contract traded).
Seeing real time buying and selling in the stocks that makeup the futures is another leading indicator we give you that forecasts 80%+ of the time which way the market will move.
Buy / Sell Pressure S&P This unbelievable tool shows how much BUYING and SELLING is going on in all the stocks that makeup the S&Ps! We have this tool for all the sectors and other indexes as well. Over the two days shown in this example it is CRYSTAL clear that when heavy buying comes in the market LATER goes up. When there is heavy selling the market falls. Simple. The way trading should be.
Example 2: In the below example you can see the market gapped up and the Banks, Drug, and Retail sectors are showing some initial weakness while the Semiconductors and Tech sectors had mild strength. Twenty minutes into the day the Semiconductors and Tech went negative and ALL 5 sectors were weak predicting that the market will fall. Within minutes the market begins to drift lower. Some traders scalp and some try to pick up multiple point moves but it is clear either way that shorting was the easiest way to trade. You can short when you see these signals or if you scalp then sell every rally as long as our Balance Point Sector tool confirms it.
Banks and Retail show as the weakest sectors. If a sector has showed strength early in the day you will often see strength in that sector later as well. During the market's drift down you will notice that the Semiconductors went positive again and the Technology sector was right around its balance point level. These two sectors often lead the market and if they are not weak it is unlikely that the market will make a big move down. This tool showed you that while the edge was in shorting, you shouldn't expect to find a big downtrend and to take small profits.
At 11:30 am EST the Drug sector went positive for the first time of the day, 15 minutes later the Semiconductors went positive and 10 minutes later Technology followed. At this point we have 4 out of the 5 sectors above their balance point and a large uptrend developed. Remember we buy when 3 out of the 5 sectors are Green and short when 3 out of the 5 are Red. Whenever you see 4 or more sectors Green you can expect to find a big up move. In this example these tools predicted a nice 9 point S&P move. That's $450 per S&P contract traded.
As the market made a higher high after 1:30 pm EST note that the Semiconductor, Tech, and Bank Sectors were getting weaker. At 2pm EST the Bank sector went negative again and 20 minutes later the Tech sector followed. Additionally, the Semiconductors were getting close to turning negative. This gave you an EARLY Warning that the market was likely to reverse. At this point you should look to enter short.
Other Indicators: The yellow line is the balance point tool for the S&P futures. It is where the average trader has a position and is an amazing support/resistance tool. The red and green signals show when the Trend is likely to reverse. When you see these the market usually either consolidates sideways or reverses.
Example 3: In the below example the market gaps down. On the first bar of the day you can see that the Semis and Retail are below balance but Tech, Banks and Drugs are positive. This is the first sign that the market is more likely to go UP than down. On the second bar of the day the Banks just dip under their balance point while the Retail sector went positive. There is still 3 out of 5 sectors above balance and the edge is still in going long. The market breaks up on the next bar, our tool having predicted this move 10 minutes before it occurred. Semiconductors confirm the breakout and jump positive. You can now see 4 out of 5 sectors are above balance and a nice 6+ S&P trend develops. This is a $300 profit per contract traded in only about 40 minutes.
Usually after the market makes a move it will return to the yellow balance point line and find support. That is exactly what has happened here. Usually the first time the market does this you can buy and it will return higher. Because the market gaped down with initial weakness a trader should be cautious and be aware that the odds of another big up move are lower than if the market started off neutral or strong. This is all common sense but I want to point this out to beginning traders as it can take months or years to learn how markets 'normally' trade.
When most traders expect the market to go up and it doesn't, it will almost always go the opposite way as traders who are wrong all exit at the same time. That's exactly what happened. Notice the Banks, Retail and Semiconductors turn negative, a low risk short would be on the rally back up to the yellow balance point line at 1284.00 at 11:20am EST. Four out of the 5 sectors are now negative predicting a big down trend which is exactly what happened.
Note as the market was going down, the Semiconductors flipped positive and negative a few times and was hovering near its balanced state. When the Semiconductor and Tech sectors are not too weak the market is unlikely to continue to trend lower. In this case it bounced right near the Pivot Level S2. We teach these techniques in our training class which is free to those who purchase rather than lease our software. At the lows the Semiconductors became positive and the Drug sector was less weak than it was earlier. This is showing you that two major sectors are not getting weaker as you would expect if the market was to continue down. Aggressive traders could look to buy this support area with a profit target at the balance point line (yellow) or the next Pivot area (red line). Less aggressive traders should be aware that the downtrend is likely to end and either tighten their stops or exit with nice profits here.
As the market did go back up most of the sectors reversed and went positive but barely so. The pivots make amazing support and resistance tools and many traders use them to pinpoint low risk buy and sell zones. We show a Trend Reversal sell signal just 1 bar before the S&P's hit the Pivot S1 level. All sectors except Semis go negative here which is a clear sign that the market is likely to go back down which it does.
Many experienced traders use swing levels to predict future moves. This is accomplished by looking to see if the market makes higher highs or lower lows. The market made a big move up in the afternoon and then sold off but didn't come close to the days low. This was a sign that the market was likely to go back up again and 4 out of 5 sectors turned positive right giving you confidence that the market is likely to continue higher.
Note: This indicator actually predicts price movement on most days. On some days, as in this example, the sectors change direction as the market is making its move. On these days this tool can give you confidence to hold your positions longer and lets you see if sectors are getting stronger or weaker than earlier in the day. Notice that the day ends with all sectors above their balance point level and the market gaps up the next day. This is no coincidence and it is another way you can use this tool to predict what is most likely to happen.
Other TopGun Tools to Predict Market Direction
Real Time S&P, NASDAQ, Dow, and Russell Tick
Many traders use the New York Stock Exchange Tick
Balance Point Line (Yellow Line) - Shows Average Traders Position Location
Rule 1) Buy
When Above Balance
Chandelier Trailing Stop - Uses each Instruments Volatility to Capture Majority of Trend
Rule 1) Buy When Above Green Chandelier Trailing Stop
The Pivot Points have long been used by Futures Floor Traders. The pivot (white line) is the average price of the previous day. The two red and green lines are support and resistance levels and make wonderful entry and exit levels as the market is often magnetically pulled directly to them.
Rule 1) Buy When Above the Pivot
Method 2) Range Trading - Learn how to trade sideways choppy days.
Most index futures rarely trend more than 30-50% of the time. The rest of the time the market consolidates and/or trades sideways. Sometimes there is a slight up or down bias but on choppy days nothing works better than our Range Projection indicator. Using statistics to let you visually see how far the market normally moves, this amazing tool gives you super low risk, high probability buy and sell areas. You simply wait for the market to sell down to the statistical low and buy or rally up to the statistical high and sell!
Example: Hourly Statistical Range - In the below example you can see the S&P futures on a 5 minute chart with our Range Projection tool. In this example we are averaging 20 days of data to show how far the market normally moves each hour. This is another one of our leading indicators and you can see how the market comes down to the statistical hourly low and goes up. As it approaches the statistical average high it sells off. You can set how many days to average and what time frame you want to average. For example you could decide to average 10 days of data to see how far the market normally moves each 15 minute bar and plot that on a 1 or 3 minute chart. You are using statistics as a guide post on how to trade. It lets you see how far the market normally trades at this time of the day and if it can't hit the statistical high or low you know volatility is lower today than normal
Example: Hourly Statistical Range - In the below example you can see how frequently the S&P futures bounce off the hourly statistical high and low. If you simply bought and sold each of these levels with a 1 point profit and 1 point stop loss you would have been 100% successful with 8 S&P points profit. That's $400 trading just one contract. Most traders have serious troubles trading when the market is range bound but you will soon learn how you can carve these kinds of markets up!
Example: Thirty Minute Statistical Range - In the below example you can see how far the S&P futures normally trade every 30 minutes. I've changed this example to show the power and flexibility of this trading tool.
There's two ways to use this trading indicator
Use 1) Use this tool to find low risk buy and sell
areas on choppy days and to perfectly time pullbacks on trending days.
Look at this nice uptrend below starting around noon. During the first 4 thirty minute boxes the market hits the statistical half hour high. But during the next thirty minute period the market can't make it up to the statistical high. This is an EARLY WARNING that the market is losing steam. Notice how the market then falls about 4 points!
Example: Fifteen Minute Statistical Range - In the below example you will see a 1 minute chart showing the 15 minute range statistical high and low. I am always amazed at how well this tool works on all time frames. Notice during the first 15 minutes of the day the market comes very close to the statistical 15 min high but nowhere close to the 15 min low. This gives you a clue that the market is more likely to break UP than down. It does and then comes right back down to the Balance Point tool and statistical 15 min low. Excellent Buy area at 9:55 am EST The market then rallies up to the next 15 minute statistical high and falls back. On the next 15 min bar the market breaks above the statistical high. It then comes down and bounces again off of the balance point line and the statistical low. Notice that the market finds support but does NOT go up and touch the statistical high. This gives you another EARLY WARNING that the market has lost strength! The market then breaks down as you would expect and hits the next 15 minute statistical low and finds support. It rallys back to the balance point line which is a very good short and sells off.
Notice on the example below we use the statistical high and low to determine strength or weakness AND to find low risk buy and sell areas.
Example: Daily Statistical Range - In the next example we use our statistical tool to show how far the S&P futures move for the day. Notice the market bounces at its Daily Statistical low and on the next day finds resistance at the statistical high. Two trades worth over 6 S&P points. Just another tool to make your trading easier using the power of statistics to find low risk, high probability entries. Also note these make excellent profit targets as well.
Method 3) Trend Reversal - The Trend is Your Friend - UNTIL It Reverses!
We Show You How To Use Volatility, Major Areas of Support & Resistance, and Trend Reversal Tool to Anticipate Reversals
TopGun Software has three other tools that will help you enter with the lowest degree of risk against the current trend.
Tool 1) Range Projection - Using statistics you can see the most likely reversal areas. You can also see when market forces are getting stronger or weaker and use that knowledge to better time your trades.
Tool 2) Probability Bands - As you can see below this amazing tool shows you the 65%, 80%, 88%, and 95% Probable High and Low. It is one of the best tools for perfectly timing your counter trend trade.
Tool 3) Pivot Points - This tool is heavily used by lots of traders and we include it in TopGun Software because it really works. Many traders enter counter trend trades at these Pivot Point Levels. They are especially useful when combined with our Trend Reversal tool and Range Projection Tool.
Other Tools That Will Greatly Improve Your Trading Results
1) Volume Profile Charts - Advanced Charting that shows you the Open / High / Low / Close but more importantly where all the trading activity takes place. This shows you REAL support and resistance areas to buy and short and exit trades. Why do so many traders lose money trading? Human emotion! Here's what often happens. Many traders enter positions in a certain direction, they are wrong and it goes against them. They sit and wait and sweat as they are losing money, sometimes a LOT of money. Many exit with losses. Others hold on tight and hope the market reverses. When it often does and comes back to the area they placed their trades they are so relieved to get out with a small loss or breakeven they almost always exit. This causes the market to stall at this level at the least and usually reverse. These areas are often the lowest risk and highest probability trades! Without Volume Profile charts you are really trading blind.
Example: In the chart below you can clearly see not only the open, high, low and close of each bar but where all the trading activity took place. This works on all intraday time frames, Daily, and Weekly. In the example below you can see 7 weeks of S&P Futures trading activity. There are two things you may quickly notice on this chart. The previous week had the majority of the trading volume at the week's low. It is no coincidence that the S&P's found incredible resistance at this level and it stopped the market from going higher. All the traders who bought in that area quickly bailed when the market went down causing a huge selloff. Also notice that the low of the week was where the majority of the trading volume took place three weeks prior. You will see this happens all the time and on all time frame volume profile charts.
Example: In the below example you can see the 60 min S&P volume profile chart. We have an option that lets you color code the volume of the world's biggest traders differently. In the chart below the 100+ lot traders are colored red and every other size white.
Using the Pivot Points and looking to short below the pivot you can see the market falls and finds support at the S2 Pivot level. This tool gives you the confidence to buy the low support level due to all the trading volume that occurred here. On the first hour of the day most of the trading volume occurred around 1285.00. This level the first time the market returns to it will be major resistance. You could short this area the first and sometimes second time it returns to that level for a high probability trade. Why? Everyone who bought that area earlier and stayed in the trade will tend to exit at breakeven when the market returns.
2) Buy/Sell Pressure - Wouldn't it be nice to see in real time how much buying and selling is going on in the stocks you trade?
TopGun Software's Buy/Sell pressure tool lets you see just that. Real time buying and selling and the ability to watch what the world's largest traders are doing. You can set this tool to show Institutional buying and selling.
Example: In the example below you can see both buying and selling on our Buy/Sell Pressure tool. In this example I am showing every size trade but you can easily set this to watch any size trades you want. Many of our traders like to watch what the 100+ lot traders are doing. They truly do MOVE the market and its very unwise to trade against them as you will lose almost every time you do. In this chart you can see heavy buying come in and the market explodes up. Then there's some selling and the market starts to drift down. Increased selling comes in and the market collapses. The way we suggest using this tool is to analyze how much buying is happening now compared to previous bars. Is there a LOT more buying now than in the recent past? If so, the market will usually go up. On the right of the chart you can see Short Covering, this is a lot of traders exiting their profitable short positions. There is obviously some buying at these levels too however since the market couldn't rally up over the previous swing high you can be pretty confidant that its just short covering and not buying. You can see immediately after that the amount of buying drops in half and then selling resumes.
Example: In the example below you can what the world's largest traders are doing. This chart shows the 100+ lot traders and their buying and selling. You can see they were selling into the close and in the morning when the market gapped down. They built up a large short position expecting the market to fall which it later did. They then heavily covered their shorts by buying at the lows causing the market to find support. As mentioned before, if you see the biggest traders selling it is very unwise to buy. In this case you would have lost a lot. Most trading platforms do not show you this CRITICAL information and you are really trading blind without it. It's analogous to surfing not knowing that a hurricane is about to hit in an hour. Many times the large traders are doing nothing, just waiting to get a better feel about which way the market will go, and when they decide which way they want to push the market its exactly like a hurricane hitting shore.
3) Multi Size Time & Sales Window- Watching trades in real time is a secret of the world's best traders. "Reading The Tape" is what this is often called. Our software gives you the best Time and Sales window you will ever find. We let you watch 3 Different Size Traders buying and selling, and show you the Ratio of Buying vs. Selling. This tool will give you CONFIDENCE!We color code Buying Green and Selling Red.
With this tool you can clearly see:
How frequently trades are occurring. This is often referred to Trade Rate. This lets you see if there is heavy buying activity now, heavy selling, or mixed trade.
How much Buying vs Selling is occurring in each trade size. In the example below you can see the biggest traders on the right have bought 70% more than they've sold.
Ability to Reset - What is so nice about this tool is you can reset the count whenever you wish. Most traders reset this when they enter a position. It lets them clearly see if the "Market Forces" are going their way or not. This can be used to get out of bad trades earlier and reduce your loss. Also it gives you confidence to hold winning trades longer and make more money.
Example - This is our Time & Sales Window for the S&P Futures. It was reset around 10:40 where you can see on the chart. On the Time and Sales window, the left window shows trades from 1 lot to 25, the middle shows trade sizes of 26 to 99, and the right shows the 100+ lot traders buying and selling. This tool is incredibly useful in so many ways. For one it shows you how frequently trades are occurring. This is called Trade Rate and basically shows the interest in the market right now. In dead times the market has slow trade, when trends are in place and there is volatility in the market the Trade Rate goes through the roof. You'll see trades flying by at lightening speed. The buys are colored green and sells red. It really gives you a feel for the market better than any other tool in existence. On the top we sum up all the buying and selling. In this example the smallest traders bought 13,950 contracts and sold 12,210. Just about even buying and selling. The ratio 1.1 shows there was 10% more buying than selling. The medium sized traders bought 17,930 contracts and sold 14,750 with about 20% more buying than selling. The BIG LOT traders bought 28,810 contracts and sold only 16,960. It is in this group that this tool becomes VERY predictive and also gives you confidence to both take trades and stay in winning trades longer. In this case the largest traders were buying 70% more than selling and the chart clearly shows a nice up trend. In this example we took two screen shots and combined them in the picture you see below. Because of the second or two delay the price chart is a tick off of the time and sales window.
4) Probability Bands - 65, 80, 88 and 95% Probable High & Low
This amazing tool uses the options on the futures to derive Implied Volatility. Nobody understands how far each trading instrument is supposed to move each day better than the Options experts. We use their implied volatility to predict the 65, 80, 88 and 95% Probable High and Low. And it WORKS!
As you can see on the example below the day 1 low was the 65% Probability Band. The next day doesn't hit either the probable high or low which happens on low range days. The following day was a Holiday and had short trade. The following day the low was the 80% Probability Band Low. Notice the next day the market gaps down and the 65% Probability Band Low causes a rally up. Then it falls to the 80% Probability Band Low and finds some support and then its the 88% Probability Band Low and bounces again. On the last day the market gaps up and rallies up to the 65% Probability Band high. There were 7 LOW RISK trades at these levels and all of them worked. Just another LEADING indicator you can use to time your trades and exit with profits!