Monday 9/13/2010

Today's Market Highlights:  
Exception 1 - Today is the day after an inside up day following a down day (High less then open of prior day and low greater than close of prior day.)  We have had 23 such days in the past 13 years.  56% ended up higher by the end of the following day. 
Exception 2 - Today is the first Monday after contract change.   There have been 52 such days in the past 13 years.  62% have ended up higher by the end of the day.  If you bought at the open and sold at the close on all days, your profit factor or win/loss ratio would have been over 2.
Exception 3 -  Today is the day following a most unusual scenario of five consecutive unfilled gaps.  Chance of this happening is about 0.25%.  There is not enough data to come up with an analysis.  I will  work on effect of unfilled gaps on  next day price action.  This may help to understand these unusual sequences better.
IMPORTANT NOTICE: There is a risk of loss in futures, forex and options trading. There is risk of loss trading futures, forex and options online. Please trade with capital you can afford to lose. Past performance is not necessarily indicative of future results. All  signals are result  of  mathematical and human analysis of the information obtained from sources, which are believed to be reliable, but accuracy and thoroughness cannot be guaranteed. Readers are solely responsible for how they use the information and for their results. I do not guarantee the accuracy or completeness of the information or any analysis based thereon.

You can trade ES in a real or free demo account with GLOBAL FUTURES .

Exit your positions before any scheduled major news because such news take command of the market and cancel the effect of  any probability calculations based on yesterdays price actions.  All zones are exclusive.  Always check for latest update before opening.
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This forecast is based on analysis of data tables prepared by computer simulation and modeling every night based on more than 12 year of data.










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3 comments:

  1. AnonymousSeptember 12, 2010 at 5:07 PM

    i dont understand risk 5points for a possible .50+ pt gain???

    ReplyDelete
  2. Ali MohseniSeptember 12, 2010 at 8:34 PM

    Thanks for the comment. My study shows that Monday if the market opens between high and close of Friday, there is a high probability that the gap closes. In this particular case theoretically the probability of closing is about 96%. That means for every 24 times, the gap fills we get stopped once. 24 * $25 = $600 while the one stop is $250. expected win is $600-$250 = $350/25 = $14. So theoretically this is a profitable trade. But personally I do not trade such a small gap because commission and the risk of slippage for me takes away a good chunk of profit. So I decided to share all viable trades and let people decide if they want to take it or not. There are people who are better equipped and able to minimize their slippage. There are some very profitable strategies that are based on large number of small wins and small number or large losses.
    In real life we take huge daily risks for small gains. For example I just drove to Starbucks to get a cup of coffee(small gain) but every time we drive we risk our lives. The fact that the probability of getting killed in an accident is so small and the probability of getting the coffee is so high makes this a good trade.
    On the other extreme, buying a lotto ticket to win $100,000,000 at the risk of losing $1.00 is a bad trade because the expected win is only about $.40 which is below our break even of $1.00.

    ReplyDelete
  3. Ali MohseniSeptember 13, 2010 at 7:08 AM

    My previous comment refers to this Monday (9/13/2010) not any Monday.

    ReplyDelete

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