After running up the previous few days, the market pulled back a bit on Wednesday. This made for some interesting decisions for overnight traders. Below is a look at the Odds Sheet as it stood near the close.
SPY, QQQ, and NQ all finished with their Averages highlighted in green. This meant that they met the minimum criteria for a possible long trade. ES is what I trade, and it JUST MISSED. An Average Profit Factor of > 1.30 is required and it came in at 1.27. But it also missed by 1 point and less than 30 seconds. Price was moving fairly quickly in the 15 minutes between the 4pm NYSE close and the 4:15pm futures close. If ES closed at 1924.75 or lower its Price Action Odds would have come in higher, and it’s Averages would have met the minimum long criteria. I noted this in the trade discussion room and on the notes page. The EdgeFinder came up blank, so there was no confirming evidence there to push me over the edge. We looked at a number of different things in the Trade Discussion Room, but did not identify anything suggesting a strong edge in either direction. I determined that if ES closed less than or equal to 1924.75 then I would look to go long overnight. It was trading there with less than 30 seconds to go, but a late surge took it above my range. Since my minimum criteria was not met, I sat out. There were some NQ traders in the room that elected to take a long trade in NQ overnight.
As it turned out, it was unfortunate that my entry was missed. ES put in a strong move overnight and opened this morning with a gap up of 15.50 points. NQ traders would have really made out well as NQ gapped up 31.75 points this morning. Near misses like this can be frustrating and disappointing to miss out on. But near misses happen in both directions. Sometimes they work out, and sometimes they don’t. For me, it is simply a matter of making sure I take trades when the edges are strong, and avoid trades when edges are dull.
Good luck if you trade tonight, and rest easy!
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