SMB Futures TOTD – 5/15/18

Merritt BlackFutures, Reading the Tape, Technical Plays

It’s time for the Futures Desk Trade of The Day! Here’s a link to yesterday’s trade as well.

Today is an interesting one, and it embodies something we hold dear to our hearts. That is, “Not all wins are wins, and not all losses are losses.” In short, the simple outcome does not determine the success or failure of a trade.

In this trade our trader was long the ES from 2715.00 and looking for a bounce. The idea was that this move was just an overall stop run, and the buyers would push us back above the key level of 2716/2717 resulting in many trapped shorts and a big profit for him.

This was not the case. In fact buyers were very weak as they pushed back into the key level. See the picture below:

ES Futures. 5min chart.

The trader did not get the trade they were looking for. They stayed mentally flexible enough to realize this is NOT how it’s supposed to look and feel on the tape. Most importantly, they were self-aware enough to understand the conflict between what they wanted to happen, and what was happening. So they scratched out of the trade into the key level.

A +2 point winner… far from the big winner the trader had in mind, but this is the kind of decision-making professionals make every day to not lose money. Perhaps some of you would have gotten frustrated at the market for moving the way it was and not conforming to your hopes and dreams? Think about it.

How could this trader improve in this session? Look no further than the label “B” on the chart above. That is a beautiful place to actually get short after the “stop run” thesis from before failed to play out. Sellers are now in control, and that’s a great area to lean on for continued downside. The trader needs to replay this sequence and see that opportunity going forward.


Trade well,


*No Relevant Positions