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EASY EMINI TRADE SETUP

By Trisha Ogilvie
Revised 10/2012
The key to successful trading is to have a trading plan and a set up that gives you the
confidence to take the trades as they come along. Set ups and indicators can do just
that; give you an indication of what the market might do and then you take an entry that
has a good possibility of making you profitable. I am making no guarantees but if you can
be patient and wait for the set ups described in the e-book you will be profitable more
often than not. There will always be losses but you use a stop knowing what your
maximum loss is going to be before you ever take the trade and you let your winners run.
You have to get passed the fact that you can not always be right, you wont be. If you
think differently you will be very disappointed in this business.
www.easyeminitrade.com
trisha@easyeminitrade.com
Disclaimer
No part of this publication may be reproduced without written permission by the author. The
purchaser will not disclose any of the trade set-ups or any other confidential information
obtained from the trading philosophy and settings obtained from this publication. This
publication is designed to provide accurate and authoritative information in regard to the
subject matter covered. It is said with the understanding that the publisher is not engaged in
rendering professional service. If professional advice or other expert assistance is required, the
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services of a competent professional should be sought. No representation is being made that
any account will or is likely to achieve profits or losses similar to those charts that are shown.
There is a risk of loss in all forms of trading. Futures and options trading have large potential
rewards, but also large potential risk. You must be aware of the risks and be willing to accept
them in order to invest in the futures and option markets. Dont trade with money you cant
afford to lose. This is neither a solicitation nor an offer to buy/sell futures or options. The book
you will be buying is published for educational purposes only. It is up to you to use the
knowledge. Consult a licensed professional about your individual trading. The past
performance of any trading system or methodology is not necessarily indicative of future
results.
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Table of Contents
Introduction----------------------------------------------------------------------------------------------------page 4
3 Amigos-------------------------------------------------------------------------------------------------page 6
Kaboom-setting up your charts---------------------------------------------------------------------page 9
Kaboom entry description--------------------------------------------------------------------------page 13
Kaboom Pull Back entry----------------------------------------------------------------------------page 20
Support and Resistance ----------------------------------------------------------------------------page 21
Staying out of chop----------------------------------------------------------------------------------page 21
Keltner Channel Set Ups --------------------------------------------------------------------------page 22
Keltner Chanel Continuation Set Up------------------------------------------------------------page 22
Keltner Channel Pull Backs------------------------------------------------------------------------page 25
Keltner Channel Range Trades-------------------------------------------------------------------page 26
More on Support and Resistance-----------------------------------------------------------------page 29
Kaboom Checklist-----------------------------------------------------------------------------------page 30
Sample Trading Plan--------------------------------------------------------------------------------page 31
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Introduction-Emini (or any market) easy trade setup
these set ups work when the market is up, down or sideways
Below are a few different trade setups that I use to trade the ES, NQ, TF, YM and Euro
Future but they can be used on any market or time, tick or range chart. I recommend if
you are just starting out to trade the NQ.
I am sure you will all agree that we are all looking for the Holy Grail for the perfect trade
set up but there is no such thing, all we can do is find the best set ups for different
market environments that work for us and our personality and our style of trading. I
hate to admit it but over the years I have spent thousands and have purchased and tried
and subscribed to more services and programs and education than I care to mention. I
know I am not alone. We are given empty promises and the people and companies
selling their programs are just in it to make money all while trying to convince us that
they have our best interest at heart and all they want to do is help us. What I am about
to share with you are simple setups that work more often than not when you follow the
trade setup and rules. The indicators are standard with most platforms which mean the
indicators are available to you for free in your current charting software. I suggest
getting used to these or any set ups you ever use in a simulator account or paper
trading them until you get the feel for them. They are simple but the key is going to be
to follow the rules. This can be difficult when you feel like you are missing the move
and everyone is making money but you. I promise you are not missing anything; a new
trade will come along. If you can do this you will find you are not over trading and you
are taking trades that have higher odds of being profitable!
With the eBook purchase I would also like to extend an invitation to you so you may try
a free 3 day trial to the education /chat room once your charts are set up. This will assist
you in understanding the set ups and allow you to ask questions real time, just send me
an email trisha@easyeminitrade.com . In your welcome email you received with the
purchase you will have the registration link for the trial as well as a link to access the
Webinar Library of all the full length recordings I have done of past webinars, these will
go hand in hand with what you will see in this ebook. Also please view the videos on
YouTube, which will also be a help http://www.youtube.com/user/easyeminitrade
Using the down load links you will click on them and save, if you have trouble right clicking on them and
choosing save as then just click on each one to open and then save. They are files for Trade Station,
Sierra, Ninja and Think or Swim so you will already have the charts loaded with indicators and ready to
go for the Kaboom Set up. There are workspaces also there for the Keltner Channel continuation set
ups too if you are interested. For the 3 Amigos set up you will need to set up your own charts except for
Sierra and Ninja, they are on the download list.
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The pdf download will be the eBook. You can just delete the files that you dont need or save in case
you need them later. PLEASE MAKE SURE YOU ARE TRADING THE CORRECT CONTRACT
MONTH, YOU WILL HAVE TO CHANGE THIS ON THE WORKSPACES YOU RECEIVE.
I would suggest first checking out the 3 Amigos set up and then set up your charts for
the Kaboom set up (this name started as a joke but I kind of like it). I am including the
set ups for the Keltner Channels which work really well but the Kaboom and 3 Amigos
will allow for more trade entries and also allow you to get into the trade much sooner.
The 3 Amigos and the Kaboom are currently my set ups of choice and they are simple
to learn. The Keltner Channel range trade set up will be a set up that you will want to
incorporate into your trading plan to use during quiet market times when the market is
trading sideways with out very much direction. The set ups described here can be used
to trade most markets, time frames, tick frames or range frames.
I start out everyday by looking at the daily chart and the 60 minute chart to pick out
areas of support and resistance so I know where price is likely to stall, bounce or pull
back.
For the 3 Amigos set up you will find that you dont really have to worry much about
support and resistance and other areas we typically do watch out for with the Kaboom.
I always like to have a broader view of price action. I like to set up my work space for
the ES using a 5100 tick chart for this purpose and on the NQ I like a 3000 tick chart or a
1597 tick chart (it will depend on what you are going to trade as your entry chart, I will
go into more of this in a moment) these charts will also determine whether I will be
looking for a long set up or a short set up when taking a Kaboom entry. I will describe
this later when I explain my rules for entry. If you do not have access to tick charts you
can use a 10 or 15 minute chart. It is very difficult to have a clear idea of what is going
on when you just look at your entry chart which is a lower time frame, tick frame or
range frame. I prefer a tick chart for this because it plots a little smoother than a time
based chart. Each bar on a tick chart represents a specific number of trades and then
the next bar starts. For example when using a 3000 tick chart each bar represents 3000
trades. FYI: I am not a fan of the ES, I LOVE the NQ and TF and just about anything else
other than the ES. The ES can tend to get stuck in areas of support and resistance
whereas we can usually get much more movement on the NQ.
I will go through setting up each chart that you will use for the Kaboom and then I will
go over the entry rules for the set ups. I will use the NQ and ES for the purpose of the
explanations here but remember you can adapt these to whatever it is you like to trade. I
am first going to give you the info on the 3 Amigos.
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3 Amigos Set Up (3 ADX)
Definition of 'Average Directional Index - ADX' (as described at Investopedia)
An indicator used in technical analysis as an objective value for the strength of trend. ADX is non-directional so it
will quantify a trend's strength regardless of whether it is up or down. ADX is usually plotted in a chart window
along with two lines known as the DMI (Directional Movement Indicators). ADX is derived from the relationship
of the DMI lines.
Read more: http://www.investopedia.com/terms/a/adx.asp#ixzz1jXoqmv80
Three Amigos Chart Setup- Set up a chart or charts that show when the 1min, 3min & 5min ADX' s are all rising
intrabar. (see below for more detail)
1. Setup 3 charts with an ADX indicator: On chart a 1min chart ADX=5 (if you have 2 places that need an input
make them both 5), On a 3 min chart ADX =3(if you have 2 places that need an input make them both 3) & on a
5min chart ADX =3 (if you have 2 places that need an input make them both 3)
If your platform allows you to color the ADX based on the slope, color the slope of the ADX, green for up and red for down
(or whatever you choose, it just makes it much easier to see when it is sloping)
OR If your platform allows you to overlay studies you can set up 1 chart with the 3 ADX's in the same panel (add
2 data series to a 1 min chart). Here is a link on how to do that in Sierra, you will notice that I have made the
choice to color the background for each of these regions which as made it very easy to see, you may not have
this option and will just use a line or whatever you find easiest to see. http://youtu.be/CM_ISLp-3yI
Three Amigos Trade Entry:
Entry chart: I am using a 4tick (1 point) range chart for my entries on the NQ, a 6tick range for the TF
(Russell), I would recommend a 2tick (.50 point) or 4tick (1point) range on the ES. I am still working out the
details on the 6e and the YM.
1. You will take the entry from your entry chart in the direction that price is currently moving after you
wait for all 3 ADX's to turn red (sloping lower) and prepare to enter as all ADX's turn green (sloping
higher), you do not have to wait for the price bars on your ADX charts to close, as soon as they turn
green (slope higher) you will place your buy or sell stop .25 above or below the bar that is forming on
your entry chart (see the next step). There is no particular order that you need to wait for the 1min,
3min, 5min ADXs to all start sloping higher, just that they are.
2. As the last ADX line indicates green (is sloping higher), you do not wait for the price bars to close on the
ADX charts, place an order 1 tick above/below the current bar in progress on your entry chart. I use a
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buy or sell stop for entry. I have been cancelling my order if the entry does not trigger on the next bar
after the set up bar. If after I have been trading this set up or a while and I see that I can get in late if the
3 ADXs remain sloping higher I will make this adjustment but for now I cancel.
I use the same targets and stops that I do on my other set ups. My first target on the NQ is 2
Points (8 ticks) then once my first target is hit my stop is moved to a tick better than my entry,
then I can trail my stop on a portion of my position once price starts to move. If you are trading
1 or 2 contracts I would suggest not trailing and just get out at the first target. My initial stop is
3 points on the NQ. You can test this set up for yourself and see what targets and stops you are
comfortable using. The stop being larger than the target works because of the high probability
of this set up getting you to your first target. On the TF I like a 10 or 12 tick target with a 12 tick
stop. I dont trade the ES any longer but you might start with a 2pt stop and a 1 point target and
test it. You will need to test any other instruments that you want to trade using this set up
before doing it. At the time of writing this I amcurrently testing the YM and it looks very
promising as well.
You will find that with this set up that price tends to be able to break through the areas that we are typically
cautious of such as the previous days High, Low, Close, the Fibonacci 50% retracement area, the Floor Trader PP
and other areas of support or resistance. Please test this for yourself and decide if you will take a trade in these
areas or not.
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Trade cancellation:
- 1 min ADX returns to red while you are waiting for 3 or 5 min ADX to turn green
- 3min or 5min ADX is green and changes to red momentarily
- Very low unusual volume (you will need to use your discretion on this)
- Significant economic news coming up
Platform adjustments:
Ninja: 1pt range is same as 4 range in ninja - set ADX bars to bar close = false
Pullback entries You will find that on pullback entries when we have a strong move occurring that the 3min
and 5min ADX will remain sloping higher and the 1min will slope lower on the pullback and then go back to
sloping higher when price continues in the direction it was heading. This can be used as confirmation to take
the pullback provided that there is a strong move happening. (there will be more on pullbacks under the
Kaboom set up.
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Kaboom (MACD set up)
Kaboom - At the time of writing this eBook I have been taking my trade entries off a 1.00
range chart for the NQ (Nasdaq Emini) and 1.00 range on the ES (S&P Emini) and 4 tick
range on the 6e (Euro Future). This has been working out very well. If you would like a
starting point on YM, TF and 6e go to my youtube channel and watch the video from
9/17/2010, it will help you with that. Each bar on a range chart represents a specific
number of ticks/points. So for the NQ for example on the 1.00 range chart each bar
represents 1.00 points / 4 ticks. I used to use a 1 minute chart for entries but with the
recent volatility in the market (at the time of this writing) and the size of the 1 minute
bars I would have to use a bigger stop than I was comfortable with. The range charts
allow for earlier entry and the use of a manageable size stop. For example if you had a
bar on the 1 minute chart that was 4 points in size (from the high to the low), that same
bar would be represented on a 1.00 range chart as 4 bars.
You can still use a 1 minute chart or you can choose to use a smaller tick chart such as
a 377 or 512. The tick charts work well too. You may find that you dont have access to
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range charts, if that is the case you will use one of the options just mentioned. I will
give examples using all these in a moment.
Chart # 1 as mentioned earlier, this will be the broader view of price action
For my all of my charts on the ES and NQ I use the chart settings of start time of 4:30
PM Est. and end time of 4:15 PM Est. You will set your settings based on your time
zone. So for example if you are Pacific Time zone you will use 1:30 PM and 1:15 PM
unless your broker or charting software does not require you to correlate to your
computer internal clock. (your time zone) If you are trading a different instrument I
would suggest using the Globex hours for your chart time settings.
NQ I use 1597 tick if I am taking my entries from a 1pt range chart. Use a 3000 tick if
you are taking your entries from a 1.50 range chart. You may find that trading from a
1.00 pt (4 tick range) range chart is to fast for you, if that is the case then use 1.50 (6 tick
range)
ES I use 5100 but you may try a 2584 if you are going to use a smaller range or tick
chart for entries
Indicators you will plot on this chart: ( I am including indicators that you will not use
unless you choose to use a set up that I will describe later where you will take entries
directly from this chart, I will mark these as optional and then you can decide later if you
would like to check this set up out)
1. 9 period Weighted Moving Average (WMA) (I want price to trade above this for
longs or below for shorts) but I am still aware of the overall trend.
2. 55 Simple Moving Average (SMA) You will find that when price gets to this
moving average it is likely going to act as a support or resistance area.
3. 200 Simple Moving Average (SMA) for the same reasons as mentioned above
on the 55 SMA.
4. 50% Fibonacci Retracement (I use an indicator that automatically does this but
you can hand draw this on your chart using your drawing tool based on the high and
low. It is as simple as figuring out the way mark between the high of the day and low
of the day. This area is also an area that acts as support and resistance.
Chart #2 this will be the chart you take your entries from
NQ I use a 1.50 or a 1.00 range chart (your charting software or broker may require
you to use 6 tick range instead of 1.50 range or a 4 tick range instead of 1.00) If you find
the 1.00 pt range chart moves to quickly you can start by using the 1.50 range chart and
once you get used to trading from a range chart then try using the 1pt range.
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ES I use a 1.00 range chart (4 tick range would be the same) but you might try a .50
range chart (2 tick range) or a 510 tick chart, the entries look good on these.
You may choose to use a 1 minute chart or a tick chart for your entries. I have included
examples of these below.
Indicators you will plot on this chart:
1. 9 period Simple Moving Average (SMA) (you may decide not to plot this but it
will be helpful when you take pull back entries.)
2. 30 Weighted Moving Average (WMA) I have the option in Sierra to color this
based on the slope. So I color green when it is sloping higher and reddish when sloping
lower. I will explain why later. If you dont have this option not to worry.
3. (Optional) 6 period Exponential Moving Average (EMA) This can be very
helpful for confirmation and also helpful when taking pull back entries but you may
decide you dont want to use it.
4. 200 period Exponential Moving Average (EMA) This moving average can often
act as support and resistance.
5. MACD using settings of 5 for Fast Moving Average Length, 15 for Slow
Moving Average length and 10 for MACD Moving Average Length
I am currently using Sierra Charts and I have the option to color my lines and histogram
based on whether it is plotting above or below 0. I will show you how mine looks in a
screen shot later and show you what yours will look like if you dont have this option. It
is not necessary but it is a nice visual.
6. 50% Fibonacci Retracement (I use an indicator that automatically does this but
you can hand draw this on your chart using your drawing tool based on the high and
low. It is as simple as figuring out the way mark between the high of the day and low
of the day.
7. Previous days high, low and close ( I like these on the chart I am trading from
because we often get a stall, bounce or pull back in these areas.
8. Floor trader pivot point I only choose to draw the PP (pivot point of the Floor
trader pivots) some traders prefer to use all the floor trader pivot points with mid points.
I dont because I like to draw my support and resistance areas on my chart as
mentioned later in this ebook. This is an area where we often get a stall, bounce or pull
back.
9. (Optional) Slow Stochastic you will use this if you decide to take range
trades as described later under the Keltner Channel section. Slow Stochastic using
settings of 14 for Fast %K Length, 3 for Fast %D length (Slow %K), 3 for Slow %D
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Length. You will use 80 as over bought area and 20 for over sold. I personally have an
easier time spotting divergence on the Stochastic and like it on my entry chart. If you
would like to know more about divergence go to
http://www.babypips.com/school/divergence-cheat-sheet.html I use regular divergence
I dont watch for hidden.
10. (Optional) I like to put support and resistance areas on the chart I am trading
from so I am aware of where price might stall, pull back or bounce. These are also great
areas to use as targets to shoot for when in a trade. I will go more into detail later on
how you can find these areas.
Above is a view of what your 2 charts will look like. I have labeled each indicator. The chart
on the left is the 1597 tick chart on NQ (for Es it will be 5100) and the chart on the right is the
1.00 range chart on the NQ or you can use a 1.50 range on the NQ (for ES it will be 1.00 range
chart) The MACD showing on the range chart (chart on right) is how mine looks choosing to
color it based on the MACD line being above or below the 0 line. The 0 line is the orange
horizontal line and when the MACD line is above 0 it plots as green, below it plots as red.
When the histogram is plotting above 0 it is green and below red. I am also coloring my price
bars green when the MACD line is above 0 and red when it is below 0. I am not drawing the
Moving average of the MACD, which is why there is just one line. As mentioned earlier the
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way I am coloring this indicator is just a visual and not a requirement. The picture below is
what yours will look like if you dont have the option to color yours.
The chart on the right is what yours will look like if you dont color your MACD according to the
0 line on the range chart. You will notice that there are 2 lines on this MACD. The green is the
MACD line and the purple is the Moving Average of the MACD. In just a moment when I
explain the set ups you will understand why I am showing you this.
The Kaboom set up
This is a set up that is based on an indicator that is on the market but it is not available
for most platforms. Mike B. showed me a screen shot of this indicator and I could see
how powerful it was. So I set out to duplicate it using indicators that most of us have
available already for free in our indicator selections. I believe I have accomplished it. I
worked on it for a couple of months to come up with the right factors, filters and
settings. Whenever I decide to make a change to a set up or to trade a set up I back test
it. I start out by going back 3 months and then 6 months to make sure it works over this
period, then and only then do I start to trade it. It is a time consuming task but I feel it is
necessary.
I take the set up entries with the trend. The trend is determined by looking at the chart
you are using for the broader view of the market. So for example on the NQ it would be
the 1597 tick chart (or whatever you are using) and seeing what the over all direction the
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price is moving. Also which side of the 9 period Weighted Moving Average price is
trading. If price is trading above the 9 period Weighted Moving Average I am looking for
a long set up, if price is trading below the 9 period Weighted Moving Average I am
looking for a short. For me even with this rule the over all trend takes priority. This is a
rule that I have in place but you may find that after trading the set up for a while that you
will be willing to take the entries long and short regardless of which side of the 9 period
Weighted Moving Average on the broader view chart price is trading. If you find that
there isnt an overall trend you can take trades in both directions. So now lets go over
the set up.
1. Look at your 1597 tick chart (if trading the NQ) and determine the trend and
which side of the 9 period Weighted Moving Average price is trading, the price bar does
not have to be closed above or below just trading above or below. Above it I look for
longs, below I look for shorts. If I am looking at a buy I like my 9wma to be sloping
higher if I am looking for a short I am looking for it to be sloping lower. I have this
moving average colored based on the slope, green it is sloping higher, pinkish red it is
sloping lower. Requiring this to be in agreement when we are getting an entry setting up
is a conservative approach to this set up and will allow for higher probability trades. I
then look for my entry off the 1.00 range chart on the NQ .
2. The charts I use for entries are the 1.00 range chart on for the NQ or 1.00 on
the ES. For a long I am looking for the MACD line crossing above 0 line and the
histogram to be plotting above 0. The opposite is true for a short. For a short I am
looking for the MACD line crossing below 0 line and the histogram to be plotting
below 0. I have my MACD colored so when MACD line and histogram are green I am
looking to buy when red, then short (you will see an example of this in a moment)
3. On my entry chart (NQ 1.00 range, ES 1.00 range) I want the 30 Weighted
Moving to be sloping in the direction I am looking to take my trade. Just as
described above under item #1, this is a conservative approach to this set up but
you will find it very effective in keeping you on the correct side of the trade. If you
decide to use the optional 6ema for confirmation of the entry you would like that to
have crossed the 30wma for entry. (Above buy and below short) You will see
examples of this here as well as in the recording of the webinar you have access to.
Nothing is really required of the 9sma on this chart but you will find it helpful when I
explain the pullback entry set up.
4. Next I am looking to see if price has room to move to the next area of support
or resistance when I take the trade in order to be profitable. If there isnt enough
room then I wait for price to get through the area. If I missed the initial set up then I
wait for price to pull back and look for histogram and MACD to still confirm. I have
found that when the MACD line first crosses the 0 line for the direction of the trade
we want to take, that is the most powerful area to enter. I will go over a pullback
entry in this ebook too; you will see an example of this later.
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4. On the NQ I am looking for +2 points, +4 points and trail a third and I start with
a stop of 3 points on the 1.00 chart, once first target is hit I move my stop to entry or
.25 better than my entry and then I trail stop as price is moving. You can use the
30wma to trail your stop just under it for longs and just above it for shorts. You can
play around in your simulator account and see what you are comfortable with for
your stop. If you dont exit in stages or you are just starting out you are not going to
trade multiple contracts. I would suggest getting all out at the first target. You may
also decide to use 3 point target with the 3 point stop or 2.5 target with a 2.50 stop.
You dont want to make your stop to small because you are going to need to give
price enough space to wiggle around without getting stopped out just to then watch
it go on to move in the direction you intended it to.
On the ES looking for +1 point, +2 points and trail a third and start with an initial stop
of 2 points.
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By looking at the charts above you will see the set up as described above for a long.
1. Looking at the chart on the left Price is trading above the 9 WMA and sloping higher and
the trend is up so I am looking for a long
2. On the range chart to the right you will see the MACD line (green line) crossing above 0
and the histogram (green lines) are above 0. You will find the most powerful set ups when the
MACD first crosses the 0 line. If you enter in later than that please make sure your histogram is
still increasing in size and your MACD line is still moving higher for a long or lower for a short,
otherwise you will want to wait for a pull back or a brand new MACD cross. I will give an
example later.
3. The 30wma is sloping higher and the 6ema (optional) has crossed above it.
4. You enter in long and away you go.
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Above is the same set up as shown in the first picture but this is not using the option to
color your MACD or price bars based on the MACD being above or below 0. If you dont
have the option to not draw the moving average of the MACD yours will have 2 lines as
you see above. If you would like not to see the moving average of the MACD you can
always choose to color it the same color as your background and that will keep it
hidden. As mentioned the way I color my bars and MACD is not required it is a nice
visual.
You can see by looking at the charts below where the same entries would have been if
you were trading off a 1 minute chart or a 377 tick chart instead of a range chart. The
choice will be yours to make as to which chart you prefer to take your entries.
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By looking at the charts above you will see the set up as described above.
1. Looking at the chart on the left Price is trading above the 9wma and it is sloping
higher.
2. On the 377 tick chart to the right you will see the MACD line has crossed above 0 and
the histogram is above 0. You will find the most powerful set ups when the MACD first
crosses the 0 line.. If you enter in later than that please make sure your histogram is
still increasing in size and your MACD line is still moving higher for a long or lower for a
short, otherwise you will want to wait for a pull back. I will give an example of a pullback
later.
3. The 30wma on the 377 tick chart is sloping higher
4. You enter long and away you go.
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You can see by looking at the charts above where the same entry would have been if you were
trading off a 1 minute chart instead of a range chart. The choice will be yours to make as to
which chart you prefer to take your entries.
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Pull Back Entries
On the chart above the line at 10:38 is the long shown in all other examples above. Lets
say you miss the first entry you would need to wait for a pull back to now enter. You
will notice at the 2
nd
vertical line that priced pulls back to the 30wma and that the 6ema
(white line) has crossed above the 9sma (blue moving average) and that they are both
heading higher, this would be a good place to jump on board. When taking pull backs if
you pay attention to these 2 smaller moving averages and make sure they are going in
the right direction and that the 6ema is leading the way (on top of the 9 for a pullback
buy or under the 9 for a pullback short) it can be helpful in determining if it is going to
be a pullback in price or is price going to change direction now. Which of course you
wouldnt want to buy if it were. Notice that the MACD line starts higher again and the
histogram is now plotting on the up side of 0 again. On pullbacks I dont mind if the
histogram is not plotting on the correct side of 0 but if it isnt then it will need to be
getting smaller in size. For example, if I were taking a pullback buy and the histogram
was under 0, I would be ok with that as long as it was getting smaller in size not larger.
When taking pullback entries you will still want price to be on the correct side of the
9wma on your chart of the broader view, in this case the 1597 for the NQ. This will be an
opportunity to take an entry.
You will notice above I have a white arrow drawn, this is price pulling back to the 9sma,
you would only be willing to do this if you have price moving very strongly and your
6ema and the 9sma are heading very strongly in the correct direction.
21
Support and Resistance Areas
Support is an area below you that price continually hits and stalls or bounces and
resistance is an area above you where price continually hits and stalls or pulls back. As
I mentioned in the section on setting up your charts I like to plot the previous days
high, low and close and the floor trader pivot point and Fibonacci 50% retracement.
These can tend to be areas where price can have trouble getting through easily. If I am
getting a set up and I have any of these areas in my way I will usually make sure I have
enough room for price to move to this area in order to get my first target. If there isnt
enough room you can still take the trade and just be aware that if price has trouble
getting through you will have to take a smaller target or get out. If I dont have enough
room to these areas I will generally wait for price to get through and then look for the
opportunity to enter if there is one presented. I can then look for a pull back once price
breaks through or wait for a brand new MACD cross of 0 entry. If you are not familiar
with support and resistance I have a video on youtube which you might find helpful.
Here is the link http://youtu.be/KHEHT0I6zTA If you have trouble with the link then go
to my YouTube channel http://www.youtube.com/user/easyeminitrade and look for the
video from April 24, 2011.
Staying out of the choppiness
As with any set up that you trade you need to know when to just sit back and do
nothing. With these set ups you will notice the times to stand aside are when your 9
WMA on the 1597 tick chart (for the NQ) and 5100 tick chart (for the ES) is just going
sideways with no real direction up or down. You will have price just teetering back and
forth above and below the 9 WMA without any real probability of success. Another time
to stand aside is when the moving averages on your entry chart are all tangled together
with no real direction and your MACD has very small histogram bars plotting above and
below 0 back and forth. Just wait for price to pick a direction and you will likely get an
opportunity to get in even if you miss the initial move. This would be a time you would
be interested in taking range trades if you decide you want to trade and not stand aside.
This is described later under the Keltner Channel set ups.
22
Keltner Channel set ups
I have to admit I love these set ups but the Kaboom and 3 Amigos described earlier will
generally get you in sooner than the Continuation set up described below. I am still
including these set ups because it is a great way to get in a moving market and the
range trade is still excellent during sideways market action and you might find you
prefer the continuation set up to the Kaboom.
Your charts will be set up as described earlier under the Chart #2 section but you can
eliminate the MACD and the 9 period simple moving average if you dont intend on
using the Kaboom set up and if you do intend on using the Kaboom set up simply add
Keltner Channel indicator with the settings of 22 for all lengths and 2 for the
multiplier/deviation. Since I add the Keltner Channel to my entry chart that I use for my
Kaboom set up I choose not to draw the mid line on the Keltner Channel indicator since
I have my moving averages already on this chart. I just use the upper and lower
channels. You may use any tick or time frame you like but I have been using it on my
range chart that I already have set up for my entries.
The only indicator you will need to plot on this chart that was not mentioned earlier
under Chart #2 information is the ADX. You will find this in your standard indicators in
your charting platform. You will use a setting of 14 and draw a horizontal line at 20. If
you are using the ADX/DMI on your entry chart use them set to 9 (this is not described
in the ebook but you will see an explanation of this standard indicator in the webinar
recordings that you received with your purchase). If you use the ADX/DMI then you will
not need to plot another ADX just use the ADX line from the ADX/DMI indicator.
Keltner Channel Set up #1 Continuation Move
This set up is used for a move that is just starting or likely to continue in the direction it
is currently going. As with every set up it is important to know where your major
support and resistance are and how much room there is for price to freely move, you
can find these areas by looking at the daily and 60m chart and determining where you
have had price stalls, bounces or pullbacks. I am only paying attention to PP of Floor
Trader Pivots, 50% retracement, previous days H-L-C and the 55 SMA on the longer tick
chart as described under the Kaboom set up for chart #1 and #2. It will also be
important to be aware of intraday areas of support, resistance or congestion that have
been created and you are likely to need to get through before taking an entry. I will take
this set up with the overall trend of the market.
For Longs
1. Price closes out side the upper channel of the Keltner Channel
2. ADX is rising and above 20 (this does not change based on trade direction, this is
measuring the strength of the trend)
23
3. Stochastic will likely be rising or already be in over bought area (above 80) this is OK
5. Place your order .25 above the bar that closed outside the upper channel.
6. Stop you can use .25 below a previous price reference and adjust it as price moves.
For example lets say you enter a long and just below you is a floor trader pivot or
previous area of price support, you can place your initial stop .25 under that area. You
may just want to start with a specific stop amount and move it as price moves higher
and once your initial target is met then move your stop to your entry price. I would use
2pt stop on ES and 3.00 on NQ initially.
7. Exits- I would suggest exiting in stages if you are trading multiple contracts. For the
ES I take profit on 1/3 my position at +1 pt and then move my stop to my entry on my
remaining 2/3 of contracts and 1/3 I take +2 pt and then on my remaining 1/3 I will trail
stop based on pivot highs and lows. NQ is +2 pt, +4pt and trail. These targets of course
will depend on how much room is above our head for price to move.
Short Entries are reversed
1. Price closes out side the lower channel of the Keltner Channel
2. ADX is rising and above 20 (this does not change based on trade direction, this is
measuring the strength of the trend)
3. Stochastic will likely be moving lower or already be in over sold area (below 20) this
is OK
5. Place your order .25 below the bar that closed outside the lower channel.
6. Stop you can use .25 above a previous price reference and adjust it as price
moves. For example lets say you enter a short and just above you is a floor trader
pivot or previous area of price resistance you can place your initial stop .25 above that
area. You may just want to start with a specific amount stop and move it as price
moves lower and once your initial target is met then move your stop to your entry price.
I would use 2pt stop on ES and 3.00pt on NQ initially.
7. Exits- would suggest exiting in stages if you are trading multiple contracts. For the
ES I take profit on 1/3 my position at +1 pt and then move my stop to my entry on my
remaining 2/3 of contracts and 1/3 I take +2 pt and then on my remaining 1/3 I will trail
stop based on pivot highs and lows. NQ is +2 pt, +4pt and trail. These targets of course
will depend on how much room is below you for price to move.
24
Continuation Move
Price closed outside upper channel, ADX (yellow line) over 20 and
Rising (you do not need the DMI plotted on your chart so please ignore this item on this example)
Continuation Move
25
Keltner Channel Set Up #2 Pull Back
We talked about pullbacks earlier under the Kaboom set up but here is another way to
get into a trade after a price move. You can wait for a pull back to the middle line of the
Keltner Channel. You will want to determine where support and resistance are so you
know you have room to be profitable and you will take this in the direction of the overall
trend.
1. Price pulls back to the middle line of the Keltner Channel and remains on the correct
side of this middle line (or if you are using the entry chart you have set up for the
Kaboom use the 30WMA and get rid of the middle line of the Keltner Channel) If looking
long price pulls back to this middle point (or 30WMA) but does not close below it. If
looking short price pulls back to this middle line (or 30WMA if not using the middle
line of the Keltner Channel) but does not close above it. See example below marked B.
2. ADX is still above 20.
3. In an uptrend you can enter .25 above the bar that pulls back to the middle line for
long and in a down trend enter below the bar that pulls back to the middle line for short.
If your order does not get filled on the next bar you may keep your order there as long
as everything is still in alignment. If while waiting for your entry, price trades for a close
above or below the middle line against the trade direction you are looking to take cancel
your order. You may place your order again if the bar comes back to close where it
needs to in reference to the middle line. For example; if looking short and you have
your order in place and price now closes above the middle line, cancel your order.
Then on the very next bar it closes back below the middle line and everything else is
still saying to take this short you may place your order again. See example below
marked A and C.
4. Expect price to reach the outer channel or previous area of support or resistance for
your targets so please know how much you can expect to get out of taking this trade
and be sure it is worth taking.
26
Pull back entry
This pic also shows DMI lines; they are not required for this set up just the ADX being
above 20.
Keltner Channel Set Up # 3 Range Trades
This is a set up you can use when the market is trading in a range. A range is an area
where price is continually hitting as resistance and support. It is important that you
know the market is in a range and not to assume this to early in the day. You will notice
that when you are in a range the ADX is likely below 20 and going sideways. You will
want to determine support and resistance and let price test these areas and hold, then
you can look to take this type of entry. You have to make sure the range is large enough
27
to trade. That of course will be determined by you, how much room is there and can
you be profitable. I am giving an aggressive entry and a conservative entry for this set
up, you can determine which is right for you. I will typically opt for the conservative
entry but that does not mean I wont take the aggressive entry on occasion. I will give a
better explanation about this in a minute. If using range charts and not a tick or time
based chart you can do range trades without the Keltner Channel and just use the area
of support and resistance established during the sideways action. The Keltner
Channels do not work well on range charts.
Short entry aggressive
1. Price trades to a resistance area and trades to the upper channel and touches it and
remains closed inside the channel.
2. Enter short expecting price to move lower to previous support area. Place your
order .25 below the bar that touched the channel or just hit a market order, your choice.
Short entry conservative
1. Price trades to a resistance area and trades to the upper channel and touches it and
remains closed inside the channel.
2. Stochastic is rolling over and crosses below 80 (over bought)
3. Enter short expecting price to move lower to previous support area. Place your
order .25 below the bar that gave you the Stochastic closing below 80.
Long entry aggressive
1. Price trades to a support area and trades to the lower channel and touches it and
remains closed inside the channel.
2. Enter long expecting price to move higher to previous resistance area. Place your
order .25 above the bar that touched the channel or just hit a market order, your choice.
Long entry conservative
1. Price trades to a support area and trades to the lower channel and touches it and
remains closed inside the channel.
2. Stochastic is rolling over and crosses above 20 (over sold)
3. Enter long expecting price to move higher to previous resistance area. Place your
order .25 above the bar that gave you the Stochastic closing above 20.
28
Range Trade Entries
These are conservative entries with price hitting upper channel and resistance area the
Stochastic rolling below 80 for the short and hitting lower channel and support and
Stochastic rolling above 20 for a long. Ignore the DMI indicator, it is not needed for
these set ups however if the ADX is plotting underneath the DMIs then that is a good
indication of sideways price action.
29
60 minute chart used to pick out previous areas of support and resistance at
the start of each day.
I use this chart to determine where there might be an area to my left where I might get a
price stall, I do not take trades off this chart but I look at this chart at the start of each
day before starting to trade for the day. When looking at the chart above you will see the
white lines drawn. These represent areas where price had a strong support or
resistance area and price could likely stall here. So for example if taking a short right in
an area where there is strong support below you, it is likely price will bounce and you
will be stopped out. If you were taking a long entry and you had resistance above you
as you see marked 60 minute chart, you would know that this area above you might be
an area where price might stall. We know this by looking to the left and we can see all
the price action stuck in this area. If we get above the white resistance lines drawn you
can see by looking to the left that there isnt any price action so this is what many call
trading into the void. There isnt anything to stall price from moving. You may also look
at a daily chart and see these areas as well.
30
There are downloads of this and the sample trading plan in word format with the
download links so you can make changes to these to personally suit you.
Prepared by J.J. revised by Trisha Kaboom
Set Up and Entry
Checklist for NQ
Pre-Trade Review
Economic Calendars - Nasdaq.com or Forex Factory
Check support and resistance areas on the 60m chart (optional)
Set Up and Entry - Long
Up trend or no trend (no trend, is there room above to resistance?)
1597 Tick Chart - Price must be above 9 WMA, is it coloring for sloping higher?
Be aware of 200 EMA and 55 SMA as areas of possible Resistance
Entry chart - *MACD line crossing above zero line in an uptrend (make sure
histogram is plotting above 0 for a buy)
Entry Chart Is the 30wma sloping higher?
Set Up and Entry - Short
Down trend or no trend (no trend, is there room below to support?)
1597 Tick Chart - Price must be below 9 WMA, is it coloring for sloping lower?
Be aware of 200 EMA and 55 SMA as areas of possible Support
Entry chart - *MACD line crossing below zero line in an downtrend (make sure
histogram is plotting below 0 for a short)
Entry Chart Is the 30wma sloping lower?
31
Created by Christian revised by Trishsa
Sample KaboomTrading Plan
Trading Day
I will Only take 3 High Quality trades per Day
I will Only take trades between 9:35 11:30
If I take 3 Trades before 11:30, I will not trade in the afternoon
I will trade the afternoon from 1:30 3:30 only if under 3 trades
I will not trade after 3:30
If I have 2 losers in a row I am finished for the day
Setup With the trend!
Buy: Macd crossing above 0 Price trading above 9WMA on the broader view and coloring for
sloping higher - the slope on the 30wma on the entry chart is coloring for sloping higher - further
confirmation; 6ema is crossing above the 30wma - when the bar closes enter by already having a buy
stop in place a quarter above the projected close of the set up bar otherwise I will use a limit order. If I
find that I can not get in using a limit order and price keeps going I will wait for the next set up.
Shorts are reversed:
Macd crossing below 0 Price trading below 9WMA on the broader view and coloring for
sloping lower - the slope on the 30wma on the entry chart is coloring for sloping lower - further
confirmation; 6ema is crossing below the 30wma - when the bar closes enter by already having a sell
stop in place a quarter below the projected close of the set up bar otherwise I will use a limit order. I f I
find that I can not get in using a limit order and price keeps going I will wait for the next set up.
I will trade the Kaboom setup with a 2.50pt Stop and 2pt Target.
I will complete my Kaboom Checklist before I place my Trade.
I will only take 3 High Quality trades per Day.
I will Sim trade Kaboom Pull back -ReEntry until I feel comfortable with setup. Once I am comfortable I
will add detail for entry to my trading plan before implementing live entries on pull backs.
Contract Increase
I will increase 1 contract per week once my weekly goal has been met (10pts per contract).
Once at 3 contracts targets are 2@2pt/Stp@BE +.25, 1@4pt
I will continue to increase contracts until I am trading 10 contracts.
Once at10 contracts 5@2pt/Stp@BE, 3@4pt/Stp@BE+.25, 2@using 30wma to TrlStp
Goals
I would like to average 15pt per week net, per contract.
I will track rating/execution by score.
I would like to average 4.5 5 on my execution rating Weekly/Monthly.
Trade Rating Score each contract 1-5:
1. Out at Full Stop Hit
2. Out at Stop moved, but a losing trade
3. Out at BE
4. Out at BE+.25
5. Out at Target Hit or, Trail Stop Hit w/profit > +.25
Trade Execution Rating Score each Contract 1-5:
1. Impulse Trade (Any Trade without Checklist completed)
2. Entered Setup late or Did not exit correctly
3. Followed Entry but Changed Stop or Changed Target outside of trade plan.
4. Followed Entry but Closed out before Predetermined Target/TrlStp was hit
5. Followed Trade as Dictated in Plan, Only 3 Trades Per Day
32
Example of Day Trade Sheet
Date Cont Price Time Setup L/S
Exit
Price Time Gain(Loss)
Trade
Rating
Exec.
Rating Notes
10/28 NQ 76.00 9:01 KB S 79.00 9:05 -3pt 1 5 Good trade
10/28 NQ 75.25 10:35 KBR L 78.25 10:45 +2pt 5 4 Entered early
10/29 NQ 102.50 8:37 KB L 105.5 8:38 +2pt 5 5 Good trade
10/29 NQ 08.25 12:45 Imp L 05.25 1:45 -3pt 1 1 Lunch/Impulse
10/29 NQ 05.25 1:50 Imp S 02.25 1:55 +2pt 5 1 3
rd
trade=punish.
Example of Trade Tracking Sheet Daily-
Date Kaboom ReEntry Exec. Rate Total Cont Gain(Loss) Notes
10/28 4.8 3.25 4.25 3 +3pts Good Day
10/29 4.25 2.5 3.25 4 -1pt Overtraded
10/30 5 - 5 2 +8pt Done for week
Ave/Total 4.68 2.875 4.16 9 +10pt
Pre Market Check List
To Be Completed Every Trading Day Before the Mkt is Open
Review Economic Calendar.
Mon Thurs 9:00 3:30 Chat room
Mark Important Economic Numbers.
Review Support/Resistance.
RELAX, Only 3 Trades per Day
Do Not Over Trade/Impulse Trade.
Simulate Trading if you feel Scared/Greedy/Sick/Distracted.
Trade Your Plan It is Working.
33
Check List Check Off
Date Eco Review Chat Room Sup/Res Feeling
10/28 Y Y Y Good
10/29 Y Y Y Good
10/30 Y Y Y Rushed, sim.
Example of Kaboom Setup Checklist -
Kaboom 1
st
Crossover 3 Trades Only!!!
1. 2. 3. 4.
Time of Day 9:47 1:26
MACD/Price Bar R/G R R
Histogram R/G R G
Slopes 3K/1.5 R/G R/R R/G
Price +/- 9WMA (3K) Y Y
Cross of 6ema/30wma Y N
Price/Time Filled 19.25/9:51 (No Trade)
Exit Stp/T1/T2/T3 T1/9:57
Kaboom Re-Entry Sim Only!!!
1. 2. 3. 4.
Time of Day 10:17 1:45
Pull back to 30wma Y Y
Histo. changed color Y N
Slopes on 3k, 1.5 Y N
Histo. Larger R/G G G
34
6ema +/- 9MA (1.5) Y Y
6ema,9sma slope Y Y
Price/Time Filled 22.25/10:19 (No Trade)
Exit Stp/T1/T2/T3 T1/10:25
Punishment
If I overtrade or Impulse trade, I must watch, but not trade, the Next morning session.
Reward
If I reach my goal of 10pts per contract before Friday, I will go to a movie, play golf,
ride my bike, or play guitar with my friends for the rest of the week. In other words, I will
take the rest of the week off. That will be nice.
Closing Thoughts-
Take the lunch hours to leave the house. Workout, run errands, walk the dogs, play my
guitar, or take my wife lunch. Do something else. Get out from in front of the
computer. I am not missing anything
Write something in your trading journal. Every trading day.
I, Christian _________, hereby commit to follow my plan to the best of my abilities. This
commitment is for me and my family. I understand that trading is a risky way to make
money and that loss is part of the risk that I am undertaking. This trading plan is
designed to limit my exposure to loss by creating Rules, Checklist, and Tracking tools to
follow and thereby create a path to profitability.
Singed ______________________________________ Dated ________