Welcome to Mini Dow Futures Blog, Specializing In Swing Trading Strategies & Day Trading The Mini-sized Dow. In this blog you will find continuous coverage of the Dow Jones Futures Market including Technical Analysis, Market News, & Short-Term Price Forecasts. We will also provide updates to our Mini Dow Automated Trading System in addition to offering trading signals in real time. We welcome all trades of the mini dow to post and share ideas.
Unique Technical Analysis
There are four primary considerations in technical analysis that is useful to know when trading the Dow. 1.) Trend Analysis 2.) Cycle Analysis 3.) Support & Resistance 4.) Price Patterns
Trend analysis includes the trend on a minimum of two time frames. As an examples, for swing trading the 60 minute and Daily charts can be used. For day trading the 5 minute and 30 minute charts can be used. When a trend is present on two time frames, the probability of the market to continue to move in the direction is strong.
Cycle Analysis includes the use of momentum indicators to identify when a market is over bought or over sold. A Cycle indicator can be used on the larger time frame to "filter" our trades so that we only trade on the right side of a longer term cycle. The cycle indicator on the smaller time frame can be used to generate buy and sell signals.
Support & Resistance are significant price levels that are visible on a price chart. There are usually drawn on the chart. Previous highs or lows, previous price channels or areas of congestion, trend lines, & Fibonacci retracement levels can all be used to identify potential "turning points" in a market. They are also useful to identify "breakout levels" in the direction of the trend. The most significant of these are labeled "Key Numbers". These are support & resistance levels that are visible across multiple time frames.
Price Patterns can act as confirming to signals to our other indicators. By analyzing price bar patterns of 1-3 days we can identify a short term swing reversal or trend continuation. Other types of patterns include trend line breakouts, triangles, double tops and bottoms, and exhaustion patterns. These patterns, when used with our indicators (trends, cycles, key numbers) allows for a comprehensive yet unified approach to trading the markets. Keeping it simple is important to the approach.
Indicator Convergence
In practice, we use the indicators as direction filters in our trade selection. We look for a convergence of our indicators to occur on two time frames and trade only in the direction of our indicators. When the indicators are in conflict, we stay out of the markets. This is how our trend-cycle strategies work. All entry strategies are filtered through our indicators so that we are always trading in the direction of the longer term and short-term trend - cycle.
Time Of Day Reversals & Opening Range
A unique feature of the stock index markets are the habitual patterns of behavior centered on time. Price reversals will tend to happen from 10:00-10:30, 12:00-1:00, and 3:00-3:30 EST.
A test of a key number during these time zones can often lead to a reversal pattern set up. When the reversal signal is in the direction of the longer term trend-cycle, the profit potential is even better. The Opening Range comprises of the first 30-60 minutes of trading. This range will often represent significant support and resistance. For the Mini Dow we use the first 30 minutes of trading for the opening range. A break above or below this range can signal a powerful intra-day trend. Fading the range in the direction of the larger trend-cycle is another strategy that can be employed.
Gaps
Gaps are creating when the overnight futures market moves away from the most recent close of the day session. Gaps can present trading opportunities based on the observation that gaps tend to "get filled" early in the session. A price pattern is used to generate a gap trade. When a market gaps strongly and the gap is not filled within the first hour of trading, this can indicate a powerful move about to occur in the direction of the gap. This gap continuation trade can be used with the trend cycle filters for greater accuracy.
Stop loss and exit strategies
A fixed money management stop is always recommended on every position. The amount should be based on the volatility of the market. For the mini dow a 30-50 point stop is recommended for day trades. A 75-100 point stop is recommended for swing trades. A trailing stop should be used to minimize risk and lock in profits.
News and Reports
Economic news and reports, as well as other markets can have a direct impact on the Dow Jones Futures. These very events will often act as a catalyst to the technical formations we use to trade. Although our strategies are not dependent on news, nevertheless being aware of financial news and developments as well as reports can be very beneficial in anticipating additional trading opportunities... as well as times to avoid being in the market.
I hope this overview of trading the Mini Dow Futures has been helpful. For a Free 2 Week Trial of my trading signals sign up at www.minidow.com.
Be sure to visit some of our other sites as well:
www.commodity-systems.com
www.autotradegold.com
www.autotradecrude.com
www.autotradebonds.com
For more information on trading commodities and to access price charts, quotes, news, research, and trading educational materials visit www.crowfutures.com
Warmest Regards,
Eddie Cuervo
Crow Commodities, Inc.
561-215-2305
Friday, February 8, 2008
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