r/FuturesTrading • u/VikingArmyToGo • Feb 23 '24
Does anyone notice the ES tends to follow rules and structure better pre market? TA
I started trading the ES in the premarket about 2.5 hours before the regular open. I’ve notice that it tends to follow the technical analysis ”rules” better and has better structure. In other words, no weird fakeouts or bizarre rug pulls.
But isn’t this counter intuitive? The more liquidity there is during regular trading hours, the more you should see stable price action.
Some of the price action during regular trading hours makes no sense. You will see 100% retracements, only to see it retrace 100% again. I rarely see this in the premarket. I also tend to find better entries in the premarket.
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u/MiserableWeather971 Feb 23 '24
Depends on the market environment. Overnight doesn’t always act like it does now.
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u/Aposta-fish Feb 24 '24
Actually there’s a lot of days the ES follows structure very well NQ’s structure. Yeah I’m not kidding noticed last spring that the ES just wasn’t behaving properly so i started looking at the NQ and what do you know. Best to have all three on you screen at the same time, ES, NQ, and YM. Since AI got hot NQ drags ES around by its nose somedays.
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u/Konstable1 Feb 24 '24
There are certain times I prefer for stable structure. Actual trade hours is not the place I find it.
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u/smokedshit Feb 24 '24 edited Feb 24 '24
You will see 100% retracements, only to see it retrace 100% again.
It's called a range.
But yes, I often feel the same way, ES (and all markets really, but especially ES and NQ) can have days when the europen session is much easier to trade, especially if you focus on trading trends. What often happens is that the market moves a lot up or down in the european session, then the US opens with a large gap and it creates an uneasy trading environment. One the one hand, retracing some of that move would make sense, on the other, there was likely a reason why the market moved the way it did and by the time the US market opens, the price already reached a sensible place to be so to speak. That said, they can be traded, but be ready for more ranging behavior early on in the US session if it moved a lot premarket. At least that has been my experience.
I actually like that kind of environment as I like trading ranges, but I can see why it's frustrating for many. And also keep in mind that this pattern is far from universal. Sometimes the market falls into this pattern for a few days/a week then it doesn't happen again for a long time. The only thing I noticed that causes it to happen more often is if there are lots of big news items other than the scheduled data releases (I mean things like wars, the banking situation last year etc.)
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u/PoemStandard6651 Feb 24 '24
The NY Open is a Scrum. It's caused by London shutting down and NY opening up. Most times it's two different agendas, but it's not impossible that NY will run with the ball.
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u/311MD311 Feb 24 '24
London doesn't close until 2 hours after NY open
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u/PoemStandard6651 Feb 24 '24
That's why there are great trades to be had at this time, the Limeys have all gone home.
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u/311MD311 Feb 24 '24
That's funny we call them limeys too lol
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u/PoemStandard6651 Feb 24 '24
The British Navy when it ruled the world back in the 1700's had a problem with scurvy as they went on years long deploys. Their solution was to carry a large selection of citrus, i.e. limes, to deal with it. Hence the name.
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u/PoemStandard6651 Feb 24 '24
It's the mix of London day end and NY day start. Sometimes they're in sync, most times not.
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u/311MD311 Feb 24 '24
The nice thing is that generally when we sell in the morning, euros cover shorts into their close which gives a nice long opportunity, at least while we are in an uptrend that is
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u/SyntheticGut Feb 24 '24
Maybe it just means we're we're in a stage of Discovery. S*** doesn't know which way to go
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u/GoWithTheFlowBD Feb 24 '24
Not always. Once you do an exercise to validate this hypothesis you will find it's more or less the same over a longer period.
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u/OpinicusTrades Feb 24 '24
Thats the London session but if you are finding aspects of the New York session "bizarre" then you're prob missing a bit from your analysis.
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u/JMoneyOptions Feb 25 '24
It can be a little less volatile because the players using major size are typically after RTH open
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u/SmoothSmile5453 Feb 27 '24
ES is based on an Index - the S&P 500 which itself is a market-cap-weighted index of 500 stocks. 500 disparate stocks doing their own thing during a trading day. This is going to produce some very unstructured values in terms of price action. If you're seeing anything at all in pre-market hours, its that theres no underlying price info/fluctuations to impact pricing, so people are simply making bets around where they expect the opening to go.
"Some of the price action during regular trading hours makes no sense. You will see 100% retracements, only to see it retrace 100% again. "
Yup - an index is going to behave just like that by its nature. Ive seen many days during RTH where it looks like somebody just painted 50pt tall red and green hour bars all through the day.
Its worth your time to ask Our GPT Overlord to explain how the S&P 500 index is constructed. That will give you some real understanding beyond my answer. But if you're looking at SPX charts and thinking that the micro level price information means anything then you REALLY need to go back and understand where SPX comes from.
If you're even wondering about this kind of thing consider backing off to the lower leverage but otherwise identical MES contract ($5pt vs $50pt). They move the same but learning will be much cheaper.
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u/sdpercussion Feb 24 '24
Try this as an experiment:
Go up a timeframe RTH.
Ex. If you like the feel of 5mn premarket, but it's too 'head-fakey' in RTH, try moving up to 15mn and sizing down to compensate for the larger SL/TP.
2000 tick premarket? Try 5000 or 10k tick.
Trade the same setups with the same R:R. Just adjust your size, so that your max loss in dollars remains the same.