image of S&P 500 day trading journal header

Day Trading Journal S&P 500 Futures

This is a day trading journal for a Long on E-mini S&P500 Futures on the 2nd of August 2018 using our “Day Trading Add-On Suite for ThinkorSwim”.  This strategy utilizes the multiple timeframe W5T dot cloud and the False Breakout Stochastic indicator that is part of the Elliott Wave Indicator Suite for TOS .  So, what are we trying to accomplish here?  First, in taking a look at the S&P500 futures it is clear that on a daily chart we are in an uptrend.  On the first chart (Daily ES chart) I’ve marked price support and resistance zones denoted by blue rectangles.  These are areas of interest as they in the past marked a reversal of time type and act as either price support or resistance.

They are areas in the past that either drew more buyers or sellers into the market to trade. Note in particular the area between 2789.75 and 2807.25 has been tested from above and below multiple times and acts as a strong support and resistance zone. Thus, from above that zone we are looking for pullbacks into this zone to BUY. (Click on the chart image to enlarge in another window)

image of Emini ES Futures Chart Daily timeframe

On August 1, 2018 at 6PM EST

The market opened and in a very short time started to sell off and continued well into the overnight session.  Take a look at the next chart below that shows this period as well as the opening regular time hours session opening at 9:30AM EST on August 2nd , 2018. (Click on the chart image to enlarge in another window) 

image of S&P500 Day Trading Journal chart

Let’s discuss the major points of the long setup and how the indicators are used.  Refer to the yellow ellipse area:

  • The overnight session is net short – most if not all of the trading was below the prior days’ close. We know that overnight traders are often the weaker hands and will likely look to be closing overnight trades as we move towards the US Session open. (It is what we expect…but note it does not have to happen).
  • Price has pulled back into our prior strong support zone and is testing it from above – this was what we were looking for in order to potentially go long.
  • The multiple timeframe W5T cloud indicator shows that price has gone below the 5min, 15min, 30min and 2 hour W5T multiple timeframe cloud’s (as shown by the first 5 top rows going red) and has pulled inside the daily W5T cloud which we expect to hold as a dynamic support zone (as shown by the cyan color on the bottom row).
  • The stochastic indicator from the Elliott Wave suite is showing strong bullish momentum entering the US Market open at 9:30AM.

This setup for a long trade we were looking for has reached its moment of truth.  If the daily W5T cloud gets broken (again, bottom row of multi timeframe dot plot) and continues on for a number of dots coupled with price breaking below our support zone then our thesis of going long is incorrect and we begin looking for short trade setups.  However, in this case we see price beginning to reverse upwards nearing the end of the overnight session.  Price starts to pull back out of the daily W5T cloud (dots go green on the bottom row) and is rapidly followed by the other timeframes.  Also, the stochastic indicators from the Elliott Wave suite are showing strong bullish price action as noted by the yellow bar in the bullish momentum zone.

Entry and Trade Management Strategy (Click on the chart image to enlarge in another window)

image of S&P500 Day Trading Journal chart with entry and trade management

The aggressive trade entry would be long after the 9:30AM market open and above the small pivot high at just about 9AM with a stop just below the overnight low.  As the trade enters and we approach the 2807.25 potential resistance line we start moving our stop quickly to below the W5T 5min cloud (which is also above break even for the trade so we are risk free now.)  There are many trailing stop strategies one can employ such as following the low two candles back, or trailing below the W5T bottom of the cloud (the MTF indicator will show a red dot on the top row when the close is below the 5min cloud.

In this case the /ES had a strong trend day and the trade can be ridden all the way to the close – for a great 31 handle trade!  It should be noted that a less aggressive entry would be waiting for the break above the price of 2807.25 for a long with a stop below the W5T 5min cloud – while not as lucrative as the aggressive trade it was also a big winner.

Summary

For this trade we had a long setup in mind given our price action was above the daily W5T cloud coupled with a strong support zone below and we’ve intelligently applied our multiple timeframe and stochastic indicators to the task of confirming our long setup was indeed in play.  While not every day is a trend day that yields so many points in one setup – this particular trade was and provided a solid profit for one day’s work.

Addendum – Description of W5T indicators used for this trade (Click on the chart image to enlarge in another window)

image of W5T Day Trading Indicator suite on chart

For this trade we used our Main Elliott Wave Indicator Suite for the ThinkorSwim Platform. You can see the Video Tour >>>HERE<<<

AND Our W5T Day Trading Add-On Suite. Watch the Video Tour >>>HERE<<<

By combining the power of these suites we have developed a robust futures day trading strategy as can be seen from the above trading journal of a recent trade.

“Trade the 5th”

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