Week in Review: Principles in Trading
Opening Remarks
Welcome to the Deep Dive! We’re glad to be diving in. We’ve got your stack of sources right here, and we’re planning to extract the most valuable nuggets of knowledge so you can get informed fast.
Today, we’re plunging deep into the world of market analysis and trading strategy. Specifically, we’re looking at a series of daily morning briefings from the week that just wrapped up—ending May 30th.
Recognizing Directional Bias
One major theme that stands out across the week’s briefings is the importance of recognizing the prevailing market direction. Early in the week, there was a strong directional bias, described vividly as a “northbound train,” with indices moving up significantly.
Glossary of Key Terms
- POC: Point of Control — the highest volume price of the session.
- Bullar Line: Also known as the bull/bear line; a key level that defines control by buyers or sellers.
- Freight Train Move: A strong directional trend that’s difficult to counter safely.
Essay Format Questions
- What key level did you plan around today, and how did price behave there?
- Did you stick to your rules after entry? Why or why not?
SUMMARY:
- ✅ Directional bias early in the week was clearly bullish, driven by events like Nvidia earnings and tariff news
- ✅ Key trading levels included 6162, POC, opening price, and the bull/bear line as foundational planning elements
- ✅ “No level, no trade” mindset enforced patience and discipline in entries
- ✅ Risk management rules stressed stop-loss use, small size, and never adding to losers—especially on counter-trend trades
- ✅ Psychological tools like journaling, loss limits, and financed runners were essential for long-term success
The Complete ES & MES Trading System Guide: Levels, Strategy, Psychology & Execution
Key Trading Levels & Chart Elements
- Bull Bear Line: A critical level indicating control. Price above suggests bullish sentiment; below, bearish. Often a long entry point and known as a “sticky level.”
- Strong Levels/Ranges: Key reaction zones. Strategy includes trading from one to another with profit at the next.
- Overnight High/Low & RTH Levels: Crucial reference points. Alignment can form key Bull Bear Lines. Liquidity grabs noted as potential drivers.
- Asia/London Session Levels: Create magnets when overlapping. Monitored for convergence and price attraction.
- VWAP: Reference line supporting bullish bias when price is above.
- POC: High-volume levels from prior days targeted frequently.
- Fair Value Gaps: Areas likely to be filled, reflecting market strength or weakness.
- Magnets: Levels like POC, Asia lows, gap fills, and 61-62 that attract price.
Trading Strategy and Execution
- Battle Plan: Created pre-session, highlights preferred trade ideas and key levels. Alerts often set for conditions.
- Patience & Setup: Only enter at pre-identified levels. Wait for ideal trades, not every fluctuation.
- Trade Management:
- Stop Loss: Mandatory. Never widen on a loser. Influences entry decisions.
- Taking Profit: Especially critical for counter-trades. Use known levels for targets.
- Runners & Scaling: Initial profits secured, runners managed with trailing stops. No averaging down.
- Counter-Trading: Smaller size, part of the plan, clear stops, and fast exits.
- Stay Green: Protect profit, especially late in the day/week. Adjust risk accordingly.
- Journaling: Daily performance tracking with journal software recommended.
- Time Frames: Multiple frames used (30s to 30m). Higher frames clarify lower time action.
- No Trade Zones: Avoid early open minutes or major news lead-ups.
- No Prediction Trading: Wait for price at levels. Let setups come to you.
- System & Discipline: Pick a system, track results, refine self. Follow your rules.
Market Dynamics and Context
- News Drivers: PCE, GDP, Jobs data, FOMC, and earnings like Nvidia are major volatility events.
- Market Hours: Session definitions influence level relevance (RTH, Overnight, London, Asia).
- Market Correlation: Look for index alignment (ES, NQ, etc.) for trend confirmation or chop detection.
- Liquidity Grabs: Strategic stop-hunting often leads to reversals or continuation trades.
- Momentum Indicator: Custom tool flags directional moves. Advises against counter-trading freight trains.
Mindset and Philosophy
- Wisdom & Mentorship: Proverbs 13:20 guidance. Learn from mentors and the wise.
- Risk Management: Protect capital and past wins. No single trade should cause major damage.
- Discipline: Rule-following ensures longevity and limits loss.
- Structure over Desire: Let chart structure, not emotion, dictate action.
- Patience Pays: High-probability setups and solid management beat overtrading.
- Resilience: Accept losses. Tools like lockout features help preserve mental capital on rough days.
Frequently Asked Questions
Q: What are “battle plans” and how are they used in trading?
A: Battle plans are pre-determined trading setups that map out entry points, targets, and stops based on analysis. These help traders react swiftly when price reaches key areas.
Q: What are “strong levels” and the “bull bear line” and why are they significant?
A: Strong levels and the bull bear line highlight major support/resistance. Above the bull bear line, buyers dominate; below, sellers do. These are critical for trade planning.
Q: What is the significance of PCE and Nvidia in the trading week discussed in the sources?
A: PCE is a key inflation metric; Nvidia’s earnings can spike volatility. Both events are tracked for trade opportunities.
Q: What is the trader’s approach to risk management, particularly when counter-trading or holding winning positions?
A: Every trade has a stop. Small size is used for counter-trades, and winners are managed with trailing stops or partial profits to stay green.
Q: How does the trader use different time frames in their analysis?
A: From 30-second to weekly charts, time frames are layered to identify key levels and refine entries/exits.
Q: What is the role of psychological discipline and journaling in this trading approach?
A: Mental strength is essential. Journaling supports review and discipline, reinforcing lessons and growth.
Q: What are some of the key market behaviours and patterns the trader looks for?
A: Patterns include lading up, liquidity grabs, gap fills, trend line backtests, and bounce plays at key levels.
Q: How does the trader view trading during news events and holiday sessions?
A: These are treated with caution due to unpredictability. Risk is reduced, though big events are observed live for potential setups.
ES & MES Training System Study Guide
Quiz
Answer each question in 2-3 sentences based on the provided material.
- What is the primary focus of the Friday AM briefing Battle Plan discussed?
- Why does the speaker emphasise the importance of a stop-loss in every trade?
- According to the Monday AM briefing, what is a key benefit of journaling trades?
- What is the significance of the Bull Bear Line mentioned in the briefings?
- What are “strong levels” and how are they used in the trading system?
- What news drivers were highlighted for the week following the Monday briefing?
- Why does the speaker often advise against trading in “chop zones”?
- What is the rationale behind using a trailing stop for winning trades?
- How does the speaker approach taking “counter trades”?
- What does the phrase “structure over desire” mean in the context of this trading approach?
Quiz Answer Key
- Friday Battle Plan: Aimed at a specific trade entry the speaker wanted, waiting for a deeper pullback level.
- Stop-loss: Essential to protect capital and avoid major losses during unexpected market moves.
- Journaling: Helps traders stick to a system, evaluate performance, and improve discipline and execution.
- Bull Bear Line: A critical level indicating market control—bullish above, bearish below.
- Strong Levels: Historical reaction points that act as support or resistance for trade planning.
- News Drivers: Durable Goods, Consumer Confidence, FOMC Minutes, Nvidia earnings, Unemployment, GDP, PCE.
- Chop Zones: Avoided due to unpredictable price action and unclear trade setups.
- Trailing Stop: Used to protect profits while allowing room for trade continuation.
- Counter Trades: Taken with caution, small size, and tight stops due to going against trend.
- Structure Over Desire: Focusing on objective setups instead of wishful price predictions.
Essay Format Questions
- Discuss the role of discipline and trade management in the featured trading system, drawing on examples from the briefings, particularly regarding staying “green” and handling losing trades.
- Analyse the significance of key levels (e.g., Bull Bear Line, Strong Levels, RTH highs/lows, overnight levels) and trend lines in identifying potential trade opportunities and managing risk within this trading approach.
- Evaluate the speaker’s perspective on trading during different market conditions and events (e.g., holiday sessions, news releases like PCE or Nvidia earnings, chop zones) and how this influences their trade selection and risk management.
- Explain the concept of a “financed runner” and its purpose within the trading strategy, detailing how initial contracts are used to mitigate risk on remaining positions.
- Based on the provided text, describe the process of mapping out a “Battle Plan” trade and the criteria used to identify the “most wanted” setups.
Glossary of Key Terms
- AM Briefing: Morning market analysis and trade plan.
- Asia Low: Lowest price during Asia session.
- Battle Plan: Pre-session trade ideas and key levels.
- Backside: Retest of a level from the opposite side.
- Break Levels: Key break-out/breakdown price zones.
- Bull Bear Line: Dividing line between bullish/bearish bias.
- Cash Account: Account funded without leverage.
- Chop Zone: Ranged, messy price action zone.
- Confirmation: Validation of a trade setup.
- Counter Trade: Trade against the trend.
- Daily Loss Limit: Max allowable loss per day.
- Daily Ladder Point: Target or reaction level from prior day.
- Fair Value Gap (FVG): Inefficient area on chart; often filled.
- Financed Runner: Runner contract held with locked-in profit.
- FOMC Minutes: Fed’s meeting record.
- Freight Train: Strong, fast directional move.
- Front Side: Trending side of a level.
- Gap Fill: Price returning to fill a gap.
- Green: Having a profitable session.
- Halfback: Midpoint of a price range.
- Heat: Volatility or price pressure.
- Home Run Trade: Exceptionally large winning trade.
- IB High/Low: Initial balance high and low.
- Journaling: Recording and reviewing trading behavior.
- Lading Up: Price tightening before a move.
- Ladder Back: Pullback to a prior level.
- Laddering: Scaling out of a trade in pieces.
- Leverage Metrics: Risk-based position sizing guides.
- Liquidity Grab: Stop hunt and reversal zone.
- London High/Low: High/low from London session.
- Magnet: Price-attracting level.
MORE INFORMATION:
Website: https://MicrosTrader.com
YouTube: https://www.youtube.com/@microstrader
Free Foundations Course: https://academy.microstrader.com/foundations-dashboard/
Q: What is the Bull/Bear Line and why is it important?
A: It’s a key level that determines directional bias—above it, bulls are in control; below it, bears dominate. It acts as a major momentum shift area.
Q: Why is trade management more important than entry?
A: Because most profits come from how you manage a trade—via stop-losses, partial profits, and financed runners—not from predicting exact market entries.
Q: How should traders approach volatile news events like earnings or economic releases?
A: Unless you have a specific plan, the default advice is to step back and avoid trading, due to the unpredictable and often violent price swings.
