Thursday, 16 December 2010

I Love Those Neutral Days

Yesterday in the ES was a neutral day. For those who don't follow Market Profile, a Neutral Day occurs when there is range extension in both directions after the Initial Balance.

OK, what is the big deal about a neutral day? Well most of the time,  after the market's second range extension, it retraces back to the middle of the Profile. I say "most" but in the ES RTH, I can't remember it not happening unless it was too late in the day.

It doesn't take a lot of smarts to figure out that this is a high probability trade that should be traded by me in every instance I see it. This is an automatic response on my part. No thinking required, I just do it. Sometimes the move is not completed entirely within the RTH session but goes into the Asian time zone. See the pic.

1 comment:

  1. Hi EL,
    Thanks for all your posts. I am confused as to what trade your speak of on Neutral Days? Fade the second move?

    Happy Holidays!