Neil's Charts - His Core Setup

2017-06-05 | Danielle Shay

An avid futures and options trader, Neil’s chart setup is one that allows him to always have an overall market view, in addition to analyzing each vehicle he is trading. Neil is all about following the trend, and entering at specific moments in time, and you’ll notice his chart setup and tools reflect that.

His core setup includes:

  • Market Internals Workspace
  • Initial Balance Grid
  • Volume Profile
  • TradeStation Workspace
    • Moving Averages (10, 20 EMA & 40, 50 and 200 SMA)
    • Voodoo Lines
    • Hand Drawn price levels
  • Trend Continuation Workspace
    • The Squeeze
    • Triple Squeeze
    • Moving averages
    • TTM Trend Bars
    • Ready, Aim, Fire

Platform: Neil uses both TradeStation and Thinkorswim on a regular basis.

How He Plans:

Neil is meticulous in his morning preparation. Before placing any trades, he does an overview that includes overnight data in the futures markets, key numbers and levels, while keeping in mind probabilities and statistics from the studies he creates from his own market research. This, combined with an overall macro view that includes the news, sentiment and market correlations is how he starts off the decision making processes during his trading day.

Market Internals Flex Grid

Neil’s main flex grid is where he gets a main slice of the information needed to make decisions in the market. He has various index futures, and correlations on his chart, as well as market internals indicators.

Included on this grid are:

  • $TICKs – helps determine strength in buying/selling programs, trend continuation, trend reversal or chop mode
  • $VOLSPD – VOLSPD measures the difference between the up volume and down volume on the S&P 500. Falling VOLSPD = increase in selling pressure, and vice versa.
  • BANK – Nasdaq bank index – uses this as a directly correlated sentiment indicator for trading with the indices
  • UVXY – Inversely correlated with the indices
  • VWAP – volume weighted average price, it’s a moving average that calculates the volume average (blue line on grid with indexes)
  • VPOC – Volume point of control (red line on grid with indexes)
  • Major indexes – S&P’s, the Dow, Nasdaq, Russel, Crude and the bonds

 

Initial Balance Grid

Neil uses his initial balance grid to day trade the /ES, as well as give him information about the overall market health for the day. He looks for confluence on this chart with his overall market data and additional setups and biases for the day, to make educated trading decisions in the /ES. The initial balance populates after one hour of trading, at 9:30 CST.  The initial balance high and low are considered important points of support and resistance, until broken. He likes to place trades based on the breach of the IB, in relation to the VWAP (volume weighted average price).

 

Volume Profile Workspace

Neil uses volume profile numbers to help him with his entries and exits when trading the /ES. What is the volume profile?

The volume profile is tracking the volume continually with every purchase of every tick and contract, it’s populating the amount of volume that’s done at every price. Neil uses this to overlay volume profile numbers with his trading idea to give him targets where price may linger. How does it work? The green histogram represents volume. Price is usually rejected at low volume pits, and attracted to high volume acceptance numbers. High volume nodes demonstrate areas where buyers and sellers are coming together and they are happy, while low volume numbers are not highly traded.

 

Trend Continuation Workspace

Neil uses this trend continuation to swing trade options or stock. We look for an organized retracement into the moving averages in conjunction with a squeeze to jump on the trend at the right time, in the right direction. This is a conservative method that he uses to ensure he is never buying the high, or selling the low, but yet jumping on the trend in a moment in time with limited risk.

 

Neil’s Trend Continuation Chart Setup:

TTM Trend: These colored candles alert you to the trend of the price movement. These candles show you that even if there is a down day, the overall trend can still remain positive. This allows you to remain on the correct side of the trend.

Moving Averages: Neil uses the 10 exponential (green dashed line), 20 exponential (beige dashed line), 50 simple (cyan solid line) and 200 simple (red solid line) moving averages.

TTM Squeeze: The squeeze alerts us to a compression of volatility and price movement. We want to be positioned prior to the squeeze ‘firing’ so that we can be in the move.

Triple Squeeze: The triple squeeze allows us to compare squeezes across various indexes and ETF holdings with the stock we are trading, all on the same chart.

Ready, Aim, Fire: The RAF is an excellent entry indicator, especially when paired with a trend continuation move and the squeeze.

 

Neil’s TradeStation Workspace

Neil usually uses this workspace to trade index futures and commodities, and it is also where he places his trades. As you can see, it has his watch list on the left-hand side that highlights the market internals also seen on his flex grid.

 

Neil’s TS Chart Setup:

Moving Averages: Neil uses the 10 exponential (green dashed line), 20 exponential (beige dashed line), 50 simple (cyan solid line) and 200 simple (red solid line) moving averages.

TTM Squeeze: The squeeze alerts us to a compression of volatility and price movement. We want to be positioned prior to the squeeze ‘firing’ so that we can be in the move.

Voodoo Lines: Neil uses these for important areas of support and resistance, as well as price targets.