Trading Strategy Using The Equilibrium Price As A Target

A trading strategy using the equilibrium price as a target is a powerful trading strategy that most traders overlook.

 This is the e-mini mini from yesterday february 1st and I want to point out something to you because I use a trading zone. I calculate a trading zone every day and for those of you who have seen my previous videos you know that what the trading zone is. I use trading zone calculations to give me a support and resistance number.

Now yesterday the support was 4419 and resistance 4534. so I put that rectangle on my chart and that’s a an area where the market is likely to trade

The trading zone is a calculation of averages based on previous days’ market movements – how far did it go up how far did it go down from the previous day’s high so on and so forth plus some smoothing averages and you basically come down to a number that’s generally fairly accurate.

Now remember it’s a calculated number so nobody has a crystal ball –  I don’t know where the market is going to trade but based on these numbers which are based on a historical calculations proven accurate for over 75 years this is the closest thing to a crystal ball that I’ve seen for day traders.

I add another price level onto my daily trading calculation and that is the previous day’s close. now the previous day’s close was 4502. the market opens either at or below or above equilibrium equilibrium equilibrium being the price where it last closed. this is the equilibrium price and this is what I take every day as being the equilibrium price this is where buyers and sellers decided on the previous day the market should settle.

Okay so the market opened at about 4512 and quickly traded down to 4501. now I know this is yesterday but just bear with me uh the window closed quickly down 10 points let me make this chart bigger so you can see it a little better. Okay the market quickly closed down 10 points after a little bit of a stop run to the upside and if you did that you should have gotten off if you’re trading the way.

I say this because this is this equilibrium is a target level, and we can use this as a trading strategy. These three prices of support resistance and the previous close are target levels – don’t look at them any at anything other than target levels and the market closed down to close our window. After that where is the market going to go? well it bounced up to where it opened. I had no idea, and you had no idea – nobody knows where the market is going to trade but the market does have a target where it wants to go. the market traded up, then down up, then down up, then down – but notice one thing.

The market traded up – the market traded down – down – up – down – up – up – down but where did it end up where did it go where did it settle? Right at our equilibrium level!

This is where buyers and sellers agree that this was a fair price for the market. this is a strategy that since nobody knows where the market is going but you do know the equilibrium price – a price where a lot of people agreed on. the market went up over equilibrium then through it and then down then back up to equilibrium then down. You could have traded any of these bounces but the sure thing was finding where the market is going to seek equilibrium; and look how many times the market did that.

So a trading strategy based on where is the equilibrium price is a good strategy, since nobody knows where the market’s going to go. you could chase the market but most of you who’ve been trading for a while know that chasing the market typically doesn’t work. sometimes you can gauge it but the market does seek equilibrium throughout the day.

the point that I wanted to make today and I hope I made it is that the market will seek equilibrium and if you can find that equilibrium on a day when the market is trading back and forth through equilibrium use that as a target where to place your trades Using this strategy of trading equilibrium you could pick up a nice few points throughout the day just trading based on the market finding a target at equilibrium.

So that’s my video for today. Students enrolled in my e-mini trading course  know my feelings on trading and of course I calculate the trading zone each day and I send it out as a subscription service.

You can sign up – it’s not expensive – you can sign up on my website timelessdollar.com.

Equilibrium trading strategy is a good lesson and I think it’s going to give a lot of people some good info to help them trade more successfully.

Anyway thanks for watching – trade safely –  this is Marv Eisen from Timeless Dollar and I’ll see you in my next video.

Knowing the day’s trading zone before the market opens gives traders a big advantage over “seat of the pants” traders. People who enroll in my trading course receive the calculated support and resistance numbers for the following day by email. You can receive this information each evening by enrolling in my trading course using this link. As a bonus, you’ll receive a 10% discount when you enroll. 

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