Learn how to trade index futures

Learn how to trade index futures

In this video, David shows you how to trade index futures in real-time using the Quantum Trading tools and indicators and applying the volume price analysis methodology. It’s an interesting session with the NQ Emini once again leading the way higher for the other indices. And of course as always, the US indices send a clear signal for risk on or risk off sentiment for forex traders through the prism of relational analysis.

00:15

Divergence in YM, NQ, ES indices

00:15

The speaker discusses the current market behavior observed in the YM, NQ, and ES indexes, highlighting frequent divergences among them. There have been strong up days for the NQ, down days for the YM, and mixed movements for the ES. This lack of consistency results in various patterns where one or two indexes move up or down independently, reflecting a complex and unsettled market environment.

01:13

Normal vs current trading conditions

01:13

The speaker explains that the current market is experiencing abnormal trading conditions where three key indicators, which normally move in sync, are diverging significantly. This divergence can provide a strong signal that the outlier will eventually follow the trend of the other two. The Nasdaq has been primarily influenced by the tech sector, whereas the other two indicators have not been affected as much by this factor.

01:46

Trend monitor signals bearish shift

01:46

The speaker discusses a shift in market trends, noting a divergence in the five-minute chart where the trend monitor is moving from a bullish phase to a bearish phase, indicated by a color change from dark blue to dark red. This suggests a potential downward move in risk asset classes. The volume point of control on the ES index is very close, implying limited room for a short position before reaching that key level.

02:45

Volume point of control importance

02:45

The segment explains the concept of volume point of control (VPOC) as the area of highest trading volume, acting as a market fulcrum that creates congestion due to heavy volume accumulation. It contrasts this with low volume nodes, where prices move more quickly. The discussion highlights how volume, price, and time interplay in market dynamics, emphasizing that regions with high volume act as strong support or resistance levels requiring significant effort to break, while lower volume areas allow easier price movement. This framework is crucial for understanding market behavior and price action.

04:13

Bearish tone and cautious shorting

04:13

The speaker discusses a bearish tone in the market, noting that while the Nasdaq (NQ) offers more shorting opportunities, it has remained relatively bullish over the past weeks. Caution is advised as the market shows no strong signs of a major decline aside from intraday reactions influenced by news events. The downside potential is limited to about 30-35 points before hitting significant volume levels. There is minimal price-based support to slow a downward move, with only a few minor levels tested once. Stronger support exists at levels tested multiple times, indicated by thicker volume profiles. The key factor for a sustained downward move will be a significant increase in trading volume at these levels.

06:11

Volume price analysis for support

06:11

The discussion focuses on recent market activity, highlighting a day with significant volume and an effort to rally despite prevailing selling pressure. The high volume and upper body price action indicate market weakness rather than strength, signaling a potential move into a congestion phase. This is not a definitive signal to short aggressively but suggests caution as the market is unlikely to close higher and is showing signs of downward pressure.

07:06

Signs of market congestion and weakness

07:06

The speaker explains that price movements showing weakness with attempts to rally followed by falling back indicate indecision rather than strength or reversal signs. They emphasize that such congestion patterns are consistent across different time frames, from one-minute to one-month charts, and that volume and price analysis principles apply universally. The discussion then shifts to analyzing an enqueue chart across multiple time frames, highlighting the importance of viewing data on various intervals such as 15 seconds, one minute, three minutes, five minutes, ten minutes, and fifteen minutes to understand market behavior.

08:06

Multiple time frame analysis on NQ

08:06

The speaker analyzes short-term trading intervals, starting from 15 seconds to one minute, observing sideways price movement with some downward pressure. They highlight areas of low volume and volume point of control, noting clear price levels where the market might break away or shift direction.

08:37

The analysis extends to 5-minute and 10-minute charts, confirming a similar pattern of volume distribution and slight weakness in the upper price range. The speaker points out that upper body price weakness often signals profit taking following a strong rally.

09:07

Profit taking is identified as the cause of recent downward price moves after a strong rally. Volume shapes and low volume nodes suggest a potential 20-point decline with limited immediate price support, indicating a thin market area before hitting deeper support levels.

09:33

A 20-point downward move is anticipated, followed by congestion as price reaches stronger support levels. Some buying interest is noted, providing light support with price wicks indicating attempts to hold the lower levels despite overall weakness.

10:31

Volume analysis on short intervals shows falling volume on the recent uptrend, suggesting limited strength in the rally. The price is likely to encounter congestion at the volume point of control, restricting further upward movement.

11:11

The speaker discusses two-bar reversals visible on short-term charts, illustrating quick price upthrusts and declines. They then examine the 3-minute chart, noting a drifting price trend and a transition in trend monitor colors indicating weakening bullish sentiment.

11:44

The trend monitor’s color changes reflect the shift from bullish to bearish sentiment as price momentum weakens. The speaker explains that these color transitions may vary depending on trend strength but emphasize the effectiveness of combining the trend monitor with trend dots, particularly on Renko charts.

12:12

VIX as fear index and risk gauge

12:12

The speaker explains the importance of using the VIX, or ‘fear index,’ to understand market sentiment and trends. The VIX has mostly been falling, correlating with rising equity indices, but recent increases in the VIX suggest equities may decline. This inverse relationship helps traders anticipate market movements and avoid being prematurely exited from trades.

13:30

The VIX is a crucial tool for intraday traders across all markets, including forex, futures, indices, bonds, commodities, and stocks. It reflects risk sentiment based on options market activity, indicating whether the market is risk on or risk off. Traders are encouraged to keep the VIX visible on their charts, with sources like Investing.com and TradingView providing real-time data.

14:35

The speaker notes a recent market rally and reversal, identifying a clear signal termed a ‘telegraph pole’ on the chart. These distinct patterns serve as important indicators for traders, helping them recognize momentum shifts and potential trade opportunities.

15:06

Volume anomalies and scalping opportunities

15:06

The segment explains the relationship between price movements and volume in trading. It highlights that a rally with very low volume is unlikely to sustain. An anomalous candle is discussed, where price and volume do not align as expected—the closing price is higher than it should be if volume confirmed the move. A comparative example candle with higher volume but different price action illustrates the concept. The presence of buying pressure is inferred from the candle’s shape and volume, which is valuable information for scalping traders looking to capitalize on short-term price movements.

16:05

Price resistance and volume clusters

16:05

The segment discusses significant price-based resistance levels seen on the accumulation distribution indicator. One key resistance level has been tested four times previously and is now acting as resistance around the 406 price point. If this level is broken, it may become a support platform. Another resistance level slightly above has been tested twice, creating a cluster that forms a relatively strong resistance area. The discussion highlights the challenge of overcoming increasing volume resistance as the price approaches these levels.

17:02

The focus here is on testing the resistance levels with precise price points, emphasizing that these resistance zones are pinpoint accurate rather than broad ranges. The price is currently testing these levels, showing some struggle to break through, which has happened multiple times before. It is noted that breaking through this resistance is crucial, and the volume point of control is shifting as volume builds in different price regions, indicating a dynamic market environment.

18:08

This segment explains the concept of the volume point of control (VPOC) as a dynamic indicator that moves with changing market volume patterns. The VPOC does not remain static but shifts as new volume exceeds previous levels in different price areas. This movement reflects how the market rebuilds volume regions over time. The segment concludes with observations of market weakness and volume activity supporting this shift in the VPOC.

19:09

Trading with volume and spread patterns

19:09

The market is showing weak momentum and may experience another failure similar to previous attempts. Short-term trading on the one-minute chart reveals limited upward movement, suggesting traders should be quick to enter and exit to capture small gains. Despite sluggish market conditions, there are still scalping opportunities for skilled traders, though fast-moving, high-momentum days are generally easier for making profits.

20:16

Making money on slow, choppy market days requires skill, precise use of indicators such as volume price analysis (VPA), and quick execution. This style of trading is not for everyone; some may prefer to wait for faster market conditions. Observations of recent candlestick patterns show selling pressure followed by buying interest, indicating a potential upward move. Volume analysis suggests that recent small candles with low volume do not indicate strong selling pressure.

21:24

The market is beginning to move upward into a low volume area, approaching a significant resistance level that has already been tested. Switching to slower time frames like the one-minute chart provides a broader perspective on the price action. There is lightweight resistance overhead, but if the market can break through this region, it may continue higher. Monitoring related indicators such as the VIX is important, as its reversal can impact the equity markets positively.

22:40

The VIX has dropped further, suggesting that the current rally in equity markets could continue if this downward trend persists. Shorter time frames show some market chop, but longer-term charts remain bullish, highlighting a minor reversal in an overall uptrend. For intraday traders, this means active scalping and quick trades, while longer-term traders may view the price action as a temporary pullback within a continuing bullish trend.

24:04

Trading styles: scalping vs longer term

24:04

The speaker discusses the importance of having a clear trading strategy and sticking to it, whether scalping or longer-term trading. They highlight the common mistake of switching tactics mid-trade and suggest separating different trading approaches into distinct accounts to maintain discipline and clarity.

25:23

The focus shifts to analyzing market volume and price action, emphasizing the significance of volume in understanding market strength and transitions. The speaker points out how a single candle can influence the market and stresses that volume analysis is applicable across various trading instruments.

26:46

The speaker explains that volume price analysis (VPA) is universal regardless of the traded instrument. They discuss key resistance and support levels in the current market, noting that overcoming certain price points could signal continued upward movement despite minor reversals.

27:48

An evaluation of market resistance and support levels is provided, highlighting repeated tests of resistance and moderate support beneath. The speaker notes that while the resistance is significant, it is not overwhelmingly strong, and surpassing it could lead to further gains due to reduced price-based resistance ahead.

29:29

The discussion touches on the flatlining VIX and reiterates that volume price analysis is broadly applicable across markets and instruments. The speaker confirms that the specific chart used is representative and that the principles of VPA remain consistent irrespective of the underlying asset.

30:59

Further technical analysis focuses on current resistance overhead and support platforms, with attention to volume patterns. The speaker highlights the importance of breaking through narrow volume nodes and points out upcoming challenges in higher price ranges where volume has significantly dropped.

31:59

The speaker expresses concern over rising prices accompanied by falling volume and narrowing spreads, which is a negative indicator for the uptrend. They explain that in a healthy uptrend, price spreads typically widen rather than narrow, signaling the need for caution.

32:30

Volume and spread behavior in trends

32:30

The speaker explains the concept of rising and widening spreads in price waterfalls during market moves. In an ideal price waterfall, spreads widen as the price moves down, resembling a waterfall shape, and similarly widen during upward moves. They emphasize the importance of rising volume in a rising market and rising volume in a falling market, noting that volume behavior differs due to the effort required for price changes in either direction.

33:26

The discussion shifts to market congestion phases and the use of a trend monitor tool that helps traders stay in positions during sideways markets. The speaker highlights how the tool prevents premature exits by signaling when the market is in a transitional phase and may soon accelerate, encouraging traders to hold through resistance rather than exit too early.

34:19

The speaker analyzes recent buying activity, noting signs of weakness such as falling volume and narrow spread candles. They caution that while these signals may indicate a potential pause or pullback, they do not necessarily mean the rally will end. The emphasis is on monitoring volume and price action to assess market strength and potential continuation.

35:09

The segment covers a mild pullback characterized by lightweight selling pressure and the formation of support levels. The speaker notes that although there is some downside volume, it is insufficient to cause a significant market decline. Attention is drawn to low volume areas above that, which if breached, could lead to a stronger move upward.

36:06

Looking at a slower 10-minute timeframe, the speaker identifies a long-legged doji indicating market indecision with balanced buying and selling pressure. This reflects a tug of war between market participants without a clear directional bias yet, signaling a period of consolidation before a possible breakout.

37:03

The focus is on monitoring large block trades in time and sales data, which can indicate significant market moves if the market reacts accordingly. The speaker explains that lack of reaction to big blocks might signal market weakness or limited upside. They also mention plans to analyze this data further on other trading platforms and the importance of block size in determining impact.

37:28

The market is currently trading around the volume point of control on the 15-second and 3-minute charts with rising volume and price spreads, which is positive. The speaker wants to see the market break through a key pivot level where previous attempts showed weakness despite decent volume. They conclude by checking other indices, noting initial signs of upward movement.

38:42

Market breadth and synchronized indices

38:42

The discussion focuses on market movements and indicators, noting encouraging signs as different market elements align on faster time frames, which is positive and not concerning. Attention is given to analyzing the NQ (Nasdaq) using Renko charts, with the speaker explaining the use of a Renko optimizer that operates on equivalent time frames (15 seconds, 30 seconds, 1 minute) to determine the optimal brick size. This approach helps reveal momentum more effectively than traditional time-based charts, providing valuable insights for trading.

40:04

Renko charts and momentum measurement

40:04

The speaker discusses market dynamics, highlighting buying pressure on the New Zealand dollar and selling on the yen, which supports rising equities and reflects risk-on sentiment. They explain the challenge of setting appropriate parameters for non-time-based charts like tick and Renko charts, emphasizing that traders often have to guess optimal settings. To address this, tools like the tick speedometer and Renko optimizer were developed to automatically adjust settings based on the smallest price change units (ticks, points, pips, or dollars) for different contracts, improving chart accuracy and relevance.

41:30

The Renko optimizer dynamically adjusts the tick count per brick, which reflects market momentum. A rising tick count indicates strong momentum, while a falling count suggests sluggishness. Examples on different time frames show a slight decrease in tick counts, suggesting a bullish move with reduced momentum compared to earlier. This adaptive feature helps traders gauge market strength more effectively.

42:30

The integration of Renko charts with trend monitoring tools enhances trend detection by signaling trend changes close to price action through trend dots and the trend monitor. These tools remain stable even during minor reversals, offering reliable trend insights. Combining Renko charts with volume price analysis on time-based charts provides a comprehensive trading approach that smooths price noise while maintaining detailed market information.

43:30

Renko charts provide structured, noise-reduced visuals that, when combined with volume price analysis, offer significant trading advantages. The speaker notes strong buying activity in the New Zealand dollar across various currency crosses, indicating robust market moves. The session concludes with apologies for running over time and thanks participants, directing them to the available indicators for further use.

44:36

Indicator availability and future updates

44:36

The speaker discusses the ongoing development and upcoming release of trading software for various platforms including MT4/5, NinjaTrader 7/8, and TradeStation, which is coming soon despite some delays. They mention plans to reintroduce indicators for TradingView users as a free upgrade, leveraging Pine Script’s enhanced capabilities to include all forex indicators and others previously missing. Additionally, they promote resources available on annakuling.com, including books, analyses, and a comprehensive forex trading program encompassing a full set of indicators across supported platforms.

46:03

Complete forex trading program overview

46:03

The segment details the core modules of the course, covering psychology, fundamentals, relational, technical aspects, and trading mechanics, offering over 200 hours of video content. It highlights the webinar library with topic-specific webinars and extensive examples, as well as membership in the VPA traders chat room hosted by Anna and David. The speakers thank viewers for attending, apologize for overrunning, and invite questions via email. They share upcoming session times and encourage viewers to stay safe, concluding with a farewell.

By Anna Coulling – creator of volume price analysis