Below is a link to a 1 year chart of the March Futures Contract of the Dow on the Chicago Board of Trade (CBOT). Back in my good ole days when the wine and money were flowing in a very benefic manner, I did a-lot of trading on the CBOT, mainly with a corporation’s money, I only made money on a commission basis if I made money for the corporation. Somehow I lucked- out and got connected with some people at the CBOT who damn sure knew how to make money trading. One of their tools was Technical Analysis, the other main tool was timing trades with a 'great' floor broker who damn sure knew how to read the floor when certain other floor brokers walked out on the floor representing large trading entices (smart money). The days where a small trader like myself could profit from this type situation are long gone, the main reason being back in my day the commissions on one contract of any futures contract was around 100 $, charged by the Brokerage Company you had your account. Now- a- days with on-line trading companies, the same commission charge runs 2-6 $ for a trade in one futures contract. In effect, what this has done is eliminate a good floor trader representing the Broker Company; therefore, eliminating the possibility for a small trader have contact with a good floor broker who knows how to read the floor timing perfect trades. Let me demonstrate an example of what I am explaining below with this link chart with first Technical analysis:
Placing a trade near old bottoms for short selling purposes is one of the keys for Technical analysis. Looking at the chart in the link below, we see 5 old bottoms around 24,000 in the March futures contract for the Dow which occurred in April, May, July, Nov, & Dec 2018. Technically, these 5 old bottoms are called a very strong Resistant Line! If I saw the Dow up significantly Monday morning nearing 24,000, I would contact my floor broker and tell him I was going to make technical trade by short selling future contract(s) in the March 2019 Contract of the Dow. I then would ask him: Do you consider this a safe trade by what you have been witnessing on the floor in the last several weeks? If he considered this a safe trade he may say something like this: Steve, all I have seen in the last several weeks is ‘smart money’ (floor brokers representing very large corporate accounts) selling rallies. This would tell me I had a very high % short trade in the Dow. I then would ask him to squawk if he saw something on the floor Monday that spooked him in not making a short trade in the Dow. Back in those good ole trading days, Brokerage Companies would have a ‘squawk box’ where certain small traders could go to their nearest Brokerage House and have access to a ‘squawk box’ being in contact with a floor broker. Again, those good ole days are long gone. Today the Dow futures trade overnight, a good floor broker has to get sleep.
Technically speaking, it is very common to see a market rally back only one time to its old bottoms after breaking-out to the downside of a long sideways trading formation as we see on this chart. So---if I saw the Dow overnight or during the Day trade near 24,000, I would call my broker representing the Brokerage Company and place a Short Trade in the March Dow futures, risking only 10% of the money in the account with Stop Order. If I initiated this short trade Monday and the market closed over 24,000 by close Friday on the weekly charts, I would close out probably at least 75% of my short trades, keeping 25% of my short trades provided I did not get stopped- out with the 10% risk trade loss. If this situation happens Sunday night or Monday, I will for fun ‘paper trade’ this ‘Short Sale,’ on the basis of a-lot of things I have posted about the Dow in this Thread Topic.
https://www.barchart.com/futures/quotes ... tive-chart