11.24: Favorite Setup x 2

It's a 10m mean reversion but a 'late' higher probability entry than timing the top or bottom.

We're looking at structure on a 10m basis. At the very least we need a a HSH or LSL with PO divergence, ideally from an extreme level but at worst above +/- 618. Pivots should be 10+ candles apart.

Then we're waiting for a loss of the 3m21e with a shift in color on the 3m21e pivot.

Ideally the 3m is in a squeeze with a steep PO slope.

Ideally the 10m HSH or LSL is aligned with a major ATR level and/or far from the ribbon and/or once price has already moved 80%+ of the Daily ATR.

Upside Mean Reversion

Upside reversal only after 10m LLs with HLs on PO (from extreme areas), plus TL resistance (10m swing highs) break. plus a 3m squeeze, and only after the 3m21e is broken through and flips to green! It's okay to be late because if wait for the other criteria, then it's more likely to rip for longer- because we've consistently trapped late shorts.

Downside Mean Reversion

Swing High in the 11a hour

Higher Swing high in the 1p hour

PO showed divergence

Now wait until:

Loss of 3m21e AND

3m21e flip AND TL support break - from two previous 10m swing lows

Hold until 3m21e is lost OR

TP at 3m48e

Then 10m21e

Premium chart for 30 delta / next major psych level - made a lower swing low with divergence. We started eating into the 3m ribbon and continually holding it. When I size it is extremely difficult to hold through the volatility within 1 3m candle.

I got in early and knew I was getting in early, hence I started with very small size. Over the next 30 minutes it became more frustrating that I didn't wait until an actual loss and flip of the 3m21e. But I was able to hold through a severe drawdown because the previous high did not break. Not only that, once the previous high failed to break over 3 candles and the 4th putting in a bearish engulfing. I then felt more confident to add size short of the loss of the 3m21e.

Once we lost the 3m21e you'd think I'd be happy to simply move my stop and wait until the 3m48e hit, but because I had such large size I was unable to hold through the volatility despite continuously making higher lows on the premium chart.

10 POINTS

Gamma was highest at 6700 and that's honestly what I should've been waiting for. Premiums ripped from 4.5 to 7.5 on the 3m candle just after I fully exited. I took about a 20% gain on contracts that went 100%.

As I get more certain in how I execute the setup, I will be able to hold through the wiggles. And wait to stop out with a loss or at least a moved stop in profit - then a move all the way to the next level.

The downside mean reversion is benefited by the typical rip in VIX, however it's typically a slower move relative to the upside mean reversion given markets tend to go up. Also, if I 'miss' the trade, a reclaime of the 3m21e to the upside is a potential entry for continued upside to the previous swing high and then potentially higher.

When I'm in the trade, rather than focusing on how high the premium goes/went - I need to focus more on the previous candle low. As long as we're headed up there's no reason to be concerned. Same thing with the actual underlying price. As long as the candles are creating lower highs, then there's no reason to even consider exiting.

More from the past week.

30 POINTS

15 POINTS

13 POINTS

40 POINTS

20 POINTS AND 25 POINTS

Today I sold most after moving 3 points and the rest at 5 points away from entry. Price went 10 points.

For upside mean reversion the smallest move once the 3m21e flipped was 13 points. I need to wait 10 points no matter what.