 Good morning book map Happy Monday everyone Hope everyone is having a good day All right Well first things first the first thing I want to talk about this morning is the contract roll over but real quick Let me just introduce myself before I do that so that people who are new to the program know who's doing the talking My name is Charles. I run a YouTube channel called pirate traders We're a community of day traders who trade the ES and the NQ and we like to hang out and discuss ideas together Today I'm gonna be talking about the ES the NQ and how it moves through the two-way auction process using market profile Which is the screen you see over here on the left? Book map, which is the screen you see over here on the light on the right and Occasionally I will click back and show these screens in the background, which are called the market internals Okay, so first things first. We're gonna roll over our contract today I am now trading the Z contract from the U to the Z and that is just because today is the first day of that roll over Interestingly enough we have this massive huge gap that was created by the contracts rolling over from one contract to another This is very unique to see as a matter of fact the first time I've ever seen it before Was the last contract roll over three months ago and if we will recall When that happened Let's scroll back and find that gap real quick there we go So if you recall that previous time when we rolled over We partially filled the big gap that day We came back down and tried to fill the large gap that we had created from that contract roll over But we could not fill the gap the market came back up Rotated for a few days building a balance area and then broke out to the upside We never came back and Filled that contract filled that to a gap from the roll over from one contract to another So that doesn't mean we can't fill the gap this time around but it is important to note it is very rare for the market to leave unfilled gaps and One would assume a gap from a contract roll over would need to be backfilled, but we now know it does not We can still get a gap and go so we're gonna treat it like every other gap Which is we are gonna assume that it is a sign of momentum To the upside that the market is done going down and it's ready to start going up So we are gonna assume today that the market has momentum to the upside but We must first deal with the gap So the first order of business for the market today will be trying to pull back down and fill the gap If they cannot do that then it becomes a gap and go which is bullish for continuation to the upside Okay, so first order of business is the gap. Can they fill it? If they fill it and get to yesterday's high at 47 4477 do we find support there or do we fail to fill that gap I Would also make a note. This is gonna be a little confusing for the newer people, but we have a gap inside a gap Okay, so there was a gap down last week from 45 oh two to 44 94 that is an unfinished auction that needs the market to come back and pass through it to finish off that auction We are now opening way above it So we have a gap inside of another gap and that too increases the odds in my mind that we need to at the very least Try to come back down and do some business inside this area just below 4500 at some point Doesn't mean it has to happen this morning, but at some point we will need to come back in and back fill this area Another really important thing to note So the next question we're asking ourselves. We're saying, okay, we're gonna start off the morning We know we have momentum up. We know that the highest probability is that the market wants to go sideways or higher today But we've got a very big gap, which would be a large pullback. So what do we do? We watch to see Can they fill the gap? If not, we look for that gap and go What are the signals that we would look for for that? Well first things first We are up at the upper end of the overnight range So that means anything inside the overnight range could become support. So we've got levels here around 34 32 28 all of those could become support We've got some levels here where we had these single prints around 1945 19 that could become support. We've got the node down here around 4512 that could become support and then last but not least there is always the chance We could just look below that overnight low just kind of poke down there and then turn around and come right back up So there is a lot of places for the market to find support this morning and then turn around and start heading higher That's what we're watching for. Where does it find support and then what happens once it does? Does it find support and immediately turn around and start going higher or does it find support and just grind and grind and grind? Those two would be different information The find support and bounce means we got a gap and go means we got momentum means we should be bullish The grind means we probably need to spend more time going sideways inside the overnight range So there's not much we can really do until the market opens and we see how it reacts There's going to be so many people off sides this morning So many people who were bearish last week and we're selling they're gonna have to cover shorts this morning So many new people that are flat that are either gonna get short because they're looking for that gap fill Or they're gonna get long as a FOMO trade chasing the momentum. There's gonna be a lot of Indecision this morning and a lot of grinding around that the market needs to do to figure out what comes next So we need to be patient and wait until we have confidence before we start entering trades We got 42 people hanging out so far today Only eight likes if you wouldn't mind pressing that thumbs up. I sure would appreciate it and Also jump in the chat. Let me know your questions because we got 20 minutes and there is nothing to do but wait I'm gonna go ahead and You know, I'm gonna close off a lot of these Levels that I have marked on the chart here once you pass through weak references to the upside they no longer matter So I'm gonna delete all these weak references because they no longer matter But I'm gonna keep the ones from the previous gap just because we want to recognize that there is a chance We come back to that gap inside the gap Okay, NQ in the exact same situation as the ES massive gap up because of the contract rollover So we will trade the NQ the exact same way as we've talked about the ES this morning We will assume okay bigger picture on the daily. This is important to differentiate bigger picture on the daily We will assume there is momentum up But that intraday at market open We need to try to pull down and fill the gap and we will be looking for support inside the overnight range First potential support is around 15 600 Then down around 15 580 Then down around 15 515 Any of those areas find support that is a gap and go then we get bullish, okay? But first the market is likely to try to need to fill the gap It's very confusing to people that are new to the auction process to differentiate time frames You've got a daily context, which is bullish Meaning over the next few days the market is likely to go higher But you've got an intraday context meaning at the moment the market opens Which is actually bearish to try to fill the gap So you need to be able to keep both of those things in your mind right now when that opening bell rings in about 15 minutes The market's likely to go down But that shouldn't get me bearish because I know they're just looking for support They're just looking for that magical level where the buyers step in and as soon as they do the momentum of the daily Which is more powerful than the momentum Intradayly will take over and then those buyers begin to push the market higher So it's a confusing thing But the first order of business is the gap fill then we immediately look for a gap and go Good morning to Tom Gunn ebb and flow RK Angelaid Jonathan RK says unpopular opinion. I believe trading levels stayed the same despite contract rollovers I do too of old levels. I do too. So any previous level that was created In a previous contract that is the level that matters on the new contract But that's what makes this particular thing that we're seeing right now so tricky because it's a push-pull between the two You've got the high that was the high in the previous contract And then you've got the opening price that is the opening price of the new contract So how will the two of them play with each other? The last time we never filled the gap The market the gap up was a sign of momentum. We found moment We found a you know support on an attempt to fill the gap and then they went from there So we will assume the same thing today. We'll just treat it like a normal gap Good morning Jay Thank God. It's Monday casinos open In 15 minutes Nap good morning to you Andrew says gap on top of a gap smells like gap and chop 100% gap and chop is just the norm now But what will be the result of that gap and chop? Will they fill the gap? Will they find support? That will give us information moving forward, but absolutely. I expect a lot of tug-of-war As I said, there's gonna be a lot of people off sides, right? There's gonna be a lot of people that were bearish last week that are gonna wake up this morning They're gonna turn on their computer and they're gonna go. Oh, I was wrong So there's only one of two things that can happen to those people if they were short last week And they wake up this morning and they go. Oh, I was wrong They have to cover that short that is bullish for momentum to the upside But if they're neutral if they're flat, what can they do? Well, they can either chase the trade right now They can go long right at the market open or they could say to themselves. All right There's a gap. I'll buy the gap fill and they'll be waiting to buy support somewhere So let's say the market starts to push down It starts to try to fill the gap and it doesn't it find support beforehand. Well, then they start to chase here So you've got a motion on both sides of the market And then you've also got sellers that are flat that you know, we're neutral last week They'll come in see this massive gap up. Some of them will become those FOMO buyers same thing Some of them will be shorting for that gap fill So you've got a lot of people off sides here. The market is going to play tug-of-war today That's just the way it's gonna be potato pot Good morning to you Michael good to see you Martin is here. Good morning Travis says do you ever take into account the volume of the two contracts? When rolling over September contract contract and about Double December. Yeah, so a lot of traders the way they choose when to roll over like personally when to stop trading one contract And when to trade the next is they wait for whichever one has more liquidity So probably by the end of the day today or certainly by tomorrow The new contract the Z contract will have more liquidity In my opinion, it doesn't matter do it whenever you want You're not a big enough trader with big enough size for it to matter You know, if you're trading just a few contracts, you'll get fills on both both the you and the Z contract For me though, I roll over on the rollover day because my market profile software Uses a continuous contract that just automatically rolls over right So I didn't have a choice in the matter when I woke up this morning I was on the new contract in terms of what I'm seeing. So of course, I'm gonna trade that new contract I'm gonna trade what I'm seeing. So I don't get confused with the different levels and stuff like that So I am officially rolled over into the Z now for my own personal trading But you could do it anytime between now and Friday and you'd be fine Any other questions nine minutes to market open 71 people hanging out 30 likes good morning, Gino. Welcome Martin says what's your opinion on book map on thinkorswim versus the full version of book map? I Am on the fence to buy the full version versus Sticking it out with thinkorswim To be honest with you, I've never used it through thinkorswim. So I can't really answer that question I will just say for me personally the single most valuable resource that book map has is the The order book right so the the ability to see where the liquidity currently is as Compared to what happens to it when the real market trades does it disappear? Does it stay there so on and so forth and that you have right you have that even with the thinkorswim version But the second most important thing to me about book map is the icebergs the stops and icebergs That is an incredibly important function So you can't get that through thinkorswim you'd have to buy the full version and pay for the stops and icebergs indicator so I Think it's a good place to start But if you really want to get to an advanced level where you can see the bots you can see what they're doing You're gonna have to consider those stops and icebergs Trading for a living. Good morning to you. You've come to the right place if you're trading for a living That's what me and the brigade do Every single day our case says the book map on thinkorswim is very limited, but still great Yeah, if you don't have book map at all certainly do that get it on thinkorswim That way you can start to get used to it start to understand, you know, what it looks like and how to read it Like any other piece of technical analysis, you know tools that you would use it's about creating those neural connections in your brain, right that muscle memory the The neurons that fire together wire together So if every day you sit and you watch how that liquidity moves in book map You watch how price moves towards the large nodes What happens when it gets there the better and better you will get at reading it The more and more reliable that information will be moving forward. There's no shortcut. It's just practice It's just watching it every day and getting better and better at it So the sooner you can begin that process the better if you can do it for free through thinkorswim Why not? Anders welcome. Good morning to you Trading for a living says I thought the cumulative Delta was much more important than most of the order book Indicators, but I barely see it on the streams. Yeah, I don't use cumulative Delta myself There's different versions of it. Are you talking about shadow traders version of it or just the general cumulative Delta? Anyway, no, I don't use any of those So essentially the way I look at the market I look at it as an auction process So much like an auctioneer as they're lifting the price of the bid I've got $100 so I have 200 200 do I have 300 300 do I 400 right? What are they watching to understand how far they can push the market up push the bid up in that case, right? They're watching the number of hands that go in the air the more hands that pop up the faster that auctioneer is gonna go Let me get to the next number. Let me get to the next number There's lots of people willing to pay this price But then as the number goes higher and higher and higher there's fewer and fewer hands going up in the air So then he slows it down, right? And he says, okay, I've got 500 do I have six six six under I have 600 sir Do you want to go to seven seven over here? And he slows that down until there's only two people left bidding and then when that very last person says I'll take it You know, I'll pay the highest bid he goes sold to the gentleman over there. Well, the stock market is the same thing It's just when he says sold to the gentleman over there They pull out another share of the same company or another futures contract or whatever like pulling out an identical painting So then that same auction process happens, but it goes down instead of up So I look at the market as a constant two-way auction process And to be able to do that Really all I need is to see on my market profile chart Where does the market bring in the most volume and where does it spend the most time? By seeing that I can see where we are in that auction process What the book map does is the book map allows me to see where do they want the auction to go, right? Where are the large nodes of liquidity that are waiting? And then how does the market get to those large nodes as it pushes to them? Do they begin to disappear or do they stay there? As the market pushes to them are there icebergs that try to reverse the market? That information tells me what comes next in that auction process All right one minute to mark it open for those of you that are just joining us So bigger picture on the daily the gap up today is bullish But the first order of business is to try to fill that gap So they're going to try to push back down towards friday's highs And wherever they find support we'll get a better idea of what comes next Are we just going to go sideways all day today? Are we going to instantly find support and turn around and go higher? Or do we need to fully fill the gap? I suspect there's going to be a lot of chop and a lot of two-sided trade Okay, the market is open First move is above the overnight high that is bullish to see Still got that massive gap that needs filling or in at least an attempt to fill Once we pass back through the opening price that will be the market heading down to try to fill the gap As long as they stay above it. It is bullish See how the liquidity is just all over the place. It's dark. It's light. It's dark. It's light. They're in they're out This is what I was talking about earlier when I said a lot of people are going to be off sides And as soon as the market opens, they're going to need to start to reposition themselves If they were short last week, they're going to need to exit those shorts If they're flat, they're either looking to get short to fill the gap or they want to get long as a FOMO trade So there's going to be a lot of tug of war up here All right, so jumping over and looking at the NQ here NQ also on a gap and go this morning They did not leave behind a week low. So they are prime to be able to keep going It is bullish as long as they stay above the opening price Which is at 15 6 20 As long as they're above there, they are building support as a gap and go for continuation higher If they pull back through the opening price if they pull back below 6 20 They're looking to fill gap and that would be bearish to come down and test the support around 15 580 If they pass back through the opening price, but as long as they stay above it It's a gap and go Let's see what happens Good morning scalping strategy So you say to me you say charles If it's a gap and go are you a buyer? Are you going long right now? The answer is absolutely not right if it were a normal gap and go I would be looking to buy here on this support because we immediately gapped them when We're above the overnight high. We're bringing in new buyers But why am I cautious today and unwilling to enter a trade? Because I know most of the buyers up here are shorts covering from last week This is that shock and awe people wake up. They see oh, no I'm short the market and it's going up and so they they feel they have to exit their positions You know at the high out of a motion So once this short covering ends, I suspect we pull back down to try to fill the gap So while it's technically right now it is a gap and go it is not bullish enough for me to buy Remember if there are stronger hand buyers That are waiting to step into the market. They don't chase at the start of the day They wait for the gap to fill Or if the gap tries to fill and it finds support and turns around they jump in after that support So the buyers up here likely more shorts covering Okay passing back through the opening price increases the odds. This is an attempt to fill the gap So now we are looking to see how far down can they push it? Where do they find support? First potential support for the es is around 15. Sorry 45 31 Then 45 28 Then down around 45 15 they are attempting to fill the gap How far can they push it? I'm going to mark a bunch of different potential levels Where the market could find support It is just tough to know where it will But these are the areas I'll be watching and if I see something that jumps out at me Like support that will catch my attention. Yeah a lot of potential support DNK says I have been trying to use your trend system in the overnight Asia and Europe trading hours and if I use one hour of Asia open as the initial balance And 3 p.m as an initial balance it seems to work But without internals it is harder Yeah, I mean that's that should work pretty much anytime. So what he's talking about is just the idea of trending, right? So first hour of the day is the initial balance if it breaks to the upside It's likely to trend higher if it breaks to the downside. It's likely to trend lower Yeah, that would work Should work on any asset anywhere on earth For whatever market is trading. So if you're trading it during those european hours, yeah the european open or the asian open Makes sense Good morning to mike who thinks Gino says have you already rolled to the december contract? Yes, sir. I'm on z It's the place to be 200 dogs. Good morning to you Martin says the screen on the left is that part of book map? It is not the screen on the right is book map The screen on the left is called market profile software Or tpo charts Okay, so i'm watching the liquidity on the book map chart right at 45 30 Right now, they're just putting liquidity pulling it putting it pulling it putting it pulling it So they haven't made a decision of whether or not they're going to turn that into support But they do want to test it The fact that I see very little to no liquidity below 45 30 tells me it probably won't be support We'll probably need to pull back a bit more into the gap But we're still going to look for a bounce here just to see what happens Nope, nothing All right, the gap fill continues Kite attack says hi. Did you trade last tuesday? It was bullish question mark Uh That's too far back tuesday Of last week. That's like a week ago. I can't remember when I was then but yeah, I was trading I trade every day Kite says it was bullish from open to lunch break. Okay. Thanks for thanks for letting us know about last tuesday All right, so we got some bot shenanigans happening right here inside this node from the overnight where they were trading for a while Uh over the weekend So they're trying to turn this into support. They're trying to play tug of war here In order to get buyers to go long and sellers to go short so that they can break it one way or another I will say if they break it to the downside, they're likely to head down and test the next big node around 45 15 Just because of that tug of war that's happening Good morning. Pavel Top gun says apple in the video lower today Uh dawn says do you ever trade so early in the day? Yeah, I've been in a short since we passed through the opening price Why because it's a gap fill and I trade gap fills I'm trailing my stop Kite says you're short. Did you speak about it in the prep? I'm just arriving Uh, well, I don't talk about my trades Live because then you guys will follow me and you'll never learn anything but I did say Before the market opened That the first order of business for the market was trying to fill the gap So the first thing I was looking for was a gap fill Then when the market opened and it pushed above the opening price I said as long as they stay above the opening price It is a gap and go but if they pass back through the opening price it is a gap fill So I said I was looking for a gap fill. I said this would be a gap fill After we passed through the opening price. I said they're trying to fill the gap So I didn't literally say I'm going to go short at the opening price But I did again and again say the first order of business was a gap fill This is the signal. I'm looking for a gap fill here. It's happening. This is the gap fill You understand And then I said the first place I'm looking for support is in here So there's two ways you could trade that you could go short on the pass back through the opening price And just take profits in the first support Or you could monitor for continuation lower. You could stay in the trade and see how far down they push it Because this first node is a bot shenanigan zone My assumption is we got to go down and test the next one So for me, I'd rather monitor for continuation lower Rather than just lock in profits here and look to re-enter But if you're looking for a signal group, you come to the wrong place I teach people how to think how to understand what the market is doing So that they can trade it in whatever way they see fit I do not spoon feed trades Because you will never learn and also I lose money all the time My system for making money as a trader bigger picture requires extreme risk management That means every trade I take every single day I follow a very exact set of rules for how I position size the trade So that even if I'm wrong half the time I still am profitable. I still make more money than I lose And whenever I tried to give you guys trade ideas and it's a losing trade you guys blow up your account So I just can't do it. You can't be trusted Most of you with the way you position size you're trading you would need to win 80 90 percent of the time To be profitable and I don't know how to win 80 90 percent of the time That doesn't work for me Kind of tax says what about people that use this resistance to scalp? What about them? They're scalpers. I'm not There's always somebody going long or short at every level. They've all got their own reasons Sure, you've got scalpers that are shorting right now looking for more of a gap fill You've got buyers that are getting squeezed out of you know longs. They were thinking that was support And now that it's not holding they're going to get squeezed out You've got longer term, you know investors that are rebalancing their portfolios You've got you know day traders that are selling to fill the gap day traders that are waiting to buy the dip You've got all sorts of participants all over the market. I don't care who they are or why they're doing what they're doing all I care is Do they hold it? Can they hold the support? If not, they got to put the market on sale and head to the next one Who the participants are why they're doing the business they're doing doesn't matter to me Just how many participants are there? And what does that likely tell us is going to happen next? Okay, so as we print the b period here the market just created what we call a poor low The poor low is an event that often causes the market to first push away from the poor low meaning go up But then increases the odds that once the market finds resistance it will come back and take out that poor low So the market is likely to push up into resistance then come back through that poor low Also with the printing of the b period we can see we have pulled the fairest price Down from half back to down where price currently is And we pulled the value area down against the low of the day Both of those are just a little bit bearish to see and increase the odds. We've got more downside continuation to come So we are now looking for resistance And continuation lower Jonathan says losing money is part of the game lose as little as possible to stay in the game Nailed it. That's risk management, right? Every trade you take You know, there's uncertainty This trade even if you do everything right, even if you have nailed your setup perfectly You have got the exact perfect place for your entry the exact perfect place for your stop in your take profit You didn't fomo in you didn't chase it. You waited for the pullback. I mean, this is the best trade You've ever taken in all your life It still might not work The market is random. Sometimes it might just go stop you out anyway So every trade you take No matter how good it is Your losses should be minimal You should never lose more than a certain amount of your account size for every trade for me. That's two percent But for you, it could be any number that way You know, you can never lose more than two percent in a trade And if every trade you take You have a target that is at least twice the distance of your loss So let's say You know, your stop is five points away. Your take profit is at least 10 points away That means every time you win You're going to win twice as much as you lose when you lose So on losing trades, you lose two percent of your account size on winning trades. You win four percent of your account size You play that system out Over 10 trades 20 trades 30 trades 40 trades You you you play that system out over an entire month And you can be wrong 60 of the time you can be wrong more than you're right You can have more losing trades than winning trades and still have more profits But having the discipline to follow those rules Well, that's the hard part that can't be taught. It can only be learned from experience Anyway kids with that I must say goodbye. That is the end of the book map stream here at 10 a.m I'm heading on over to the private stream with brigade members I do this stream every morning for the first hour of the day So if you found anything I talked about today to be helpful or you want to learn more I recommend you join the brigade. It's only 10 bucks a month. You can see up at the top of the screen You can see where you would go pirate traders dot i o forward slash join And join the party. It's only 10 bucks. That's less than a single tick on the es of profit I promise you over the next month I will say at least one thing that saves you from losing a tick or helps you to win a tick And then the uh the investment will pay for itself All right, thank you so very much from here. I will say goodbye As far as what to expect the rest of the day Right now the short term intraday momentum is to the downside We have a gap fill in attempt right now So as long as we are below the opening price the market is trying to get down to friday's high We also have a poor low in need of repair So both of those are a sign that we still have intraday momentum down So you're going to assume the market's going to keep going down However, once it finds support real support good solid support You want to shift your thinking immediately to the market is likely to either go sideways Or turn around and head higher Because on the daily time frame the market has momentum up This is just an attempt to fill the gap And filling a gap is just a way for stronger hand buyers to get into the market Those stronger hand buyers are not going to chase up here at the highs At market open they're going to wait for the market to be put on sale You know like somebody that won't buy a new mattress until labor day weekend because they know it's going to be 50% off Those stronger hand buyers this morning. They wake up. They see that gap up They're not going to buy at the high, but man as soon as the market finds support. They're going to want to be buyers So it is bearish Short term intraday to the downside, but merely to find those buyers then it becomes neutral to bullish Right away. All right. Thank you very much. I wish you all the best of luck happy trading and members of the brigade I'll see you on the private stream Bye