Kardec Trader breaks down a 20-contract ES trade that hit $20,000 profit on a 4.5:1 risk-to-reward. At price level 5710, 111 passive sell contracts met 77 aggressive buyers, signaling a pullback that became the edge for a short.
4.5 to 1 (4 1/2 to 1)
20 ES contracts
$20,000
111 contracts to sell at 5710
77 buyers hit at 5710
This Trade was a 4 1/2 to 1 realized risk to reward ratio. It was 20 ES contracts and a $20,000 profit. So looking at the heat map again, we see a thicker line at the top. That just means there is a thick wall of passive sellers sitting here. I highlighted that there's 111 contracts to sell at 57 10, which is this price right here. Someone is looking to passively sell directly under this level of supply that we just rejected. Right over here at 5710 the Market Rall, there's aggressive buying denoted by this large green bubble which just indicates aggressive buyers hitting the ask and buying from someone who is selling on the ask. This to me is a good confirmation because this indicates 77 buyers hit at 5710. But there was 111 passive sellers. And to me, when there is an influx or more passive sellers at a level and there are aggressive buyers, this is a very good signal that the market in the short term wants to quickly pull back. And this is where I find an edge in looking to capitalize and placing risk for a bearish position.
