May 22 - First Touch Reversal Example. I didn’t take this reversal play off the first touch of the second green FireLine, but it would’ve worked for 100 points. I was waiting for a long off UVL, but price never got there.
FireLines
The indicator I use to trade the Nasdaq on the 1 minute chart.
How I Trade Them
FireLines plots key price levels and an Inflection Point (IP) - the blue line - that acts as a directional filter for the session. My rules are simple and keep me on the right side of the market during the New York open.
- 1If the New York session opens above the blue line (IP), I am only looking for longs. If it opens below, I am only looking for shorts.
- 2Wait for price to break and retest a level. I don't trade the first touch against the trend - I want the break and the retest.
- 3When price retests the level I wait for a signal candle off that level. I enter when the signal candle breaks.
- 4I target 2:1 reward to risk based on the signal candle stop.
- 5I trade this on the Nasdaq (MNQ/NQ) on the 1 minute chart during the first 90 minutes of the New York session.
Trade Examples
Real trades using FireLines levels. Each one shows the setup, entry, and what I was thinking in the moment - including the ones where execution wasn't perfect.
These are selected examples, not a complete record, and other trades lost. Past performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.
May 21 - Two Trades. First trade was a long off UVH. Nothing wrong with the setup, it just lost. Second trade was a long after price tested IP and gave a signal candle. I got out for 52 points, but it did go to the full 2:1 target.
May 20 - First Touch Reversal Setups. No trades for me because my power was out, but there were two first touch reversal setups that both worked. This is part of the first touch testing: 50 point stop, 100 point target, only off the first touch in the New York session when the level was not tested in Globex.
May 19 - First Red FireLine Short (Win). Price was below IP, so shorts only. I waited for price to come back to the first FireLine. The trade won. The circled trade would have been the cleaner one according to my rules, with a 33 point stop and 66 point target.
May 18 - Trade Review. This was a messy execution day. I jumped back in too quickly after the first loss, then later identified a cleaner short setup with less overlap and a better rejection of the red FireLine. Also noted a first touch reversal idea off the second red FireLine.
March 30 - LVL Short (Win). Jumped the gun a bit and got in too soon - it still worked, but I should've waited for the signal candle after the level broke and held. Entry was a bit sloppy but the trade ran to 50 points. 2:1 target was 74 points.
April 13 - LVL Short (Loss). Below IP so shorts only. The trade itself won 2:1 based on my signal candle off the level. The loss came from an order-handling error on my end - a second long opened where my original stop had been. That second trade was not supposed to happen.
April 16 - Long off UVH (Win). Price was above IP so longs only. Got a test of the UVH level with a signal candle. Could've waited a couple of minutes for the signal candle right off the level - either entry worked. Got out early at 42 points, 2:1 would've hit.
April 20 - Short off IP (Win). Break and retest of the IP (Inflection Point). Before it broke I was watching for a long, but after the break I had to take the short when it retested and gave a signal candle that also rejected the 9 EMA. 2:1 based on the signal candle stop.
May 12 - FireLines Set Ups Overview. Price below IP so shorts only. I took set up 2 for 42 points - could've held much longer but was happy with the win. Set ups 1 and 5 were the countertrend plays (first touch long). With the trend there were 4 set ups - 3 wins, 1 loss.
Scroll or use the arrows to view more examples
Other Set Ups Worth Exploring
The way I trade FireLines is just one approach. There are two other areas I've been watching closely that show real promise - I'm just not trading them live yet because I haven't done enough testing.
In Testing
Countertrend - First Touch Reversal
Rather than waiting for a break and retest, this approach uses a limit order on the first touch of a level going countertrend. I've seen this play out beautifully many times - sometimes you only need a 10 point stop and the trade goes 100 points. Other times it needs a 40 point stop.
I'm interested in backtesting this thoroughly on the Nasdaq to figure out where the stop should be and whether some lines are better for it than others. Until I have that data I'm not trading it live.
In Testing
Overnight Session
The FireLines levels hold up really well in the overnight session. I've done some testing around automating a first touch strategy during those hours and what I've seen is promising - but I haven't done enough testing to trade it with confidence.
If the overnight session is your trading window, this is worth exploring. Grab the two week free trial and see how the levels behave during the times you're at the screen.
Start Your Free 2 Week FireLines Trial
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