FTSE Impulse Bar Day Trading Strategy

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We all know about gap filling on the FTSE futures. If you don’t I would seriously take some time to watch the market on open. The FTSE, in principle, likes to fill its gaps. That does not mean its a given rule that a gap will get filled in the same session it was created. However, you can be pretty sure that the price will be attracted to that gap area within a few sessions.

There are many statistics that quote the probability for a gap fill depending on the day but most of these fall into my 40-60% strike rate range. (If you haven’t read all of my artciles you probably won’t know that I think most trading system strike rates will fall with in this range). But due to the nature of gaps they are very hard to trade so I use them as helpful indicator, nothing more.

This goes for the impulse bar as well. You will see that the FTSE is often a very tidy, some say slow, indice to trade. But due to this nature it makes impulses much more clear to see on a chart, both historically and in real time. An impulse, to me, is when the price suddenly moves very quickly in one direction without looking back. It can often be in one bar so looks like a verticle move with very little horizontal direction on the chart. Think impulses after a data release and you pretty much know what I am talking about.

These impulses can happen around news time and obviously gaps are in someways an imulse bar (depending on what time frame you are looking at). But they do also just occur intraday when price has coiled up so much it just needs to beakout and the slightest move outside the recent range can feed off itself.

These impulse bars are very much like gaps. They LIKE to be retested. This means that the top of the impulse if often near the top of the move, so entering a trade there is risky. For a start you have no support areas to place your stop. This makes going with the impulses unattractive. Obvioulsy there are alway exceptions to the rule.

The best way to trade the impulse bar in my opinion is waiting for the rest of the start of the impulse bar and then enter in the direction of the impulse. This will mean you can get stops in nice and close to your entry. Naturally sometimes the price will just pass the impulse origin and carry on going which is why stops should be used.

Again I would suggest, as with gap trading, you can just use this as an additional indicator. Something that may make you think…”I will wait for a retest before taking my next signal”.

Below is a chart of some of these impulse bars. You can see the smaller they are the quicker they get retested. It is also worth noting that and impulse bar can get retested with another impulse bar thus creating a choppy range situation which likes to take out stops/voulme from either direction.

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FTSE Impulse Bar

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