Technical Analysis for Futures Traders
Companion Document

Trading Frameworks

This document is a companion to the book. The book's chapters develop the why; this document gives the how, concrete frameworks that you can drop on top of any trading session, coded with explicit conditions, entries, exits, and disqualifiers.

Each framework includes: - Regime applicability (which regime label from Chapter 2 the framework is valid in). - Entry conditions (a checklist that must all be true to take the trade). - Disqualifiers (anything that voids the setup, even if all entry conditions are met). - Stop and target placement rules. - Sizing notes. - Expected reaction rate (where empirical evidence supports an estimate; where not, we say so). - Failure mode (the regime or condition under which this framework will systematically lose).

Framework 0: Pre-Market Routine

This is the daily warm-up. Run it before every RTH session. Time budget: 20–30 minutes.

Steps

  1. Cross-asset scan. VIX (level and percentile vs. trailing 30 days). DXY (intraday direction). US 10Y yield (level and direction). ES/NQ overnight range and net change. Crude inventory schedule. FOMC / data calendar for the day.
  2. Overnight structure read. Mark overnight high (ONH), overnight low (ONL), midnight open. Note whether overnight is balanced, trending up, trending down, or range-extension.
  3. Reference levels. Mark RTH PDH, PDL, PDC. Mark prior-week H/L. Mark the most recent untested (naked) POC. Mark the prior-day VAH/VAL.
  4. Composite regime estimate (provisional). Based on overnight structure and cross-asset context, write down a predicted opening regime label. This is a prediction, not a classification, the actual regime classifies after the open.
  5. News blackout pre-mark. Note any data releases scheduled within RTH. Set hard blackout windows (5 min before to 15 min after) for any tier-one event.
  6. Daily-loss cap reaffirmation. Write down today's per-trade risk and per-session loss cap in dollars. This is non-negotiable.

Output

A one-page session-prep sheet, completed and signed (literally, by hand, in a journal). The discipline of writing it down, not just thinking it, is the point.

Framework 1: The Open-Type Playbook (Dalton-style)

Classifies the open into one of five types within the first 15 minutes of RTH. The classification is the playbook selector.

The five open types

Type Signature (first 15 min) Implication
Open Drive Immediate one-directional move from open price; little or no probe of the opposite side High probability of trend day in the open's direction
Open Test Drive Probe one side, fail, reverse decisively Trend day in the reverse of the probe direction
Open Auction Around prior close, slow, no decisive direction High probability of range day; fade extremes
Open Auction in Range Around prior close, multiple small probes both sides Range day with high mean-reversion probability
Open Rejection-Reverse Initial drive, then sharp reversal beyond the open Often a trend day, but with a violent character; reduce size

How to classify

By 09:45 ET on ES (15 min after the cash open), you should be able to write down the open type. The classification uses three inputs:

  • Direction in the first 5 min (from open to 09:35 close). Was it >+0.3% (up drive), <−0.3% (down drive), or between (auction)?
  • Range expansion 5–15 min (high − low of 09:30–09:45). Wide vs. trailing 14-day open ranges?
  • Behaviour at extremes. Did one side get tested and held, or did it break?

The implied playbook

  • Open Drive Up. Bias long for the day. Setups: pullbacks to AVWAP from the open, IB extension targets (IB high + 0.5 × IB range, +1.0, +1.5). Anti-playbook: do not fade the IB high without explicit reversal confirmation.
  • Open Test Drive Up (reversal from down probe). Bias long. Setups: long entries on retest of the probe low or AVWAP, target IB extension. Higher confidence than Open Drive because the probe-and-reverse confirms institutional rejection.
  • Open Auction. Range bias. Setups: fade the IB extremes back to the IB midpoint or opposite extreme. Anti-playbook: do not chase IB-extension breakouts without explicit confirmation (see Framework 4).
  • Open Auction in Range. Range bias, tighter stops. Same setups as Open Auction; expect smaller realized ranges.
  • Open Rejection-Reverse. Bias in the direction of the reversal. Reduce size by 25–50%, this open type produces the highest intraday volatility and the easiest mis-timing.

Disqualifiers

  • Tier-one news within first 30 min. Open type is unreliable; classification voids until post-news.
  • Pre-roll volume light. On the day before a roll, the open type signal is weaker.

Failure mode

The Open Drive can fail when there is no follow-through buying after the initial drive, the day becomes an Open Auction Aborted, which looks like a trend day for 30 minutes and then reverses. Without an order-flow check on the IB high (CVD continuation? Stacked ask imbalances at the high?), trust the open type only to set bias, not to size up aggressively.

Framework 2: Trend-Day Continuation

The highest-expected-value framework when correctly applied; one of the most expensive when misapplied (in a Range or Range-Vol regime, this framework systematically loses).

Regime applicability

  • Trend-Vol (preferred). Trend-Calm acceptable with size reduction.

Entry conditions (all must be true)

  1. Composite regime classified as Trend-Vol or Trend-Calm by 10:30 ET.
  2. Open type was Open Drive, Open Test Drive (in the trend direction), or Open Rejection-Reverse (in the trend direction).
  3. Pullback to a defined reference level: session AVWAP, the most recent confirmed swing low (in an up-trend) or high (in a down-trend), or a fair-value gap from the morning impulse.
  4. Order-flow confirmation: CVD slope still positive (in an up-trend) on the pullback bars; no bearish divergence at the level being tested.
  5. Pullback magnitude ≤ 0.6 × IB range (deeper pullbacks are character-changes, not continuation).

Disqualifiers

  • News blackout active.
  • Composite regime score has shifted toward Range or Squeeze in the past 30 min (regime drift).
  • CVD bearish divergence at the prior swing high (in an up-trend), even if entry conditions hold.

Stop placement

Behind the pullback's lowest point (or 1 × ATR below entry, whichever is wider). Never at a round number, round-number stops are where the sweep occurs.

Target placement

  • First scale (50% of position): prior swing high (or low, in down-trend), a 1.5 × ATR move minimum.
  • Second scale (30%): IB-extension level (IB high + 0.5 × IB range, or further).
  • Runner (20%): trailed at the most recent confirmed swing low (HL in an up-trend), exiting on CHoCH (Chapter 2) or end of session.

Sizing

Per-trade risk fraction = 0.75% of account equity (smaller than the 1% baseline because the framework holds for longer and is exposed to more regime-drift risk).

Expected reaction rate

Empirically, in correctly classified Trend-Vol days, the first-target hit rate (the 1.5 × ATR initial scale) is in the 65–75% range based on practitioner consensus and the author's own informal tally on ES/NQ in 2024–2025. The second-target hit rate is meaningfully lower (40–50%) because intraday trends frequently exhaust at the IB extension. Caveat: these are practitioner estimates, not validated through the rigorous walk-forward framework of Chapter 16. Treat as a working hypothesis and validate on your own data.

Failure mode

The framework loses systematically when the regime classification is wrong, typically a "Trend-Vol" tag that was actually a Range-Vol day with a strong morning move that exhausted by 11:00 ET. The fix is regime re-evaluation at IB completion (10:30 ET). If the composite has moved toward Range, exit any remaining continuation positions at break-even or first scale and stand down for the rest of the session.

Framework 3: Range-Day Fade with Sweep Confirmation

The bread-and-butter framework for Range-Calm regimes. Disciplined and high-frequency.

Regime applicability

  • Range-Calm (preferred). Range-Vol acceptable with tighter stops and smaller size.

Entry conditions (all must be true)

  1. Composite regime classified as Range-Calm by 10:30 ET.
  2. Price approaches a defined range extreme: IB high, IB low, equal-high cluster, equal-low cluster, VAH, or VAL.
  3. Sweep mechanic completes (Chapter 3): pierce ≥ 0.10 × ATR, close back inside the level, on a single bar.
  4. Order-flow confirmation: CVD divergence at the wick (bearish at upper sweep, bullish at lower sweep), and/or absorption signature (footprint stacked imbalances on the rejection bar's opposite side from the sweep direction).
  5. No tier-one news scheduled in the next 30 minutes.

Disqualifiers

  • Composite regime drifted to Trend in past 30 min.
  • The level being faded has already been swept earlier in the session and held, second sweeps of the same level have a different reaction profile (see Failure mode).
  • The sweep occurs on extremely high volume (>3× trailing average), this often signals initiative flow that will continue, not reverse.

Stop placement

Above the wick of the sweep (in a fade-short) or below the wick (in a fade-long). Typically 4–10 ticks beyond the sweep extreme. Never inside the sweep range.

Target placement

  • First scale (50%): range midpoint (IB midpoint, or POC if available).
  • Second scale (30%): opposite range extreme.
  • Runner (20%): held until either (a) the opposite extreme is reached, or (b) regime classification flips to Trend.

Sizing

Per-trade risk fraction = 1.0% of account equity (closer to baseline because the framework has tighter stops and more setups per session).

Expected reaction rate

In Range-Calm regimes with all conditions met, practitioner consensus puts the first-target hit rate at 60–70%. Validate on your own data.

Failure mode

The most common failure is taking the framework in a regime that looks like a range but is actually a transition to a trend. The diagnostic: in a true range, sweeps are absorbed (delta and price disagree on the sweep); in a regime transition, sweeps run (delta and price agree, just the price hasn't extended yet). Order-flow confirmation is the defence.

A second failure mode: the "double sweep." A first sweep gets faded successfully; a second sweep of the same level often runs, because the institutional player who absorbed the first sweep has now exhausted their position and the level is undefended. After a successful first-sweep fade, raise stops to break-even and stand down on a re-test.

Framework 4: Squeeze Breakout

The lowest-frequency, highest-asymmetry framework. Patience is the entire edge.

Regime applicability

  • Squeeze (BBW < 20th percentile of trailing 20 days, ATR percentile <40th).

Entry conditions (all must be true)

  1. Composite regime classified as Squeeze for at least 5 bars (i.e. the squeeze is not a single bar's noise).
  2. A directional bar closes outside the Bollinger Bands (2σ on close, period 20). The breakout direction is the direction.
  3. Bar volume ≥ 1.5× trailing 20-bar average (real participation, not a thin-tape artifact).
  4. Order-flow confirmation: CVD slope agrees with the breakout direction; footprint shows aggressive flow (stacked imbalances) in the breakout direction on the breakout bar.
  5. The breakout occurs outside a news blackout window.

Disqualifiers

  • Breakout immediately retraces back inside the bands within 1–2 bars (failed breakout, actually a fade signal).
  • Multiple recent failed breakouts of the same range (the range is "harder than it looks", sit out).
  • Tier-one news scheduled within 1 hour.

Stop placement

Behind the opposite Bollinger Band, or at the squeeze's structural extreme on the opposite side, whichever is closer. The stop is wider than other frameworks (typically 1–2 × ATR) because squeeze breakouts have wide initial volatility.

Target placement

  • First scale (50%): 1 × ATR beyond the breakout level (modest target; many squeezes break-out partially and revert).
  • Second scale (30%): the prior squeeze range projected forward (range-projection target).
  • Runner (20%): trailed at the most recent confirmed swing in the breakout direction, exiting on CHoCH or end of session.

Sizing

Per-trade risk fraction = 0.5% of account equity (smaller because the wider stop produces a larger nominal position even at a small risk fraction, and squeeze breakouts have higher false-positive rates than continuation setups in established trends).

Expected reaction rate

Practitioner consensus on Bollinger squeeze breakouts is mixed, Bulkowski's data on related patterns suggests reaction rates around 60–70%, but with high variance and substantial drawdown periods. Treat first-target hit rate as 55–65% as a working hypothesis. Validate.

Failure mode

False breakouts are the dominant failure. The directional bar closes outside the bands; on the next bar, price re-enters the bands and the original direction reverses. The defence is the confirmation requirement (CVD agreement, volume threshold), without it, the squeeze breakout setup is approximately coin-flip.

Framework 5: News Blackout Protocol

This is not a trade setup. It is a defensive discipline that protects the account from the tier-one events that systematically destroy edges.

The protocol

  1. Before the session, list every scheduled tier-one event for the day.
  2. For each event, define the blackout window: 5 minutes before the release to 15 minutes after.
  3. Within the blackout window:
  4. No new positions. Hard rule.
  5. Existing positions: scaled out partial, stops trailed to break-even or exited entirely depending on conviction. The most defensive variant is to be fully flat through the blackout window.
  6. No order-flow trades for the next 30 minutes after the blackout, the post-news tape takes time to normalise.

Tier-one events list (default)

  • FOMC rate decisions and press conferences.
  • Non-Farm Payrolls (first Friday of each month, 08:30 ET).
  • CPI (mid-month, 08:30 ET).
  • GDP (quarterly, advance/preliminary/final).
  • JOLTS, Retail Sales, Core PCE, second-tier but still elevated.
  • EIA Crude Inventory for CL traders (Wednesday 10:30 ET).
  • Powell or major Fed speakers outside FOMC.

Why this is non-negotiable

News-driven moves are not technical events. They are information events; the price discovery happens in milliseconds and propagates over minutes. Order-flow signals, support/resistance levels, regime classification, none of these maintain their statistical properties through a tier-one event. The trader who tries to "trade through" tier-one events is consistently the trader who blows up an account from one outsize loss.

Failure mode of the protocol

Some traders rationalise around the blackout: "this event is priced in," "I have an edge," "I'll just use a small size." Every rationalisation is wrong distributionally. The blackout is categorical. Treat it as a hard rule, not a soft heuristic.

Framework 6: Position Sizing

The only edge that compounds across regime changes. Get this right and most other mistakes become recoverable.

The sizing formula

contracts = floor( (account_equity × per_trade_risk_pct) / (stop_distance_ticks × tick_value) )

Worked example: - Account equity: $50,000. - Per-trade risk: 1.0% = $500. - Trade: long ES, entry 6,200, stop 6,196 (16-tick distance). - ES tick value: $12.50. - Risk per contract: 16 × $12.50 = $200. - Contracts: floor($500 / $200) = 2 contracts.

If the stop distance changes to 25 ticks (a more conservative structural stop), risk per contract becomes $312.50, and the sizing drops to 1 contract, not "still 2 contracts because the stop is wider." The dollar risk is fixed.

The five tiers of risk

Tier Per-trade risk Per-session loss cap When to use
Conservative 0.50% 1.0% New strategy, new contract, rebuilding after drawdown
Standard 1.00% 2.0% Validated strategy, normal regime, normal capital
Aggressive 1.50% 3.0% Highest-conviction setup in known regime; rare
Crisis (auto) 0.25% 0.50% Crisis volatility detected; sizing automatically halved
Probationary 0.25% 1.00% Recovering from > 5% drawdown; restore standard tier only after 5 winning sessions

These are starting points, not laws. Adjust based on your validated edge and your psychological capacity.

The session-cap rule

The per-session loss cap is hard. When you hit it, you stop trading for the day. No exceptions. The justification is the geometry of compounding: a series of "just one more trade after the cap" sessions is the most reliable account-killer in the practitioner literature.

The correlated-position rule

If you are simultaneously long ES and long NQ, you do not have two trades, you have one trade in two contracts that are correlated above 0.85 intraday. Treat the aggregate risk as one position. Do not stack correlated trades to get around the per-trade risk cap.

Failure modes

  • Sizing in points instead of dollars (Chapter 1's first trap).
  • Adjusting size after a loss in the same direction (Martingale-adjacent).
  • Sizing on the basis of "conviction" without a validated mapping from conviction to expected edge.

Framework 7: The Trade Plan Template

Every trade you take should be expressible in this template before you click. If you can't, you don't have a trade.

Template (8 fields)

1. Setup name:               [e.g. "Range-Calm sweep fade, Framework 3"]
2. Regime classification:    [e.g. "Range-Calm, composite confirmed at 10:30 ET"]
3. Level / structure:        [e.g. "Sweep of equal high at 6,212 (matches PDH)"]
4. Order-flow confirmation:  [e.g. "CVD bearish divergence at wick 6,213.50; absorption on rejection bar"]
5. Entry:                    [price]
6. Stop:                     [price]   (compute risk in $ and ticks)
7. Targets:                  [first scale; second scale; runner]
8. Size:                     [contracts, derived from sizing formula]

If any field is empty, the trade is not ready. The template is the discipline.

The rule

Write the plan before you take the trade. Not after. Not in your head. In writing. If your platform allows, save it to a journal entry tied to the order ticket. If not, write it on paper.

This sounds rigid. It is. The cost of rigidity here is a few minutes; the value is preventing every "I just took it because it looked right" trade, which is empirically the worst-EV class of trade in any disciplined trader's journal.

Framework 8: The Daily Plan (Operational Checklist)

A condensed end-to-end workflow that ties the frameworks together.

Before the open (07:00–09:30 ET)

  1. Run Framework 0, Pre-Market Routine.
  2. Predict an open type and a regime label, in writing.
  3. Identify 2–4 watch-levels for the session (the highest-confluence levels on the chart).

At the open (09:30–10:30 ET)

  1. Watch the first 15 minutes; classify open type per Framework 1.
  2. By 10:30 ET, classify regime per the composite (Chapter 2).
  3. Compare classification to your prediction. If they disagree, re-evaluate your framework selection.

During the session (10:30 – 14:30 ET)

  1. Apply the framework matched to the regime:
  2. Trend-Vol / Trend-Calm → Framework 2 (Trend-Day Continuation).
  3. Range-Calm / Range-Vol → Framework 3 (Range-Day Fade with Sweep).
  4. Squeeze → Framework 4 (Squeeze Breakout), if and only if a breakout occurs.
  5. Respect Framework 5 (News Blackout) automatically.
  6. Use Framework 7 (Trade Plan Template) for every trade.
  7. Track per-session P&L against the cap from Framework 6.

Pre-close (14:30 – 16:00 ET)

  1. Begin reducing position aggressiveness. The last hour of ES has its own dynamics (MOC flow); standard frameworks lose validity.
  2. Flatten or scale out runners by 15:30 ET unless conviction is high.
  3. Log all trades with full plan-template fields.

Post-session

  1. Run Framework 9, Post-Session Review (next).

Framework 9: Post-Session Review

Discretionary trading without a structured review is gambling with extra steps. The review is what converts intuition into calibrated belief.

Review steps (target: 30–45 minutes per session)

  1. Reproduce the chart. For each trade, mark entry, stop, target, and the regime classification as it was at the time.
  2. Categorise each trade as one of:
  3. (W) Won. Setup correct, regime correct, execution correct.
  4. (L1) Lost. Setup correct, regime correct, execution correct, normal variance.
  5. (L2) Lost. Setup correct, regime wrong. Regime drift not detected.
  6. (L3) Lost. Setup wrong. Setup conditions not actually met; rationalised entry.
  7. (L4) Lost. News blackout violated, or other discipline rule violated.
  8. Tally categories. Most retail-trained traders find L2 + L3 dominate by 2:1 over L1. That is the diagnostic.
  9. Identify the systemic error. A single L3 is bad luck; three L3s in a week is a discipline problem requiring a rule change.
  10. Update the journal tag schema. Tag each trade with regime label, framework used, conviction level, time of day, post-news flag. After 100 trades, you have a personal statistical profile. After 500, you have a personalised trading edge.

The weekly review

Once a week (Sunday is a common slot), pull the journal data into a spreadsheet: - Win rate by framework. - Win rate by regime. - Average R per trade by framework × regime. - P&L by time-of-day. - L2 / L3 ratio over time (trend?).

The metric that matters most: L2 / L3 ratio. L2 (regime mismatch) is mostly fixable with better regime detection. L3 (setup not actually met) is mostly fixable with stricter pre-trade discipline. Both are improvable. Track them; act on them.

Framework 10: The "I Don't Trade Today" Checklist

Some sessions are not trade-able. The discipline of recognising them is part of the framework.

Skip the session if any of these are true:

  1. Composite regime is Transitional / unclassifiable by 10:30 ET (the indicator components disagree).
  2. You did not run the pre-market routine.
  3. You took an L4 (discipline violation) yesterday and have not yet written a corrective rule for it.
  4. Realised volatility is in crisis range (ATR > 2× trailing 30-day median). Halve size if trading; consider flat.
  5. Tier-one news dominates the session (e.g. FOMC + Powell press conference + dot plot revision in one afternoon). Skip the news-dominated portion.
  6. You are below the per-session loss cap by more than 70% (i.e. you've used most of your day's risk on a single losing trade). The remaining capacity is too small to size a new trade well; stand down.
  7. Personal: you are sleep-deprived, distracted, emotionally compromised, or otherwise off. This is the most important rule and the hardest to enforce. Trade only when your decision-making is operating at its baseline.

The cost of not trading

Zero. There is no penalty for skipping a session. The cost of trading badly is real; the cost of not trading is theoretical. The asymmetry favours the skip.

A note on framework selection

The frameworks above are not the only valid setups. They are defensible defaults, drawn from practitioner consensus, calibrated against the regime taxonomy, and explicitly flagged for their failure modes. A trader with a personal edge built on top of these frameworks (or in addition to them) will do better than one mechanically following them. The goal of presenting them as frameworks is to give you the structure on which to build your personal edge, not to replace the work of building it.

The book's later chapters (Part III especially) introduce additional concepts, multi-AVWAP confluence, naked POC retests, footprint patterns at specific structures, that produce additional framework variants. The eight or nine frameworks here are the floor, not the ceiling.

Summary table

# Name Regime Frequency Sizing Key risk
0 Pre-Market Routine All Daily n/a Skipping it
1 Open-Type Playbook All Daily, by 09:45 ET Bias-only Misclassifying the open
2 Trend-Day Continuation Trend-Vol, Trend-Calm 2–4 setups per trend day 0.75% / trade Regime drift
3 Range-Day Fade w/ Sweep Range-Calm, Range-Vol 4–8 setups per range day 1.0% / trade Regime transition
4 Squeeze Breakout Squeeze Rare (a few per month) 0.5% / trade False breakout
5 News Blackout All Event-driven n/a Rationalisation
6 Position Sizing All Every trade n/a Sizing in ticks not $
7 Trade Plan Template All Every trade n/a Skipping the write-up
8 Daily Plan All Daily n/a Drift from plan
9 Post-Session Review All Every session n/a Skipping it
10 "Don't Trade Today" All When triggered n/a Override of the rule

Frameworks 0, 5, 6, 7, 9, 10 are defensive disciplines, they don't generate trades, they prevent bad trades. Frameworks 2, 3, 4 are the offensive playbooks. Framework 1 is the regime-to-playbook bridge. Framework 8 is the daily wrapper.

A trader who runs the defensive disciplines without the offensive playbooks will not lose much; a trader who runs the offensive playbooks without the defensive disciplines will eventually blow up. The asymmetry tells you where the work is.