This is a 1-minute chart of ES futures. It's displayed in US Central Time. Regular trading hours have started at 08:30CT. As at 09:30CT, the RTH session high is 4408.50 and the RTH session low is 4384.50. Which of the following trades have a statistically favorable outcome?

Of all the answers, only #2 has a favorable statistical outcome with appropriate position sizing.

#1… Price does not revert to averages… averages track (and lag behind) price.

#3… Chart patterns, support & resistance are subjective and can change across timeframes.

But for #2, when ES breaks its first hour’s range for the first time, it’s statistically more likely to not break the other side of that range than to break it. This can be used to define risk. The average range for a full trading day can be used to assess “have we gone far enough?”. It’s one of many statistical observations that can be used to determine opportunity… prices that are likely to be reached and the likelihood of reaching them. We can utilize many including ranges, order flow traded volume at price and Market Profile patterns.

By balancing the likelihoods of risk and opportunity, and sizing positions accordingly, we can assemble trade setups and systems that have a proven long-term statistical edge.

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