Putting every signal on the map

It is 08:55 ET (20:55 ICT). NQ trades 60 points above yesterday’s settle, your chart has eleven horizontal lines on it, and the chat is already arguing about direction. In thirty-five minutes the cash session opens. The question this lesson answers is simple: what do you write down before 09:30 ET so that, at 13:15 ET, bored and flat, you already know which trades you will not take?

Key terms

Morning sheet (tờ kế hoạch buổi sáng): a short written plan, finished before the open, that says how wide the day is likely to be, where you will watch, and which trades you are allowed to take House rule.

σ ruler (thước σ): one standard deviation of the day’s move implied by the options market, σ = price × VXN ÷ 100 ÷ √252, with bands at ±0.5σ and ±1σ around the prior settle Definition. VXN is Cboe’s 30-day implied volatility for the Nasdaq-100; √252 turns a yearly number into a daily one. OPF4.03 owns the full derivation.

Pre-refusal (từ chối trước): every trade that is not one of the written scenarios is declined in advance, at a time when you hold no position and feel no P&L House rule.

Chart first: how far a normal day travels

The ruler does one job: it turns “60 points” or “a level 300 points away” into a fraction of a normal day. It says nothing about direction.

How it works

Line 1: ruler and width chips

Compute σ from the prior settle and the prior VXN close, then write four prices: −1σ, −0.5σ, +0.5σ, +1σ. On Nasdaq-100 index days, the close lands inside ±1σ about 77% of the time MeasuredNasdaq index; on NQ futures this is extrapolated from the index. The bands are not targets and not support or resistance. They are a scale for everything else on the sheet: a target two σ away is a wish, and a level 0.1σ from the open gets touched by chance on most days.

Next to the ruler, light the width chips (chip độ rộng), each a yes/no check that says “today may be wider than the ruler”: a gap of at least 0.5 ATR from the settle MeasuredNasdaq index, VIX at or above 20 MeasuredOther market, VIX9D above VIX PlausibleNasdaq index, and net dealer gamma below zero if you have a gamma source PlausibleNasdaq index. In our lab’s 721-session level study, big gaps, high VIX and an inverted term structure widened the session range, and every level, named or random, stalled less often. The chips change size and style (smaller size, follow rather than fade), not which level holds. DESK2.03 owns the chips and the size decision; the gamma chip carries three limits (30-minute blocks, not significant once you control for the day, one market regime) and never changes size on its own (REG3.01).

Line 2: inventory and areas to watch

Note where the overnight session traded and where most of its volume sat relative to the settle (M4.06). Then copy five to eight areas from your level map (M4.07), each with its distance from the settle in σ and one role: decision, target or reference. Overnight inventory as a forecast is lore Lore, and so is the idea that a poor high pulls price back to it Lore. Pre-market levels as a group are touched and respected at the rate of random prices at the same distance Measured: no edgeNasdaq index, and stacking several levels in one zone adds nothing measurable Measured: no edgeNasdaq index. So the areas are where you watch order flow, not where price is expected to turn. M4.09 owns the written confirmation rule you apply when price gets there.

Line 3: open read

Written by 10:00 ET (22:00 ICT): where the open sits against the prior range (inside or outside), the first 30 minutes’ range in σ, and volume relative to recent days. M1.05 gives the measured base rates for open location; the opening-type label itself does not forecast the close Lore.

Line 4: working hypothesis

One falsifiable line, for example “balance inside the overnight range until the initial balance (10:30 ET) breaks one side”. Day types are labels assigned at the close; calling one by mid-morning has not been shown to forecast the rest of the session Lore. Treat the line as the assumption you manage by, and write what would make you drop it.

Line 5: scenarios with numbers

Two or three if-then plans, each with a trigger, a target and an invalidation price, plus one explicit no-trade condition. “IF two 5-minute closes above the decision zone and ten minutes accepted there, THEN long toward the next area or +0.5σ, whichever comes first; INVALID back below the zone.” A scenario without numbers is a mood. Writing plans in if-then form raises the chance you follow them in studies of behaviour in general; for trading it is plausible, and its effect on profit is not yet measured PlausibleOther market (M0.06 shows the numbers).

Why pre-refusal is the point

No setup without a sheet line House rule. “Absorption at 25,040” is not a trade; “Scenario B at the 25,120–25,140 decision zone, confirmed by the written rule” is. The sheet’s authority comes from when it was written: before the open, with no position. If a genuinely new situation appears midday, write it as a scenario first (trigger, target, invalidation, size), then trade it. The sheet can be amended; it cannot be bypassed.

Pre-refusal is a house rule, not a measured edge. The map does not make a level work; it limits how many unplanned, unscored trades you take, which keeps your journal clean enough to learn from.

What the data says

Worked example: a complete sheet, NQ

Synthetic day, illustrative numbers only. Settle 25,000.00; VXN prior close 24.0; 14-day ATR 420 points.

1. Ruler and width (09:00 ET): σ = 25,000 × 0.24 ÷ 15.87 ≈ 378 points. Bands: 24,622 / 24,811 / 25,189 / 25,378. Gap +60 = 0.14 ATR (chip off); VIX 17 (off); VIX9D/VIX 0.92 (off); no gamma source (not used). No chip lit: normal-width assumption, house size.
2. Inventory and areas: overnight 24,990–25,085, volume centred near 25,040, flat top at 25,085 (noted, not traded on). Areas: 25,120–25,140 prior value-area high and prior high, decision (+0.32σ to +0.37σ); 25,189 +0.5σ, target; 25,085 overnight high, reference; 24,990 overnight low, decision (−0.03σ); 24,880 prior low, target (−0.32σ).
3. Open read (10:00 ET): open 25,050, inside the prior range; first 30 minutes 25,010–25,075 (0.17σ), volume below the 20-day average.
4. Hypothesis: balance inside 24,990–25,140 until the initial balance completes; dropped if price is accepted outside either edge.
5. Scenarios:
   • A) IF two 5-minute closes above 25,140 and ten minutes accepted there, THEN long toward 25,189, then 25,250; INVALID back below 25,115. Size: house.
   • B) IF a probe into 25,120–25,140 is rejected back below 25,115 within three bars and the M4.09 confirmation rule passes, THEN short toward 25,040, then 24,995; INVALID 25,160.
   • C) No trade between 25,010 and 25,110 without a written trigger, and no new position beyond ±1σ.

Midday check (12:00 ET, 00:00 ICT): initial balance 25,005–25,095; neither A nor B has triggered. No trades yet, and that is the sheet working as written.

Close score: the session ran 24,998–25,122 (124 points, 0.33σ) and closed 25,071, inside ±0.5σ. The ruler held; the balance hypothesis held, a label you can only give at the close. No scenario triggered. You refused two trades: a 13:15 ET “perfect” absorption long at 25,040 and a breakout buy at 25,100. Log both with what happened next. Over enough days, expect the refused trades to do about as well as any random entry; the sheet is not built to dodge losers, it is built so that every trade you take was planned and can be scored.

The mirror and the failure

The short side of the same sheet is scenario B, written before the open with the same structure. Now the failure: suppose scenario A triggers at 11:05 ET, NQ closes two 5-minute bars at 25,148 and 25,152, you buy 25,152, and twenty minutes later NQ trades 25,112. The invalidation at 25,115 does its job: a planned loss of 37 points plus costs. Nothing about the sheet promised the acceptance would hold; acceptance describes the last minutes, it does not forecast the next (M4.01). A sheet that only ever shows winners has stopped being scored honestly.

Do it on the platform

Prop-firm note. The size decision on line 1 sits inside your firm’s limits, which are firm rules with dates; the Prop Firm course shows them in dated cards. A width chip can only lower your size, never raise it past a firm cap.

Common mistake: treating the ±1σ band as a target or a turning point. It is a scale for distance. Price reaching +0.5σ is a common event on an ordinary day, not a signal.

Common mistake: reading “my sheet’s areas were touched today” as proof that the map works. Areas near the open get touched by chance; our lab found pre-market levels touched and respected at the rate of random prices at the same distance. Score your map against random levels before you trust it (M4.07).

Common mistake: trading off-sheet because “this one looks too good”. Every off-sheet trade is a vote that your 13:15 ET brain outranks your 09:00 ET brain. If it really is new, write the scenario first, then trade it.

Drill: five sheets, scored

For the next five sessions, write the sheet before 09:30 ET and score it at the close.

1. Line 1: σ in points, the four band prices, and which width chips are lit.
2. Line 2: at most eight areas, each with its σ distance from the settle and one role.
3. Lines 3–5: open read by 10:00 ET, one hypothesis, two or three scenarios with trigger, target and invalidation, and one no-trade condition.
4. At the close, record: did the close land inside ±0.5σ, ±1σ or beyond; which scenarios triggered and how they ended; every refused trade and what price did over the next 30 minutes.

What we don’t know yet

• Whether traders who write and score a morning sheet earn more than those who do not is not yet measured; the if-then evidence is about following plans, not returns.
• The ruler is measured on the Nasdaq-100 index; a full calibration on NQ futures needs more sessions than the lab’s 53.
• The gamma width chip rests on 55 sessions in one regime and is waiting for 40 more before it is confirmed.

Recap

• Line 1 is the ruler: σ = price × VXN ÷ √252, bands at ±0.5σ and ±1σ; about 77% of Nasdaq-100 index days close inside ±1σ (NQ extrapolated).
• Width chips say “possibly a wider day”: they change size and style, not which level holds.
• Areas to watch are where you read order flow; as a group they do no better than random prices, so their value is planning, not prediction.
• Scenarios need a trigger, a target and an invalidation; anything not written is refused in advance (a house rule), and the sheet can be amended but not bypassed.
• Score every sheet, refused trades included, so the journal tells you which lines carry information.

Quiz

Further reading

• Cboe, VXN dashboard: the Nasdaq-100 volatility index the ruler uses.
• Carr, P. and Wu, L. (2009), “Variance risk premiums”, Review of Financial Studies 22: why implied volatility usually runs above realized.
• Gollwitzer, P. M. and Sheeran, P. (2006), “Implementation intentions and goal achievement: a meta-analysis”, Advances in Experimental Social Psychology 38.
• Our lab: the VIX and VXN ±1σ band calibration on daily SPX and NDX bars, a pre-registered ruler test on 53 NQ futures sessions, and the 721-session study of pre-market levels against random prices, including the gap, VIX and term-structure filters.

Prerequisites: M4.06 Overnight inventory, M4.07 the level map, EV1.03 how we grade. Next: M4.09, the written order-flow confirmation rule you apply when price reaches an area on this sheet. Goes deeper: OPF4.03 (the σ ruler), DESK2.03 (width chips and the size decision), M7 (journaling, where the scored sheets live).

Educational content only — not financial advice. Futures trading involves substantial risk of loss.