Nasdaq Futures Analysis and Trade Plan for Today: Fading the Gap-Up
This is an opinion, not financial advice, by Itai Levitan, investingLive.com
The U.S. stock market is closed today due to a public holiday, but Nasdaq futures opened with a notable gap-up. After Friday’s heavy move, traders are debating whether this strong push is an overreaction or the start of another leg higher. Our assessment points to a potential fade setup — a tactical opportunity to short into strength, applying core tradeCompass principles for controlled risk and partial profit-taking.
Nasdaq Futures Trade Plan (MNQ or NQ)
| Entry | Price | Size | TP1 | TP2 | TP3 | Stop |
|---|---|---|---|---|---|---|
| Sell 1 | 24,978 | X | 24,805 | 24,619 | 24,427 | 25,223 |
| Sell 2 | 25,024 | X | 24,805 | 24,619 | 24,427 | 25,223 |
| Sell 3 | 25,067 | X | 24,805 | 24,619 | 24,427 | 25,223 |
Average entry:
(24,978 + 25,024 + 25,067) / 3 = 25,023
Stop-loss: 25,223
Total risk (points): 25,223 – 25,023 = 200 points
Take Profit Targets (points gain from avg. entry):
TP1: 25,023 – 24,805 = 218 points
TP2: 25,023 – 24,619 = 404 points
TP3: 25,023 – 24,427 = 596 points
Assuming equal take-profit sizes (1/3 each), the average blended gain if all three are hit:
(218 + 404 + 596) / 3 = 406 points average gain
Reward-to-Risk Ratio (RRR)
Risk: 200 points
Reward: 406 points
Reward-to-Risk Ratio: 406 / 200 = ≈ 2.0x
This means that for every 1 unit of risk, the trade offers a potential reward of roughly 2 times the risk, which is a healthy setup under tradeCompass risk management principles.
Percentage Calculations (Based on Average Entry 25,023)
Risk: (200 / 25,023) × 100 = 0.8% potential loss
Reward: (406 / 25,023) × 100 = 1.6% potential gain
These are realistic intraday-swing magnitudes — not extreme and within reason for Nasdaq futures volatility.
Market Context and Technical Setup
The fade idea is based on several technical confluences:
The area around 25,000 acts as a psychological round-number resistance, often triggering profit-taking and reversal attempts.
This zone overlaps with the Value Area Low (VAL) and Point of Control (POC) of October 7–8 — regions where prior high-volume activity occurred, suggesting supply may re-emerge.
The gap-up comes after a sharp Friday sell-off, hinting that today’s early strength could represent an overextension rather than renewed momentum.
By setting layered sell orders between 24,978 and 25,067, traders are fading this rally with controlled exposure.
Why Reward-to-Risk Matters
A good RR ratio is one of the cornerstones of professional trading. It ensures that even if a trader is right only half the time, consistent winners still outweigh losers.
For example:
With a 2:1 RR, a trader can afford to be wrong 50% of the time and still break even.
With disciplined stop placement (beyond the activation threshold but not far), risk is contained while allowing room for natural price fluctuation.
This is why tradeCompass emphasizes partial profit-taking and stop movement to breakeven after early targets are achieved.
Trade Management Plan
After TP1 (24,805) is reached: move the stop of the remaining position to the average entry (25,023) to protect gains.
After TP2 (24,619): consider taking another third off, securing a strong realized profit.
TP3 (24,427): optional runner for traders seeking to capitalize on extended momentum.
This is a tactical fade setup, not a long-term short bias. The expectation is for a temporary retracement from overextended prices rather than a full trend reversal. Traders should remember that today’s U.S. stock market closure may lead to thin liquidity, which can exaggerate both moves and reversals.
Use this setup as a model for disciplined execution — risk small, scale out strategically, and always align your trade with a favorable reward-to-risk profile.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Trade at your own risk. For live trade ideas and setups, join our Telegram group at https://t.me/investingLiveStocks
