4 9 18 day trading system
Face the Day Armed with a GAME PLAN When it comes to trading for a living, investors fall into three categories:. The point of this, of course, is to emphasize the importance of facing each trading day with a game plan and a trading system. A very large part of that game plan involves having a specific trading system or setup, and, more importantly, a trading methodology in which to apply to each trading system or setup. Without this combination, a trader is like a wounded antelope in the center of a lion pride, where it is not a question of "if" the antelope is going to get whacked, but rather of "when. I utilize 8 trading systems in my daily trading routine. One of the simplest and most effective is one I call the "5 Minute Multi-Pivot Play" trading system, which is a trading system I utilize on the mini-sized Dow futures. For the sake of simplicity, Day will focus on the mini-sized Dow trading system in this article. The main advantage of this trading system is that it is price-based as opposed to a indicator-based trading system. By the time most of the trading software generate a buy or a sell signal, the move is already well under way. By system this price-based methodology, there are many instances where I get into a trade before day indicator-based trading system traders, and I usually end up handing off my position just as a buy or sell signal is being generated on a stochastic or other oscillator type trading system. I do follow a 2, 4, and 13 period exponential moving average as well as a 7 period RSI on each 5 minute chart. I don't use these for signals; I use these to see when these lagging trading software are creating buy and sell signals so I know when the "crowd" is jumping in. First off, let's talk about the pivots: There is no big mystery or secret to the pivots. This trading software is readily available and have been around for a long time. These are support and resistance levels calculated by floor traders using a simple mathematical formula. These levels became widely known and have moved off floor. Today many day traders trading aware of them and try to use them, but in my experience they are using them incorrectly. To add to the confusion, there are different formula versions and different time frames that are used when calculating pivots. So, to get started, let's look at what I use, which is one of the standard pivot formulas:. Pivot - High - Low S3: Once a day trader has this formula, then the key data that is needed is the high, low and close of the previous session. For my own day trading, I like to utilize 24 hours worth of data, and therefore I use the 24 hour session from 4: This information generates 7 important levels for the next trading day: The central pivot has the most weight of the 7 levels. Once the pivots are created and drawn, they will resemble the chart in Figure 1. Figure 1 shows a trading system on a 5-minute chart of the CBOT mini-sized Dow contract with its corresponding Daily, Weekly, and Monthly pivot levels. Figure 1 shows a 5-minute chart of the CBOT mini-sized Dow contract with its corresponding Daily, Weekly, and Monthly pivot levels. It is rare when a stock index hits its R3 or S3 levels, as that is the extreme of the range. This is important to know because if a market rallies to R2 or a sells off to S2, that usually ends up being the dead high or the dead low of the day. This knowledge will help temper a trader's emotions and keep them on track to follow this trading system. For example, the markets rally to a daily level, and I short the move. Or a market sells off to system daily level, and I buy the move. I don't wait for the moving averages or the RSI to confirm the action. Instead, I set up the orders based on the price action. Ideally, I will get MA confirmation at least minutes after I place the trade, if not sooner. In truth, the trader can trade this system without the MA confirmations " I just like to see them turn in my direction after I'm in a trade. I know this is trading most traders are just now getting in the trade " way too late! Figure 2 shows a 5-minute chart of the CBOT mini-sized Dow contract with trading system entry and exit levels. Figure 2 shows a 5-minute chart of the CBOT mini-sized Dow contract with the trading system entry and exit levels. The idea is to be "first in line. The idea is to be "in front of the pivot" and be first in line to get in or out. If I place a day trade and it is near the overnight highs or lows, say 25 points away, then I will use that level as my stop. I do not aggressively trail my stops in this trading system. Figure 3 shows trading 5-minute chart of the CBOT mini-sized Dow contract with trading system entry, exit and stop levels. Figure 3 trading system shows entry levels with their corresponding stops in place. I'm not a big fan of aggressively trailing stops in a trading system. Figure 4 shows a 5-minute chart of the CBOT mini-sized Dow contract with trading system entry, exit and trailing stop levels. Figure 4 shows a 5-minute chart of the CBOT mini-sized Dow contract with system entry, exit and trailing stop levels. Figure 4 shows an example of where to move up a stop. This seems like a simple rule, but it is hugely important. The whole idea of this trading system is to day the trader's losses small so he can live to fight another day. This is very reasonable and will prevent a trader from having a killer drawdown day where emotions run rampant, causing overtrading. The whole key to online futures trading is managing equity swings. One of the biggest mistakes I see new traders make is doubling or tripling up from their original plan. The reasons are all emotional based, and all it means is that a trader's account is now a disaster waiting to happen. A trader can be right 5 times in a row, but if he continues to pyramid and add contracts, he only has to be wrong once to suffer a huge loss. Decide how many contracts to trade and stick to that trading system on each and every trade! If I am in a trade, I will stay in it and keep my parameters on. However, if I am flat day into this time frame, I will not initiate new trades. This is the dead zone of the day. The institutions are done trading until after 2: ET because there is not enough volume to handle their orders during the afternoon. The resulting price action is choppy, and the only people who benefit from this are brokers, as traders overtrade their accounts, giving back all of their profits they made in the morning. In this trading system, I've found one of the best ways to improve a person's profitability is to not let them trade during trading time of the day. Those are the trading systems and rules I follow. What is nice about this trading system is that the trader doesn't have to watch it very closely once he is in a position. I'm not an aggressive trailer of stops. System like to get in a position, set my parameters, and then focus on other things. Depending on the trader's work situation, he could do this at the office, especially on the West Coast. He could set alerts for the key levels, and then when the markets. Digg This Bookmark on del. Trading System Face the Day Armed trading a GAME PLAN When it comes to trading for a living, investors fall into three categories: Those that have a trading system Those that are developing a trading system Those that never believed in utilizing a specific trading system. Before we look at how to use the trading system, let's look at its main components: So, to get started, let's look at what I use, which is one day the standard pivot system That said, let's take a look at my rules for my trading system while trading the pivots. Basic Methodology of the Multi-Pivot Strategy: My ideal trades are fades against these levels. If we are rallying up to a pivot level, then I am either already long and am looking for an exit, or I'm flat and I'm looking to initiate a new short position. On Friday, January 16 the price action on the chart is showing 3 trading system setups. As the markets rally to the midpoint nearI set up a short, with my target being the daily pivot that is sitting below at"plus 3 points" - something I will talk about in my next trading system rule. On a system to the pivot, I close out my short, and end up going long, with my target being the midpoint. After hitting the midpoint, I close out my long, and reverse and go short, with my target being the daily pivot once again. Now that we have the basic idea, let's go over entry points and stops. When I was filled at my short at the midpoint I immediately placed a 20 point stop at The stop is based on the trader's entry level, not the pivot level. When the market gets within 5 points of my target, I move up the stop up to the same pivot I used as my entry level and subtract 3 points. In this trading system case, the entry pivot was the green dotted line, which is one of the weekly levels. Summary Those are the trading systems and rules I follow. He could set alerts for the key levels, and then when the markets Digg This Bookmark on del. Reproduction without permission prohibited. Click to tell your colleagues via your Outlook email. Join Today Meet Our Trading Team. John's Trading Service The Live Trading Room Archived Videos. Live Seminars Trading Indicators Trading Courses. How To Videos FAQ Free Day Trading Videos. Home Day Trading Articles Trading System. This site is powered by MemberGate Membership Site Software.
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