Day Trading Tactics! (by mmTesla)

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This post is going to serve as a primer for future posts detailing day trading tactics/analysis, homework, finding your set-ups and eventually breaking down given set-ups that occurred throughout the week. I think the natural progression of posts will be best suited for everyone. This will be geared solely toward the ES, though the same tactics apply damn near everywhere.

First lets examine what you need to pay attention to:

Opening range– Often referred to as the OR, IB or opening 30. Basically it’s the first 30 minutes of market action during regular trading hours.

Why is it important?

Read about the initial balance and opening types in Mind over Markets, or the PDF called 10 o’clock bulls.

What to focus on?

The high and low and of course the application of this context (get to that in later posts). The opening 30 gives a heads up as to who is in charge, if we go to the high of the OR and we get a reversal printed, that means a hell of a lot more than a reversal just occurring somewhere. Again if you read those two books it’ll become abundantly clear.

Globex– The overnight session between the close of regular trading hours and the open of regular trading hours the next day.

Why is it important?

Because professionals look at it, and generally there are some good set-ups like professionals ambushing retail that does not know about those levels. Usually happens 1-2 times per week.

What to focus on?

The highs and lows. Overnight action in of itself is WORTHLESS. But the overnight extremes mark the high or low of the next day respectively roughly 65% of the time and they get traded 96% of the time. They are a value area.

Pivots– There are a ton of ways to calculate pivots. To be honest its more about where they are in context to everything else that I am mentioning in this post, rather than the level itself so any setting will do IMO.

Why is it important?

Because professionals of every level look at them and they are forward looking.

What to focus on?

Where they are in relation to your support and resistance zones, opening 30, globex hi/lo etc. Look at pre-market, how is the market reacting to these levels prior to the open? More credence if they are being respected and more credence if they line up with everything. Also check out weekly pivots and daily pivots, good to know where both are.

Candlesticks– Self explanatory.

What to focus on?

Wicks, wicks, wicks. They tell the story, they show you who is in control.

The extremes of the candles who is in control if X level is taken out on these candlestick formations? For example the highs and lows.  If we get to a value area and the wicks start appearing say we are testing support. Tells me to look for buying. Now ask where if price goes do I know momentum has flipped to the upside, even if its only temporary?? I’ll post examples of these in another post BUT start asking yourselves these questions now and trying to figure it out. Hint, hi/lo of important candles, measuring bars (big ass candles) and doji (the whole doji family).

Market internals– Don’t really use this one personally but I’d use cumulative delta. But there are some big advantages in using internals, Dutch probably has some solid resources to point you too on the subject.

Support/resistance- Normally do my homework on the 60 minute charts. ONLY horizontal levels.

What to focus on?

Think wicks on the candlesticks and where do they meet. Generally you’ll see these in 10pt increments. Not a hard and fast rule but its just how the market tends to structure itself.

Trendlines– Careful. More distracting than anything else.

What to focus on?

Normally drawing them on a 15min allows me to see where momentum is at, IF they break while in a value zone it adds credence to start looking for a short. Again notice it by itself is meaningless to me, but the context of it breaking tells me momentum has flipped or if you have a reversal and anticipate the minimum momentum will carry it is to a break of the trendline that is also useful.

*CAUTION* I have noticed that trendlines and classic TA patterns are more distracting then they are helpful because people draw very complex patterns that may or may not be there. My advice: stay FAR AWAY from them, for now at least.

Fibs- Fibonacci retracements another tool I do not use.

What to focus on?

The 50% retracement. One of the primary things I have found that has value with it, even then it is still more about its context then anything else. So don’t fall in love with them.

EMAs: Another tool I normally do not focus on.

What to focus on?

The 20 ema. If it is pointing up and say we have broken out of the OR and have re-tested the OR high from above and this lil indicator is upsloping, you can bet your ass every professional and algo has been cleared to hit heavier size on buying the dips in line with the sloping of the 20 ema. Or so I am told J

That about covers my PRIMER. More to come soon. Here is my advice start marking those levels off and watching them. The main thing that seperates people from reading the context is the people who have the unbiased screen time. Meaning you aren’t LOOKING for an outcome. Which is different than looking for a set-up.

Just have the levels and make a list of questions as the market approaches them. What is the market doing as we are approaching the level? where is this level in relation to the others? What is price doing at this level? Is it printing a reversal? Slicing through? Is it having trouble and printing wicks?  Do NOT look at those levels to prove being bearish or bullish. ONLY look at them to see what price is doing.

Make a list of questions and ask yourself and fill it out somewhere (journal). It will not click right away. But in a bout 3 months or less you’ll see it click a hell of a lot easier and it will no longer seem foreign and the markets will no longer appear an unwinnable game IMO!