Day trading techniques can essentially be categorized into three main types:
- Trend Following Strategy
- Trend Fading Strategy
- Ping-pong Strategy
Using each of these day trading secrets involves reading and interpreting emini trade price movement charts together with multiple popular technical indicators. The objective is to establish a high probability that the price of the E-mini is going to move at least “x” points in a given direction. Based on this expectation the trader sets up a buy or sell order to enter a trade at a certain price, exit at another price for a gain, and protects the trade with a stop loss order for instances where the wrong view is taken.
A prerequisite for successfully using these techniques is that you study the history of the preceding trading days for the emini you are trading to establish the average “daily range” of prices. The highs and lows and the distance between them on average will give you the parameters inside which you can potentially make a profit on a given move in prices.
The Complete Day Trading Home Study Course – Download Version (discounted price)
- Trend Following Day Trading Technique
Use this strategy when the market is trending strongly in an up or down direction. The day trading tip here is to recognize the strong breakout and place an order to buy or sell at a specific point and then place an order to close that position for a gain at a predetermined exit point. The predetermined exit point is set at an acceptable profit target, but inside the probable range where the price will reach a high or low and start turning again. This is takes the emotion out of the trade having set a mechanically executing exit point. - Trend-Fading Day Trading Technique Use this strategy when the market has moved significantly beyond its normal range. This is related to a concept called “exhaustion” which sometimes occurs when a security has been in high demand, resulting in bidding the price up repeatedly until the buyers are all fulfilled, followed by a sudden fall in price as buying ceases. The underlying rule supporting the trend-fading concept is that prices tend to return to their mean, thus causing peaks to turn down and troughs to turn up. Capitalizing on the trend-fading will seek to predict the moments when the price is turning back towards the mean and profit from a part of that move.
- Ping-Pong Strategy. Use this strategy when the market is moving sideways. When there is no strong price trend, the emini tends to trade in a narrow range, with a small price difference between the upper and lower limits. The Ping-Pong technique studies the range and uses the predictable move from down to up, and up to down “scalping” a small profit from each move.
(Several tested and proven strategies are taught in the The Day Trading Home Study Course .
Typical indicators used to assist in interpreting the price action for all of these strategies are:
- LINES - Sloping lines drawn to join lows or highs thus indicating a trend up or down. Horizontal lines drawn between common lows indicating support levels, and lines drawn between common highs indicating resistance levels.
Graphic from The Complete Guide to Day Trading – Download it FREE
- MACD – a momentum indicator – watch this for evidence of “divergence”. Divergence is where the MACD indicator is showing a trend opposite to that of the actual price trend. For example where the price is going up implying strong demand but the MACD shows a weakening of momentum, the trader can expect an imminent reversal of the upward trend.
Graphic from The Complete Guide to Day Trading – Download it FREE
- Moving Average Lines crossing – this is basically the same as above and is often plotted on top of the MACD bar chart. This uses two MA lines, one with a short frequency and one with a longer frequency. Where the one crosses the other usually indicates a change in the momentum direction.
- Bollinger Bands – these are indicators of upper and lower price bands, set on a basis of deviation from the moving average. Using these bands it is possible to predict possible limits to price movements, and also to detect when a new trend is in the making as the Bollinger Band curves up or down, away from the established pattern. Another telling characteristic of Bollinger Bands is a that a breakout in price movement is often preceded by a “pinching” of the bands closer together, indication an imminent breakout.
Graphic from The Complete Guide to Day Trading – Download it FREE
- Volume is the most common and dependable indicator because increases in volume imply excess-demand or excess-supply, which are the ingredients for sharper volatility, and an opportunity to gain from the price move.
Directions on how to use trade E-minis successfully can be learned in detail, step by step from the Day trading E-mini “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post Emini education – Day Trading Class and Day Trading Seminars
Mail this post
Day Trading Opportunities
