Day Trading the SP Futures with Initial S/R and the NYSE TICKWritten by Mike Reed
The area of support or resistance that is hit FIRST in morning has special significance. In first hour of trading, market's reaction to initial support or resistance is a good "tell" for strength of next move.
For instance, if market moves up in first 20 minutes of trading, touches initial resistance zone, and then turns down, this implies that a good tradable downtrend move is likely to develop.
How strong that new trend becomes is market-dependent. As market falls, its reaction to each new support zone gives an indication of how weak or strong new downtrend is. If market falls to initial support and breaks down through it without a stall or a bounce, it will probably continue down to next level of support. But, if market loses downside momentum near initial support zone, downtrend may well be over.
When price comes into a resistance or support area, NYSE TICK is by far best indicator of what price may do from this point. What is "TICK"? The TICK is simply difference between number of stocks that last traded on an "up-tick" versus number of stocks that last traded on a "down-tick". When TICK reaches +1000, market has reached a short term overbought extreme and TICK reaches -1000, market has reached a short term oversold extreme.
Day Trading Success-The Key is SurvivalWritten by Mike Reed
A lot of traders, especially new traders, are looking for a list of simple trading rules to follow. "Rules-based trading" is better than an undisciplined approach, that's for sure. But simple mechanical rules have not worked for me. Like every successful discretionary trader, I've learned to recognize a group of high-probability situations (or setups) that put odds on my side. In a way, these setups are "rules", but they are essential.
Most new traders tend to focus just about all their time and energy on finding nearly perfect "setups", but trade setups, even very good ones, are *not* key to successful trading. It's *way* you trade your setups that keeps your losses smaller than your gains. And this is single most essential key to trading success. To me, process of limiting losses is more than just money management...it is survival.
I can't give you a list of mechanical survival rules that will take place of experience and make you a successful trader overnight, but if you stick to following principles in your trading, you'll be on track. You'll be doing just about opposite of crowd, and you'll eventually learn to limit your losses. Limiting your losses is only way I know to make money in this business.