Transcript Slide 1
Welcome to Field Financial Group’s Learning to Day-Trade Volume 1: Support & Resistance Charts provided by: Future Source Click anywhere on the screen to continue This presentation will provide the following information: The Importance of Using Support & Resistance. Identifying Support & Resistance Levels across Different Time-Frames. Learning to Pull the Trigger. Click anywhere on the screen to continue The Importance of Using Support & Resistance Are you familiar with the phrase “herd mentality”? One investor after another following the market momentum as it ebbs and flows throughout the day. Being able to identify near-term market support or resistance gives you the possibility to reduce the amount of investment capital you risk per trade. On the following chart, a simple 7 day trend line shows solid upward momentum with several intraday entry points. Even if you’re goal is to day-trade 5 minute bars, knowing this and other simple trading techniques can put you ahead of the herd. Click anywhere on the screen to continue This 10 minute chart spans two days. The yellow bars represent the overnight trading session and the blue bars represent the day session. The previous day’s low was 1041.50. As a day-trader, taking a long position near 1042.00 and placing a stop below 1039.00 (the low of the last two overnight sessions) would have given you an approximate risk per contract of $150.00 ($50 per point x 3 points). Subsequently, the market moved 10 points to the upside, in which case any sensible day-trader would trail the market with a stop-loss order to protect profits. Whether you trade multiple contracts or one-lots, your approach to trading should be crisp and emotionless. Day-trading should be short, aggressive trades with a profit objective of a few-hundred dollars per contract. Don’t get greedy! The market almost always takes it back. Click anywhere on the screen to continue Identifying Support & Resistance Levels Across Different Time-Frames. To be a successful day-trader, you must try to incorporate several layers of technical analysis quickly and seamlessly. Support & Resistance can be one of the most important tools in your trading arsenal. Doing your homework by examining price relationships across several time-frames can improve your entry and exit levels. Once you have zeroed in on your preferred time-frames (e.g. 3-min., 5- min., 15-min., etc.), you will be able to apply this technique across different market sectors by quickly scanning pre-set variable charts at a glance. Remember, being prepared ahead of the trading session will help keep you focused on your true goal --- making money! Click anywhere on the screen to continue When you’re day trading the E-mini S&P 500, you must identify prior days highs and lows as well as intraday price-inflection points. In the following chart the red support line was drawn based on Thursday’s early-morning low. During Thursday’s day session, the market did not attempt to break that low. However, during the early morning trading on Friday, there was a failed attempt to maintain new lows, leaving the original Support line intact. This market pattern offers the potential for a long position with a reasonably close stop. (See Thursday’s early low of 119.75 and the failed attempt which reached a low of 118.75). Click anywhere on the screen to continue If the overall long-term trend is still intact, you could enter a limit order to buy 1 at 122.00 limit, with the understanding that the market could fall through this Support level searching for sell-stops. Aggressive traders could buy another contract at 119.00 even and place a stop 5.0 to 7.0 points below the average entry level. If the Support level is breached, it immediately becomes an important price inflection point. If your buy order(s) have been hit, but your sellstops have not, you could place an additional buy-stop order above the original level of Support at 1020.00. Remember, if your stops are hit, you can still keep that buy-stop working above the market. During a given trading day, a price inflection point often can remain strong. You never know how many buy or sell-stops are in the market. Don’t get discouraged if the market hits your stops and then reverses and heads in your originally intended direction, leaving you on the sideline. But, if you find this happening too often simply adjust your stop-loss orders to stay further outside short-term market noise. Click anywhere on the screen to continue By the end of the trading day, the following chart depicts a downside failure to follow through with and an upside “reversal punch” through the newly formed price-inflection point resulting in a 10 point race to the finish. The low for the day was 1016.25; this would leave a well-positioned sell-stop untouched. This chart should serve as an example to all day-traders of the importance of scanning your Support and Resistance levels across multiple time-frames. Click anywhere on the screen to continue From time-to-time a day-trader should look back even further in time to make sure they are not missing a potential long-term Support or Resistance level. This E-mini S&P 500 daily bar chart shows the market quickly approaching a trend line top. This chart spans 10 months, giving even a short-term day-trader an insight into longer-term market momentum and resistance. As a day trader, you could short the market on an order just under the trend line with a reversal to buy two contracts 5.00 points above the trend line. These opportunities, although infrequent, can only be exploited by the determined day-trader who may know a little bit more than the masses. Click anywhere on the screen to continue Chart from prior page Fast forward 8 day-trading sessions. Zoomed-in, this 6-month chart plainly shows the failure at the top of the trend line. As a day-trader, being able to detect a shift in momentum is crucial. Click anywhere on the screen to continue Learning To Pull The Trigger! One of the toughest transitions in day-trading your own account is going from theory and education to practical application. Success in day-trading comes mostly from trial and error. The E-mini S&P 500 contract gives you the liquidity and low margin requirements necessary to learn to apply individual trading techniques. If you are just beginning to day-trade, start with one or two contracts. Keep your losses manageable until you discover your comfort zone. Only then, re-evaluate your risk tolerance and possibly add more contracts to your trading plan. If you have day-traded before without success, re-evaluate your trading plan and manage your expectations. Most unsuccessful day-traders simply lose focus and become increasingly greedy. If you expect to double your account on a weekly basis, you have set your profit objectives too high. Remember, day-trading is simply jousting with the market. Step in and don’t be afraid to step out quickly. Day-traders sometimes fool themselves into holding positions overnight. Doing this can expose you to a great deal of price volatility and risk. As a daytrader, it is essential to close out all positions before the trading session ends. Click anywhere on the screen to continue Future presentations will be located at fieldfinancial.com. We hope that you will visit us often to advance your knowledge in trading futures and options. Please feel free to recommend our website to your friends. “This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures and options trading involve risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. In no event should the content of this market letter be construed as an express or an implied promise, guarantee or implication by or from Field Financial Group that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance.” Extreme market conditions or other extenuating circumstances can substantially increase loss due to the inability to execute a “Stop Loss” order.