Top 10 Futures Day Trading Setups

Team Day Trader Beginner Course 4

2016-08-24-TOS_CHARTS Slide 1

TRADE TYPES – All opportunities must be able to be quantified by being one of the following. Don’t forget, context is extremely important. Do not trade these setups mechanically and expect to have good results. Always judge the strength of any directional move in terms of market internals, overall pattern, tempo, and where the current range sits in relation to prior areas of balance.

1. Fade extreme of value area if from a starting point within value area

  • Internals should be mixed or not in trending mode and tempo should be relatively slow.
  • Odds of success increase if there is already some value built within the value area and the market breaks towards an extreme later in session.
  • Odds of success decrease if market breaks towards VA extreme early.
  • Market internals show the underlying strength or weakness of any particular move and define the odds of that move continuing through the next inflection point or rejecting or stalling.

2. Buy the high or sell the low of value area if starting outside of value area

  • Internals should be positive if buying, negative if selling.
  • It should be apparent that internals and tempo do not support a larger move into the prior day’s value.
  • The market wants to reject balance and establish value elsewhere.

3. Buy the breakout from the value area if starting inside of value area

  • Internals must be positive if buying and negative if selling
  • There must be small counter-move upon first touch of VAH or VAL to build pressure.
  • Do not buy a “coming up from bottom” or “coming down from top”

4. Fade opening gap when ONL or ONH fails to get taken in opening drive

  • Gap must be less than 10 points /ES.
  • Overnight inventory must be at least 90% or > net long or short.
  • Odds of success increase if prior days structure does not support prior strong or weak settle and gap is just adding to imbalance.
  • Trade location must be close enough to ONL or ONH to allow for proper risk – reward ratio.
  • Internals should not be indicative of ignoring overnight inventory, especially $TICK
  • Targets should be in stages. Prior high/low, VAH/VAL, POC

5. Pattern based continuation or reversal trade according to 5/15 candlestick chart

  • Trend line using 24 hour or RTH.
  • Consolidation breakout from tight range
  • Buyers or sellers shut off pattern
  • Favor setups that are outside of balance but can be taken inside VA if apparent that the game is to get all the way to other extreme of the VA.

6. Larger directional bounce or retracement driven from larger time-frames such as daily

  • Day time-frame guidelines do not apply.
  • Best trade will fly in the face of current market activity
  • Enter first on limit order and manage later.
  • Better if at major support or resistance or swing high/swing low

7. Buy or sell move to VPOC or HVN

  • Look for VPOC or HVN as end point for larger directional move that has already been underway for some time.

8. Fade R3’s and S3’s

  • Market may be moving with huge increase in momentum and tempo to this level, thus use tight stop.
  • RoRo: “Right or Right out”
  • If range of prior day is compressed, then odds are weaker of rejection at this level.

9. Buy highs or sell lows if developing profile is incomplete

  • Target is same distance as from end of value to end of excess on opposite side of range.
  • Tempo and internals must be showing a building of pressure below poor high or above poor low.
  • Acceptance should have already occurred around this area in terms of volume and TPO’s.

10. Buy or sell 80% rule trade

  • Trade location is imperative.
  • Look for move back into value that holds value without falling back out.
  • Stop is always below/above last pullback/retracement after entering VA first time.

Acronyms:

  • HVN: High Volume Node
  • ONH: Over Night High
  • ONL: Over Night Low
  • POC: Point Of Control
  • RTH: Regular Trading Hours
  • TPO: Time Price Opportunities
  • VA: Value Area
  • VAH: Value Area High
  • VAL:  Value Area Low
  • VOPC: Virgin Point Of Control

Don’t forget, CONTEXT is extremely important. Do not trade any setup mechanically and expect to have good results. Always judge the strength of any directional move in terms of market internals, overall pattern, tempo, and where the current range sits in relation to prior areas of balance.

With that said, “We have great challenges and great opportunities, and with your help, we will meet them together!” – Jason

Team DayTrader
        Learn. Trade. Profit.

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