Intraday Trading Strategies : SPY 09/08/2009
Part of my Intraday Trading Strategies series, this post focuses on SPY 09/08/2009. I'll go over a few entry signals shown on the chart as well as signals which would trigger an exit if you are on the wrong side of the trade.
Various entry signals can be found on just about any chart, and depending on what type of trading is being done.
What is more important in my mind though, is learning to recognize exit signals, and getting yourself to act upon them to either take profits, or a loss if necessary
The chart below is of SPY 09/08/2009 and we are looking at it to find signals for Intraday Trading Strategies that seek to profit from small moves, primarily Scalping or a hybrid of Scalping and Day Trading.
Keep in mind that other tickers can be used such as SDS or SSO to take advantage of increased leverage for short term intraday moves, while still using SPY for your analysis.
For anyone who doesn't have a problem with entering trades shortly after the open, a Short entry signal was given about 9:33/9:34 a.m. when the price met up with the pre-market upper resistance level and failed to break through. I have shown this area in the red circles in the image on the right.
The first exit signal on this chart, depending on how tight your stop loss rules are, would have been between 9:45 a.m. and 10:00 a.m. as the price started to move higher.
If you got out here fine, you made a profit. If you then watched and noticed the price move to a new low just after 10:00 a.m., or if you hadn't taken the first trading opportunity, you would now consider entering Short on a breakdown to the new lows.
Let's take a look at the continuation chart next, to see what happened:
Congratulations! You have managed to enter a Short position at the bottom of the move. I don't know about you, but this happens a lot. The key here is to recognize that your entry Short was wrong as the price starts moving higher, and get out for a small loss.
Otherwise, you may find yourself holding on and when the price nears point #2, you may close your Short position feeling that it will keep moving higher. You may even close your Short position at point #2 and go Long!
Moving on, the next signal to enter a Short position occurred at 11:00 a.m. and again at 11:30 a.m. Do you see the signals?
Notice at 11:00 a.m. an Intraday Double Top was formed combined with a decreasing MACD and RSI. At 11:30 a.m. a Triple Top was formed, again with a continued decreasing MCAD and RSI.
Both of these Top reversal patterns proved to be good Short entrys for Intraday Trading Strategies seeking to profit from small, short term price movements.
As always, remember that Cutting Losses Short and Position Sizing are keys to being successful when trading. Taking a small loss in the example above would have allowed you to possibly take advantage of other trading opportunities as they came about and easily make up for the loss.
There are other signals and patterns shown in the chart above, but we will save those for another post. Keep in mind that specific signals and indicators do not work every time. Learning the probabilities of them working under various scenarios will allow you to be ready and take advantage of them.