Full Breakdown of My Trading Strategy Dow Futures Daytrading
I will be detailing my strategy to both help others and to help myself fine tune my strategy.
My strategy is one of market maker cycles. The end goal: to trade off of the Daily chart by drilling down to the 15 minutes for entries. Everything revolves around the Daily chart. The only indicator I use is ATR, other than that, pure price action. I use opening prices a lot in my trading.
Starting with the MONTHLY chart:
Every month has the following-
An opening price
A first trading day
A last trading day
These are things that ALL traders see and can't misinterpret.
I will use June as the basis for my examples.
I try to figure out what kind of monthly candle is likely to form. Bullish, Bearish or Doji. I use ATR to try to figure out the likely size also. For Dow Futures, a typical Monthly candle is around 3000 ticks +/-
Going to the Daily chart, I mark the beginning of the month and the end of the month.
The meat of the strategy, and the one quite frankly is the most difficult and the most discretionary, is reading price action on the Daily chart to determine what the next daily candle is likely to do and where it opens at. No strategy is 100% accurate and I do take losses from being wrong. With proper risk management ( I will detail my personal risk management later ) you can still make tons of money being 50% right.
Not everyday is meant to be traded and quite frankly, most days are pure trash. Over 55% of all Daily candles are small, resting Doji days. You are looking for the expansion daily candles.
Starting with the first trading of June:
1. May 29th, Large Doji day and and formed a mother bar
2. May 30th, another doji day and still inside the previous bar
3. June 2nd, opened up in middle of inside bar, Bias for day is Long. Buy near the bottom of the inside bar and a break of Yesterday's Low.
This is an actual trade I took. Once I saw the Doji candle on the 15 minute break below yesterday's low I entered in Long. I will go over stops and targets later. For now, I am explaining how I find my bias and locations.
The next day: start the process over again. Look at the Daily and the context of the bars. Look for swing points, Daily highs and lows. Key Daily bars as signals. I usually like to do this 5 minutes after Asia opens just to see where price opens at. I then mark the daily open with a cyan blue line. If I am Long bias then I want to buy under the open at key levels. I use SP as swing point, a daily high or low that has not been broken yet.
Tuesday, I would have a Long bias again. Because we opened still inside of the mother bar and I see highs not broken, I want to trade in that direction. What is a key level on this Tuesday? I see the monthly open right underneath. The big question I would ask myself on this Tuesday is where in that move can I get in on a pullback for the Long trade?
The market gives you an entry here.
I did not take that trade, I WILL show you the trade I did take on this day. After NY opened, I saw the spike into the monthly open and a doji right ON the open. I slammed Long. Especially, the three swing points to be used as the direction.
Now on to trade management. Stops, Targets. I have the same bracket for every trade, so the only variable is my entry. Once I enter, I set my ATM strategy.
I use the 15 minute ATR to determine my stop loss. This part is also up to the individual trader and is discretionary. I will show you MY strategy.
Take a zoomed-out view of the 15-minute chart with the 14 period ATR, mark the clusters of the peak ATR readings from NY sessions. In this case it is between 70-90. I tend to go towards the upper limit, this case 90. I then use 1.25-1.5 times of this reading based on my account and position sizing. In June AND in July, I am using 120 tick stops.
My targets are all strictly 2.5 risk to reward of what my stop is plus or minus a few ticks for commissions. Since I am using 120 tick stops, my targets are therefore, 300-310 ticks. Going back to my Tuesday trade, the trade management would be a set 2.5R all or nothing. Enter the trade and walk away. Go read a book or play PS5. Go to gym. It will either hit stop, target or close out at 4pm NY close.
2 Winning trades wipes away 5 losers. I have losers all the time with a 50% win rate. I can expect 8 losing trades in a row at any given time. Something I have experienced multiple times.
Now on to my money management strategy. The holy grail of this entire system. Quite frankly, how you enter and your strategy at the end of the day doesn't amount to much. How you manage your money is where professionalism is achieved.
Take your starting account balance, divide it in fours. I will use a 10,000 account as simple math.
10,000
2500 Level 1 14.5R
2500 Level 2 11.5R
2500 Level 3 9.5R
2500 Level 4 8.5R
I risk 1.75% per trade and each level will stay fixed until the next level is reached. In this example, Level 1 will be using $175 risk per trade and a 2.5 risk to reward, $440 reward. You will keep risking $175 per trade until you hit your $2500 profit goal to advance to Level 2. In this case this will take you 14.5R
Now you are on Level 2, you find your new account balance is now $12,500. Find 1.75% of this = $220. Keep using $220 risk until you hit another $2500 in profits. This will take you 11.5R.
Keep repeating these steps until you have hit all 4 profit levels and your account has doubled. Your new account balance is now $20,000. You will start this process over again. To double your account you will need a total of 44-45R. At a conservative approach of 5-7% monthly gain, you can expect to double your account in 8 months +/- depending on how good you can get.
The number one major key to ALL OF THIS IS
One trade per Daily candle. You lose on that day, move on and come again tomorrow
All profit targets need to be hit or close out at 4pm depending on price
My strategy is one of market maker cycles. The end goal: to trade off of the Daily chart by drilling down to the 15 minutes for entries. Everything revolves around the Daily chart. The only indicator I use is ATR, other than that, pure price action. I use opening prices a lot in my trading.
Starting with the MONTHLY chart:
Every month has the following-
An opening price
A first trading day
A last trading day
These are things that ALL traders see and can't misinterpret.
I will use June as the basis for my examples.
I try to figure out what kind of monthly candle is likely to form. Bullish, Bearish or Doji. I use ATR to try to figure out the likely size also. For Dow Futures, a typical Monthly candle is around 3000 ticks +/-
Going to the Daily chart, I mark the beginning of the month and the end of the month.
The meat of the strategy, and the one quite frankly is the most difficult and the most discretionary, is reading price action on the Daily chart to determine what the next daily candle is likely to do and where it opens at. No strategy is 100% accurate and I do take losses from being wrong. With proper risk management ( I will detail my personal risk management later ) you can still make tons of money being 50% right.
Not everyday is meant to be traded and quite frankly, most days are pure trash. Over 55% of all Daily candles are small, resting Doji days. You are looking for the expansion daily candles.
Starting with the first trading of June:
1. May 29th, Large Doji day and and formed a mother bar
2. May 30th, another doji day and still inside the previous bar
3. June 2nd, opened up in middle of inside bar, Bias for day is Long. Buy near the bottom of the inside bar and a break of Yesterday's Low.
This is an actual trade I took. Once I saw the Doji candle on the 15 minute break below yesterday's low I entered in Long. I will go over stops and targets later. For now, I am explaining how I find my bias and locations.
The next day: start the process over again. Look at the Daily and the context of the bars. Look for swing points, Daily highs and lows. Key Daily bars as signals. I usually like to do this 5 minutes after Asia opens just to see where price opens at. I then mark the daily open with a cyan blue line. If I am Long bias then I want to buy under the open at key levels. I use SP as swing point, a daily high or low that has not been broken yet.
Tuesday, I would have a Long bias again. Because we opened still inside of the mother bar and I see highs not broken, I want to trade in that direction. What is a key level on this Tuesday? I see the monthly open right underneath. The big question I would ask myself on this Tuesday is where in that move can I get in on a pullback for the Long trade?
The market gives you an entry here.
I did not take that trade, I WILL show you the trade I did take on this day. After NY opened, I saw the spike into the monthly open and a doji right ON the open. I slammed Long. Especially, the three swing points to be used as the direction.
Now on to trade management. Stops, Targets. I have the same bracket for every trade, so the only variable is my entry. Once I enter, I set my ATM strategy.
I use the 15 minute ATR to determine my stop loss. This part is also up to the individual trader and is discretionary. I will show you MY strategy.
Take a zoomed-out view of the 15-minute chart with the 14 period ATR, mark the clusters of the peak ATR readings from NY sessions. In this case it is between 70-90. I tend to go towards the upper limit, this case 90. I then use 1.25-1.5 times of this reading based on my account and position sizing. In June AND in July, I am using 120 tick stops.
My targets are all strictly 2.5 risk to reward of what my stop is plus or minus a few ticks for commissions. Since I am using 120 tick stops, my targets are therefore, 300-310 ticks. Going back to my Tuesday trade, the trade management would be a set 2.5R all or nothing. Enter the trade and walk away. Go read a book or play PS5. Go to gym. It will either hit stop, target or close out at 4pm NY close.
2 Winning trades wipes away 5 losers. I have losers all the time with a 50% win rate. I can expect 8 losing trades in a row at any given time. Something I have experienced multiple times.
Now on to my money management strategy. The holy grail of this entire system. Quite frankly, how you enter and your strategy at the end of the day doesn't amount to much. How you manage your money is where professionalism is achieved.
Take your starting account balance, divide it in fours. I will use a 10,000 account as simple math.
10,000
2500 Level 1 14.5R
2500 Level 2 11.5R
2500 Level 3 9.5R
2500 Level 4 8.5R
I risk 1.75% per trade and each level will stay fixed until the next level is reached. In this example, Level 1 will be using $175 risk per trade and a 2.5 risk to reward, $440 reward. You will keep risking $175 per trade until you hit your $2500 profit goal to advance to Level 2. In this case this will take you 14.5R
Now you are on Level 2, you find your new account balance is now $12,500. Find 1.75% of this = $220. Keep using $220 risk until you hit another $2500 in profits. This will take you 11.5R.
Keep repeating these steps until you have hit all 4 profit levels and your account has doubled. Your new account balance is now $20,000. You will start this process over again. To double your account you will need a total of 44-45R. At a conservative approach of 5-7% monthly gain, you can expect to double your account in 8 months +/- depending on how good you can get.
The number one major key to ALL OF THIS IS
One trade per Daily candle. You lose on that day, move on and come again tomorrow
All profit targets need to be hit or close out at 4pm depending on price
Note
An example Live in Monday July 14thLong Bias
Looking for a buy low of the day under the open and a break of July 9's low
Note
Note
I am Long after the market gapped down based on my strategy. Closed back inside after tapping July's Monthly Open. I had a Long bias on Friday and the market handed me exactly what I wanted. No hesitation I got in. I don't know if the trade will succeed or not, nor do I care. I take every trade in my system.Long 44,437
120 tick stop
335 tick target
Note
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.