When day trading any market, it is vital to review and prepare for tomorrow’s trading the night before. The work you do becomes your road map for the next trading day. It helps you understand where you are in the trading day, and is useful for initiating positions, confirming market direction, and setting trade profit targets.
Select a Good Day Trading Market
In day trading, it is best to concentrate on one or two markets. Select a market with good volume and adequate daily movement. The S&P e-minis consistently has the best liquidity and good daily range. It is one of the best day trading markets. A good day trader can concentrate on this market alone and be successful.
Support and Resistance for Tomorrow’s Day Trading
Each night after the close, review the charts in the market you trade. Look closely at the higher time frames. The weekly chart provides overall market direction. Daily and hourly charts reveal immediate market trend and key levels of support and resistance that frequently come into play the next trading day. An important question to consider: Are the daily or hourly charts indicating that a move or direction change is imminent for the next trading day? Often, we can anticipate how tomorrow will trade from these two higher time frame charts.
Related Markets Provide Day Trading Insights
It is also helpful to review the charts of related markets. For example, if you are trading the S&P e-mini futures (symbol = ES), then you would want to review the Dow mini (YM), Nasdaq 100 mini (NQ) and the Russell 2000 mini (TF) futures, as well. All of these markets are related. Thus, if all four markets are making new highs, we can see that the overall US stock market is strong. We might look the next day to be a buyer on any early weakness. In contrast, if the Dow and S&P markets are making new highs but the Nasdaq and Russell are lagging behind, the next trading day could see a deeper pullback or market turn.
Market Internals Give a Day Trading Edge
Review market internal data. Knowing the levels of the Advance-Decline Index, VIX Index, NYSE Tick Index, and overall volume can confirm or disconfirm what is seen in price action. If the S&P futures rally, but the NYSE Tick and Advance-Decline Indices are lagging and not reaching the levels of yesterday’s rally, then odds increase that the rally could die out soon and a countertrend move may take place.
The Most Important Levels for Tomorrow’s Day Trading
One of the most important things to note is the high and low of the previous day. The next day’s trading will often revisit yesterday’s high or low before setting the trend for the current day. Trading right down to or holding just above yesterday’s low, for example, indicates that the buying seen there yesterday continues to be strong today. This testing action will set the stage for an intraday rally and allow you to enter near the daily low.
Sometimes, the market will trade over yesterday’s high, reverse, and come right back through the high to the downside. The reverse can occur at yesterday’s low. This bull (or bear) trap happens frequently. The move wrong-foots many traders as they buy the upside breakout or sell the downside break. When the market comes back through the daily support or resistance, it forces traders on the wrong side of the market to close their trade. This adds jet fuel to propel the market in the direction of the reversal. It is one of the very best day trading setups.
AUTOPOST by BEDEWY VISIT GAHZLY
