EMINI SUCCESS FORMULA

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1 LIVE Webinar

2 Legal Disclaimer No claim is made by Trading Concepts, Inc. that the trading strategies shown here will result in profits and will not result in losses. Trading may not be suitable for all recipients of this Training Program. All comments, trading strategies, techniques, concepts and methods shown within our Course are not and should not be construed as an offer to buy or sell stocks, ETFs, futures, foreign currencies, and/or options they are opinions based on market observation and years of experience. Therefore, the thoughts expressed are not guaranteed to produce profits in any way. All opinions are subject to change without notice. Each trader/investor is responsible for his/her own actions, if any. Your purchase of the Trading Concepts EMINI SUCCESS FORMULA Start-Up Edition constitutes your agreement to this disclaimer and exempts Trading Concepts, Inc. from any liability or litigation. Trading Concepts, Inc. 2

3 1. What are Futures and Commodities? 2. What are E-Mini Futures? 3. Technical vs. Fundamental Analysis 4. Charting Price Charts 5. Identifying Market Condition The UPTREND Process The DOWNTREND Process 6. Retests & Failures 7. SUPPORT & RESISTANCE 8. Types of Traders 9. Trading Styles 10. Trend vs. Counter-Trend Trading 11. Volatility 12. Fibonacci Retracements 13. Moving Averages 14. Trading Strategies Trend Determination Trade Set-Ups Initial Trend Entry Trade Management 15. Key Times of Day 16. Summary 5 Step Process for Trading Mastery Trading Concepts, Inc. 3

4 What Are Futures and Commodities? Trading Concepts, Inc. 4

5 The terms Futures and Commodities is similar to the way Equities and Stocks are used when traders and investors talk about the Stock Market. Trading Concepts, Inc. 5

6 To be more specific Futures are contracts of Commodities that are traded at a Futures Exchange like the Chicago Mercantile Exchange (the CME) or the Intercontinental Exchange (the ICE). Commodities are the actual physical goods like corn, soybeans, wheat, gold, silver, crude oil, etc. Trading Concepts, Inc. 6

7 Futures contracts have expanded beyond just Commodities; now there are Futures contracts on financial markets like the S&P 500, DOW, T-Notes, Foreign Currencies and others. Trading Concepts, Inc. 7

8 The most popular and liquid Futures and Commodities products can be broken down into 6 major groups Trading Concepts, Inc. 8

9 1) Equity Index Futures (E-Mini Futures) 2) Agricultural Commodity Futures 3) Energy Futures 4) Foreign Currency (FX) Futures 5) Interest Rate Futures 6) Metals Futures Trading Concepts, Inc. 9

10 Equity Index Futures include key benchmarks such as the S&P 500, Dow Jones Industrial Average, NASDAQ-100, and the Russell 2000 Index. Trading Concepts, Inc. 10

11 Agricultural Commodity Futures include the staples of everyday life: the Grains (Corn, Soybeans, and Wheat), Oilseeds, and Sugar. Trading Concepts, Inc. 11

12 Energy Futures include Crude Oil, Natural Gas, Gasoline, and Heating Oil. These Energy Futures contracts are benchmarks that set the price for these resources worldwide. Trading Concepts, Inc. 12

13 Foreign Currency (FX) Futures offer transparent and equal access to foreign currencies. The CME is the largest regulated FX marketplace in the world. Trading Concepts, Inc. 13

14 Interest Rate Futures include short-, medium-, and long-term interest rate derivative products on the most widely followed U.S. interest rate benchmarks. Trading Concepts, Inc. 14

15 Metals Futures include full-size and smaller size contracts on Gold, Silver, and Copper. Trading Concepts, Inc. 15

16 What Are E-Mini Futures? Trading Concepts, Inc. 16

17 E-Mini Futures track the most popular broad-based stock index benchmarks in the financial world. Launched between 1997 and 2005, E-Mini Futures are among the fastest growing products in the industry. The four most popular E-Mini Futures are E-Mini S&P 500 Futures contract (ES) E-Mini NASDAQ-100 Futures contract (NQ) E-Mini Dow (YM) Russell 2000 Index Mini Futures (TF) Trading Concepts, Inc. 17

18 All E-Mini Futures contracts are traded completely electronically via electronic order management software on a PC or through a registered commodity futures broker over the telephone. Trading Concepts, Inc. 18

19 E-Mini Futures are appealing because of their excellent liquidity and around-the-clock availability. At one-fifth the size of their standard counterparts, these contracts have found an audience among professional and individual investors alike. Trading Concepts, Inc. 19

20 E-Mini Futures are contracts to buy or sell the value of a specific stock index at a specific price on a specific date in the future. Businesses and individual traders trade E-Mini Futures for different reasons, but primarily to try to profit from or protect themselves from changes in the price of the underlying indexes. Trading Concepts, Inc. 20

21 Financial professionals, such as pension and mutual fund managers, typically use E-Mini Futures for managing risk and hedging portfolios against adverse price moves. Others, such as day traders or position traders, trade the E-Mini Futures to speculate on the price fluctuations of the stock market. Trading Concepts, Inc. 21

22 E-Mini Futures closely follow the price movement of their respective indexes, typically referred to as the underlying or cash indexes. Trading Concepts, Inc. 22

23 What is the E-Mini S&P 500? The E-Mini S&P 500 Futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the Standard & Poor s 500 Index, the key benchmark for large-capitalization U.S. stocks. E-Mini S&P 500 Futures are the world s most actively traded stock index futures contracts, with over 1.6 million contracts traded on average per day. Trading Concepts, Inc. 23

24 E-Mini S&P 500 Futures (ES) Minimum Price Fluctuation (Tick Size): 0.25 index points = $12.50 (1.00 index point = $50) per contract Trading Concepts, Inc. 24

25 What is the E-Mini NASDAQ-100? The E-Mini NASDAQ-100 Futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the NASDAQ-100 Index, a key benchmark of technology, telecom, and biotechnology issues. E-Mini NASDAQ-100 Futures offer diversification potential with underlying index holdings that span major industry groups including computer hardware and software, telecommunications, biotechnology, and more with over 259,000 contracts traded on average per day. Trading Concepts, Inc. 25

26 E-Mini NASDAQ-100 Futures (NQ) Minimum Price Fluctuation (Tick Size): 0.25 index points = $5.00 (1.00 index point = $20) per contract Trading Concepts, Inc. 26

27 What is the E-Mini Dow? The E-Mini Dow Futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the Dow Jones Industrial Average Index, a price-weighted index of 30 blue-chip U.S. companies. E-Mini Dow Futures represent nine economic sectors including financial service, technology, retail, entertainment and consumer goods with over 138,000 contracts traded on average per day. Trading Concepts, Inc. 27

28 E-Mini Dow Futures (YM) Minimum Price Fluctuation (Tick Size): 1 index point = $5.00 per contract Trading Concepts, Inc. 28

29 What Is the Russell 2000 Index Mini? The Russell 2000 Index Mini Futures contract is traded via the Intercontinental Exchange (ICE) and was created to track the Russell 2000 Index, one of the major benchmarks for small-capitalization U.S. stocks. Russell 2000 Index Mini Futures represents the most widely accepted measure of small-capitalization stocks trading in the U.S., with over 117,000 contracts traded on average per day. Trading Concepts, Inc. 29

30 Russell 2000 Index Mini Futures (TF) Minimum Price Fluctuation (Tick Size): 0.10 index points = $10.00 (1.00 index point = $100) per contract Trading Concepts, Inc. 30

31 Chicago Mercantile Exchange (CME) E-Mini S&P 500, E-Mini NASDAQ-100, and E-Mini Dow trading hours CME E-Mini Futures contracts begin trading each week on Sundays at 5:00pm CT (Central Time) and continue until close of business on Friday at 3:15pm CT. Each day the market closes for a 15 minute break at 3:15pm, re-opens at 3:30pm, and continues trading until 4:30pm with a daily maintenance break until 5:00pm when the market re-opens. Normal trading hours are Monday through Friday 8:30am to 3:15pm CT. Trading Concepts, Inc. 31

32 Intercontinental Exchange (ICE) Russell 2000 Mini Index Futures trading hours ICE Mini Index Futures contracts begin trading each week on Sundays at 8:00pm ET (Eastern Time) and continue until close of business on Friday at 6:00pm ET. Each day the market closes for a two hour break at 6:00pm ET. Market settlement time each day is at 4:15pm ET. Normal trading hours are Monday through Friday 9:30am to 4:15pm ET. Trading Concepts, Inc. 32

33 Contract Months E-Mini Futures trade in quarterly time frames, with March, June, September, and December expirations. Trading can occur up to 8:30am on the 3 rd Friday of the contract month. Traders start switching over to the next contract on the 2 nd Thursday of the expiration month. However, volume does not typically pick up on the next contract month until Monday during the week of expiration. Trading Concepts, Inc. 33

34 Why Trade E-Mini Futures? E-Mini Futures are among the fastest growing products for a number of reasons Trading Concepts, Inc. 34

35 The E-Mini Futures markets are highly liquid and active markets: Market participants include institutional traders, investors, and individual traders so there is large open interest and volume (substantial liquidity). ENTER and EXIT trades easily. Tight bid/offer spreads, which reduce trading transaction costs. The E-Mini Futures markets are volatile markets with a wide enough daily trading range to offset transaction costs. Trading Concepts, Inc. 35

36 The E-Mini Futures markets are traded via electronic access: One central marketplace (CME and/or ICE) that offers market integrity and fully integrated clearing that matches and settles all trades and guarantees the creditworthiness of every transaction that takes place. Trades electronically virtually 24 hours a day so you literally can trade from the comfort of your own home. An easy and cost-effective way to access the financial markets. Millisecond response time for speed and ease of execution so you will receive immediate fills. Trading Concepts, Inc. 36

37 The E-Mini Futures markets provide the use of leverage: Use of leverage provides the individual smaller trader with more flexibility. Brokers offer day trading margin requirements as low as $500 per contract. Trading the E-Mini Futures also offers: The equivalent of broad market exposure to a variety of major stock indexes at one-fifth the size of their standard counterparts. The ability to employ a variety of trading strategies, such as hedging and spreading. Trading Concepts, Inc. 37

38 Why Trade E-Mini Futures over Stocks/ETFs? If you are new to trading E-Mini Futures, you will find it helpful to understand the differences between trading E-Mini Futures and trading Stocks/ETFs. Trading Concepts, Inc. 38

39 Trading E-Mini Futures is a more efficient use of capital: Significantly lower margin requirements You only need to put up a fraction of the amount of margin trading E-Mini Futures. No SEC minimum equity requirement of $25,000 to day trade. No T+3 (stocks/etfs) Your futures trading account is credited or debited based on that day s profits or losses. No payment of margin interest You will have to pay margin interest on money borrowed to purchase Stocks/ETFs. No inventory required for a SHORT position it is just as easy to go SHORT as it is to go LONG trading E-Mini Futures. No payment of SHORT position interest You will have to pay interest to SHORT Stocks/ETFs. Trading Concepts, Inc. 39

40 There are tax advantages to trading E-Mini Futures: Futures: The 60/40 rule 60% profits are taxed as long-term capital gains. 40% profits are taxed as ordinary income. Stocks/ETFs: Profits are taxed as ordinary income (up to 35%). Trading Concepts, Inc. 40

41 If you BUY an E-Mini Futures contract, you hope to gain from future price increases when you offset your trade by selling the contract. Correspondingly, if you initially SELL (i.e. Sell SHORT) an E-Mini Futures contract, you hope to gain if the price of the contract declines. Trading Concepts, Inc. 41

42 Short Selling (also known as shorting or going short ) is the practice of selling, for example, an E-mini Futures contract at a perceived over-valued price with the intention of covering, or repurchasing at a lower price. The net decline in price results in a profitable transaction. The rapid price changes associated with stock indexes and E-Mini Futures create continuous trading opportunities. Trading Concepts, Inc. 42

43 Technical Analysis vs. Fundamental Analysis Trading Concepts, Inc. 43

44 Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements on a chart. Trading Concepts, Inc. 44

45 Technical Analysis helps traders anticipate what is "likely" to happen to prices over time. The most commonly used tools to determine future price movement are moving averages, MACD, advance/decline data, volume, and even chart patterns. Trading Concepts, Inc. 45

46 Technical analysts (chartists) are not concerned with balance sheets, income statements, intrinsic value, or emerging product lines. This type of fundamental information is assumed to be already factored into price. Trading Concepts, Inc. 46

47 Fundamental analysts, on the other hand, do look at economic factors, known as fundamentals, such as a company s balance sheet, income statements, new product lines, etc. to determine the value of a companies stock. Trading Concepts, Inc. 47

48 Fundamental analysis can be used in conjunction with Technical analysis but most often is used to make long term investment decisions. Trading Concepts, Inc. 48

49 I use a handful of technical tools to identify market trends and (intraday) SUPPORT and RESISTANCE. Let s dive right in and take a look. Trading Concepts, Inc. 49

50 Charting Trading Concepts, Inc. 50

51 Price Charts reflect the psychological component (fear and greed) of the market. They provide you, the trader, with information about the psychology of the market and how you should trade it. Price Charts are the most direct and easily accessible method of seeing overall supply and demand in the markets. Trading Concepts, Inc. 51

52 The most commonly used Price Charts are those which reflect Price Action through Time, Trades, and Range. Trading Concepts, Inc. 52

53 Time-Based Bar Charts and Candlestick Charts are a reflection of the OPEN, HIGH, LOW, and CLOSE of Price over a given interval of Time (ex. 3 Min. Chart). HIGH HIGH Upper Shadow CLOSE OPEN Upper Shadow REAL BODY REAL BODY OPEN CLOSE Lower Shadow Lower Shadow LOW LOW Trading Concepts, Inc. 53

54 3 Minute Chart Time based charts reflect the range of price movement over a given period of time. Trading Concepts, Inc. 54

55 Tick Charts are based on a certain number of trades per bar. Each bar or candlestick represents a specified number of transactions. These transactions include all orders, large orders as well as small orders. Tick Charts reflect Price over a given number of transactions or trades (ex Tick Chart). Trading Concepts, Inc. 55

56 1597 Tick Chart The number of bars that print on a Tick Chart during trading hours is a reflection of the volatility of the market. For example, a 1597-Tick Chart represents 1597 trades per bar and another bar will print after every 1597 transactions (trades) that occur. Trading Concepts, Inc. 56

57 Range Bar Charts take only price action into consideration. Each Range Bar (whether it be a vertical bar or candlestick) represents a specified movement of price. Range Bar Charts reflect Price over a given amount of volatility (ex. 4 Tick Range Chart). Trading Concepts, Inc. 57

58 For example, during normal trading hours (8:30am CT to 3:15pm CT) on a 3 minute chart you will find 135 bars / candles representing the market s price action. On a Range Bar Chart, there can be any number of bars / candles that print during normal trading hours as during times of higher volatility, more bars will print; conversely, during times of lower volatility, fewer bars will print. Trading Concepts, Inc. 58

59 4 Tick Range Chart The number of bars that print on a Range Bar Chart during trading hours is also a reflection of the volatility of the market. Trading Concepts, Inc. 59

60 Identifying Market Condition Trading Concepts, Inc. 60

61 There are 3 primary waves or TRENDS in the market (or three ways the market can move): 1) UPTREND, 2) DOWNTREND, or 3) SIDEWAYS TRADING RANGE Identifying which wave or TREND a market is in is vital to successful trading! Trading Concepts, Inc. 61

62 One naturally assumes that the more a trader knows about the various technical indicators, the higher the probability is that this trader will earn income. Some traders use charts filled with indicators, squiggles, lines, fans, ellipses, and so forth to the point where the actual price action barely can be discerned! This is backwards! Trading Concepts, Inc. 62

63 ALL commercially available technical indicators are derived from price and volume alone. Therefore, technical indicators are lagging; this means that any signal generated from an indicator will come after the signal generated by price and volume alone, if you know how to read it. Trading Concepts, Inc. 63

64 My charts are relatively simple, and they are not overcrowded with what I consider to be useless information. Trading Concepts, Inc. 64

65 Simplicity vs. Complexity Analysis Paralysis! Do you really need technical indicators to see what is going on in this chart? Trading Concepts, Inc. 65

66 At its core, identifying market condition is really just understanding price movement. My METHOD works in ANY TIME FRAME, and the concepts that I teach really are at the core of what I use in the market to help build an EDGE for my trade entries and exits. Trading Concepts, Inc. 66

67 The following principles form the cornerstone of any and every sound trading methodology or system that exists today. There is really only ONE major market cycle (movement) in existence; the market can do nothing else but comply with this one basic market cycle. Trading Concepts, Inc. 67

68 The market either trends UP, DOWN, or CONSOLIDATES before a continuation or reversal. This is the core price structure and rhythm of how the MARKETS move and trade at all times. There is no other movement or motion possible in the markets. Trading Concepts, Inc. 68

69 Trends are based upon UPSIDE penetration of market HIGHs, and DOWNSIDE penetration of market LOWs. Trading Concepts, Inc. 69

70 New HIGHs and New LOWs are being formed continuously in the markets... Trading Concepts, Inc. 70

71 We must try to identify these important levels to help us map out what the market is probably going to do next. Trading Concepts, Inc. 71

72 Identifying critical lows in an UPTREND and critical highs in a DOWNTREND will enable you to know with high probability that the market is probably going to change directions and reverse. Trading Concepts, Inc. 72

73 The UPTREND Process Once an UPTREND is established, if a New High (NH) is penetrated to the upside you will assume that higher (New) Highs and higher Active Lows (ALs) will continue to the upside until proven otherwise. If the Most Recent Active Low (MRAL) is penetrated to the downside, then the UPTREND may be potentially changing and/or has reversed. Trading Concepts, Inc. 73

74 An Active Low (AL) is the lowest reaction point down off of a New High (NH) at/near the 34 EMA in an UPTREND before reversing back up to match and/or penetrate up through the previous New High (NH), and must be the low of a minimum of 3 candlesticks trading down off of a New High (NH). Trading Concepts, Inc. 74

75 The UPTREND Process NH NH NH NH (New High) NH AL AL MRAL (Most Recent Active Low) AL (Active Low) A series of higher New Highs (NH) and higher Active Lows (AL) Trading Concepts, Inc. 75

76 The DOWNTREND Process Once a DOWNTREND is established, if a New Low (NL) is penetrated to the downside you will assume that lower (New) Lows (NLs) and lower Active Highs (AHs) will continue to the downside until proven otherwise. If the Most Recent Active High (MRAH) is penetrated to the upside, then the DOWNTREND may be potentially changing and/or has reversed. Trading Concepts, Inc. 76

77 An Active High (AH) is the highest reaction point up off of a New Low (NL) at/near the 34 EMA in a DOWNTREND before reversing back down to match and/or penetrate down through the previous New Low (NL), and must be the high of a minimum of 3 candlesticks trading up off of a New Low (NL). Trading Concepts, Inc. 77

78 The DOWNTREND Process (Active High) AH AH AH NL (New Low) NL NL (Most Recent Active High) MRAH NL A series of lower New Lows (NL) and lower Active Highs (AH) NL Trading Concepts, Inc. 78

79 Retests & Failures Trading Concepts, Inc. 79

80 NH MRAL Retest The market first must retest a New High (NH) or New Low (NL) before it can fail off that price level if it s going to fail at all. Retests are simply when the market tests (retests) a previous New High (NH) or New Low (NL). Retests indicate that the market is at least trying to settle down. Trading Concepts, Inc. 80

81 NH MRAL Failure Retest 3 Types of Failures Marginal New Highs & New Lows: When the market takes out a New High or New Low marginally (slightly). Matching Highs & Lows: When the market matches the previous New High or New Low to the exact price. Failure to Reach a New High or New Low: When the market actually fails to trade to the previous New High or New Low. Failures can only occur after a retest when a market is unable to take out a previous New High (NH) or New Low (NL) with any significance. Trading Concepts, Inc. 81

82 NH Retest FAILURE (Bullish Failure) NH MRAL AH AL NL A Bullish Failure is when the market is unable to take out a previous New High (NH). Trading Concepts, Inc. 82

83 A Bearish Failure is when the market is unable to take out a previous New Low (NL). AH NH NL MRAH AL NL Retest FAILURE (Bearish Failure) Trading Concepts, Inc. 83

84 If a market takes too long to come off these levels (i.e. test of a high or low), Be cautious & aware market could break through that high or low (& tighten up your stops if currently in a trade) The market could possibly be basing and getting ready for a relatively large move through the New High (NH) or New Low (NL) that it's testing. Trading Concepts, Inc. 84

85 An UPTREND Reversing into a DOWNTREND In order for a market to potentially change TREND from UP to DOWN, it must penetrate down through the Most Recent Active Low (MRAL). Once the MRAL is penetrated to the DOWNSIDE, look for a potential change in TREND from UP to DOWN. This is the first indication trend may be changing. Trading Concepts, Inc. 85

86 An UPTREND Reversing into a DOWNTREND NH (Highest High) HH AH NH MRAL NL AH AL NL AH AL NL DOWNSIDE penetration of the Most Recent Active Low (MRAL) Trading Concepts, Inc. 86

87 The longer an UPTREND continues with higher New Highs (NHs) and higher Active Lows (ALs), the more likely it is to start moving sideways into a TRADING RANGE or potentially change and REVERSE. A market can only move so far so fast without some sort of rest or reversal. Trading Concepts, Inc. 87

88 A DOWNTREND Reversing into an UPTREND In order for a market to potentially change TREND from DOWN to UP, it must penetrate up through the Most Recent Active High (MRAH). Once the MRAH is penetrated to the UPSIDE, look for a potential change in TREND from DOWN to UP. This is the first indication that trend is changing. Trading Concepts, Inc. 88

89 A DOWNTREND Reversing into an UPTREND AH NH AL AH NL NH MRAH NL AL LL (Lowest Low) UPSIDE penetration of the Most Recent Active High (MRAH) Trading Concepts, Inc. 89

90 The longer a DOWNTREND continues with lower New Lows (NLs) and lower Active Highs (AHs), the more likely it is to start moving sideways into a TRADING RANGE or potentially change and REVERSE. Now that we have discussed how to identify market condition, let s touch on one more Extremely important concept regarding SUPPORT and RESISTANCE. Trading Concepts, Inc. 90

91 SUPPORT & RESISTANCE SUPPORT & RESISTANCE levels are very important concepts to understand; they are powerful occurrences that happen in ALL markets and ALL time frames. Trading Concepts, Inc. 91

92 Using SUPPORT and RESISTANCE will help ensure that you will trade on the same side as the professional market makers and market specialists, thereby increasing the probability of any trade you decide to place. Since all professional traders use SUPPORT and RESISTANCE levels in their trading, these levels prove to be very reliable and predictable. Trading Concepts, Inc. 92

93 SUPPORT is a price level (or general area) where the buying overwhelms the selling of a market and provides good BUYING opportunities. Trading Concepts, Inc. 93

94 RESISTANCE is a price level (or general area) where the selling overwhelms the buying of a market and provides good SELLING opportunities. Trading Concepts, Inc. 94

95 Here s the extremely important points I want you to know regarding SUPPORT and RESISTANCE The longer the SIDEWAYS trading range, the stronger SUPPORT and RESISTANCE will become, and the bigger the breakout will be when the market does start to move outside of the trading range. RESISTANCE becomes SUPPORT when broken to the UPSIDE. SUPPORT becomes RESISTANCE when broken to the DOWNSIDE. Trading Concepts, Inc. 95

96 In an UPTREND, when RESISTANCE is broken to the upside, it will act as SUPPORT (a potential BUY zone). Trading Concepts, Inc. 96

97 In a DOWNTREND, when SUPPORT is broken to the downside, it will act as RESISTANCE (a potential SELL zone). HIGH AH1 AH2 LOW AH3 NL1 NL2 AH4 AH5 NL3 NL4 NL5 Trading Concepts, Inc. 97

98 OK, up to this point we ve discussed Market Condition, Trend Determination, and SUPPORT & RESISTANCE levels. Now, let s look at the different Types of Traders and Trading Styles then we ll show you some simple tools and techniques for entering the market. Trading Concepts, Inc. 98

99 The Four Most Common Types of Traders Trading Concepts, Inc. 99

100 These 4 Categories of Traders are all based on the typical length of time that they re in a trade. It boils down to which time frame (discussed shortly) that you will use for your trading decisions. Trading Concepts, Inc. 100

101 Scalper Day Trader Scalpers are typically in and out of the markets several times during the day as many as 30 to 40+ times during the day, only looking for very small moves, and never keeping a trade overnight. Scalpers typically use small tick charts or 1-2 minute charts to make their trading decisions. You have to be a full-time trader to be able to trade like this. Day Traders are typically in and out of the markets 1 to 5+ times a day, never keeping a trade overnight. Day Traders typically use 3 minute, 5 minute, 15 minute, and/or 30 minute charts to make their trading decisions. You should be able to devote a minimum of 1-2 hours during the 9:30am ET to 4:00pm ET trading session to become a Day Trader. Trading Concepts, Inc. 101

102 Swing Trader Position Trader Swing Traders are not in and out during the trading day, but rather they keep trades overnight. These types of trades can last anywhere from 2 days to a few weeks or longer, depending on what the market does. Swing Traders typically use Longer- Term Intra-Day charts or Daily charts to make their trading decisions. Position Traders will hold a position for the long term (from months to years). Position Traders are not concerned with short-term fluctuations because they believe that their longterm investment horizons will smooth these out. Many Position Traders will take a look at weekly or monthly charts to get a sense of where the market is in a given trend. Position Trading is the polar opposite of Day Trading because the goal is to profit from the move in the primary trend rather than the short-term fluctuations that occur day to day. Trading Concepts, Inc. 102

103 Time Frames Used for Trading There are different time frames used by different traders depending on the type of trader they are. Trading Concepts, Inc. 103

104 Weekly Charts are used by longer-term Position Traders to capture major trends in the markets. Each bar encompasses five (5) trading days. Daily Charts are used by Swing Traders to capture intermediate-term swings in an ongoing trend while side stepping the brief countertrend (CT) moves. Each bar encompasses one full trading day. Longer-term Intra-day and Hourly Intra-Day Charts (i.e. 60 Minutes) are used by Swing Traders and to capture shorter-term swing trades that traders may hold overnight. Shorter-term Intra-day Minute Charts (i.e. 30, 15, 5, 3, & 1 Minute) are used by Day Traders for daily cash flow. Most Day Traders will use a 30 or 15 Minute Chart to help eliminate noise and gain a clearer perspective of the shorter-term trend. Day Traders will typically base their trade entries and exits off of a 5 or 3 Minute Chart. Scalp Traders will typically use a 1 Minute Chart for really quick scalp trades. These shorter time frames are typically used for trades that are not held overnight. Trading Concepts, Inc. 104

105 YOU ultimately must figure out what time frames best suite YOU as a person and as a trader, in terms of your personality, temperament, and time commitments. For example, Some traders prefer to Day Trade for Daily Cash Flow and have no desire to hold positions overnight, and Some traders simply want to Position Trade and/or Swing Trade with the goal of looking to supplement their incomes safely, conservatively, and consistently or grow their retirement accounts. Trading Concepts, Inc. 105

106 I want you to think about everything that we ve discussed up to this point and place yourself in the category of the Type of Trader that makes the most sense to you. Trading Concepts, Inc. 106

107 Your energy level doesn t necessarily play a huge role in your overall trading success, but I do think it would be wise to try to match your trading style with your energy level. For example Many Scalpers and Day Traders tend to have a higher energy level. Swing Traders tend to be more even keel and are definitely right between higher energy and lower energy. Scalpers, Day Traders, Swing Traders, and Position Traders are definitely mixed between all energy levels. Most people who think of themselves as Position Traders are those that simply don t have the time to put a lot of time into their trading. Trading Concepts, Inc. 107

108 Here are some questions you need to answer to help you determine what Type of Trader best suits your personality, temperament, and time commitments: Can you sleep at night with a position on? Do you typically feel stressed watching the markets during the trading day? When the market closes each day, do you feel happy or exhausted? How much time each day, week, or month do you want to put into your trading? Do you work full time? Are you able to put as much time into your trading as you would like, or is your work schedule combined with your family life making it impossible to devote as much time to your trading as you would like? Are you retired looking to spend 2 to 4 hours a day on your trading? Are you looking consistently to compound your accounts (i.e. IRAs, Discretionary)? Trading Concepts, Inc. 108

109 Breakout Trading vs. Retracement (Pullback) Trading Trading Concepts, Inc. 109

110 Breakout Trading can be defined in two ways: 1) BUY the market as the market is making higher highs, or SELL the market as the market is making lower lows, and 2) BUYING the Breakout of a Trading Range by placing a BUY STOP order above the HIGH of the Trading Range, or SELLING the Breakdown of a Trading Range by placing a SELL STOP order below the LOW of a Trading Range. Trading Concepts, Inc. 110

111 UPSIDE Breakout of a Trading Range Place a BUY STOP order above the HIGH if and when the market breaks above the HIGH, you ll be there to take advantage of the move. Trading Concepts, Inc. 111

112 DOWNSIDE Breakout of a Trading Range Place a Sell STOP order below the LOW if and when the market breaks below the LOW, you ll be there to take advantage of the move. Trading Concepts, Inc. 112

113 Retracement (Pullback) Trading is when you look for an established TREND to develop and simply wait for a Retracement (Pullback) before getting into the market in that TREND direction. If the TREND is UP, you wait for the market to pull down off of a New High into a logical place of SUPPORT before entering LONG. If the TREND is DOWN, you wait for the market to pull up off of a New Low into a logical place of RESISTANCE before entering SHORT. Trading Concepts, Inc. 113

114 UPTREND Retracement (Pullback) Trading Wait for the market to pull DOWN off of a New High (NH) into a logical place of SUPPORT before BUYING the market. Trading Concepts, Inc. 114

115 DOWNTREND Retracement (Pullback) Trading Wait for the market to pull UP off of a New Low (NL) into a logical place of RESISTANCE before SELLING the market. Trading Concepts, Inc. 115

116 Trend Trading vs. Counter-Trend (CT) Trading Trading Concepts, Inc. 116

117 Many beginner traders try to catch tops and bottoms in the market and don t even try to trade the TRENDS. Many novices believe that trying to catch a market top or bottom is where the real money is. I disagree catching just a little piece and/or a much larger piece of the TREND adds up and is easier to do with a high probability of success. Trading Concepts, Inc. 117

118 I highly suggest about 80% of your trades should be trading with the TREND. The remaining 20% or so of any trade you make can be COUNTER TREND (CT) trades. Trading Concepts, Inc. 118

119 Focus more on TREND trades as opposed to trying to pick tops and bottoms (CT trades). You will find your trading not only less stressful, but also much more rewarding and profitable if you simply stick to trading with the TREND. Trading Concepts, Inc. 119

120 Of the roughly 20% of COUNTER TREND (CT) trades you may make, 80% of those trades should be BUYS. Why, because BOTTOMS are much easier to pick than tops. Most traders have a bias towards buying the market rather than selling the market as a whole. BOTTOMS are put in place much more quickly than tops (market tops take longer to form). Trading Concepts, Inc. 120

121 COUNTER-TREND (CT) trading is more difficult than TREND trading Trading Concepts, Inc. 121

122 Wait for a Retest Of a Low before potentially looking to BUY LONG. Trading Concepts, Inc. 122

123 Wait for a Retest Of a High before potentially looking to SELL SHORT. Trading Concepts, Inc. 123

124 Volatility Trading Concepts, Inc. 124

125 General Rules of Thumb The market tends to be a lot less volatile in UPTRENDs. The market tends to be more volatile in DOWNTRENDs and falls roughly three times more quickly than it rises. Trading Concepts, Inc. 125

126 Let s discuss Volatility a bit further because we will revisit this subject later when we talk about protective stop placement. HIGH HIGH 1 Day Range 3 Minute Range LOW LOW The volatility of a market is reflected in the range printed during a specific period of time. The range of a Day s trading is simply the HIGH minus the LOW (HIGH LOW). Just as the range of a single 3 Minute bar is the HIGH minus the LOW (HIGH LOW). Trading Concepts, Inc. 126

127 The Average True Range (ATR) indicator measures the range (volatility) of a market for a given number of periods (normally 14 periods). Knowing the Average True Range gives us a range the market is likely to stay within. Trading Concepts, Inc. 127

128 On our preferred Day trading chart, the 3 Minute bar or candlestick chart, the ATR gives us a range the market is likely to stay within allowing us to use the market volatility to identify stop level. When using ATR, we will place our stops 2x (above/below price) the indicated ATR. Trading Concepts, Inc. 128

129 Fibonacci Retracements Trading Concepts, Inc. 129

130 Fibonacci Retracements are a very popular tool among technical traders and is based on the key numbers identified by mathematician Leonardo Fibonacci in the thirteenth century. However, Fibonacci's sequence of numbers is not as important as the mathematical relationships, expressed as ratios, between the numbers in the series. Trading Concepts, Inc. 130

131 In technical analysis, Fibonacci Retracement is created by taking two extreme points (usually a swing low and swing high) on a chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Trading Concepts, Inc. 131

132 Once these levels are identified, horizontal lines are drawn and used to identify possible SUPPORT and RESISTANCE. Let s look at a couple of recent examples of Fibonacci retracements in the E-Mini S&P 500 Futures market Trading Concepts, Inc. 132

133 Buyers in Control Look for Buying opportunities! NH2 NH1 MRAH 38% 50% AL2 AL1 LL Trading Concepts, Inc. 133

134 NH AH1 50% 38% NL1 Sellers in Control Look for Selling opportunities! NL2 Trading Concepts, Inc. 134

135 Moving Averages Trading Concepts, Inc. 135

136 Moving Averages are another tool used by technical traders to identify support and resistance. Simply put, a moving average prints the average price of an instrument over a given period of time. The most common Moving Averages ( MAs ) used in day trading are the 8/21/34/50/89/100/200 MAs. Let s look at two frequently used MAs, the 34 and 50 period Exponential Moving Averages (EMAs). Trading Concepts, Inc. 136

137 Market is trading Above the MAs. Look for Buying Opportunities! NH2 NH1 AL2 34 EMA 50 EMA AL1 LL Trading Concepts, Inc. 137

138 50 EMA 34 EMA Market is trading Below the MAs. Look for Selling Opportunities! Trading Concepts, Inc. 138

139 Now that we ve discussed the two most frequently used tools (i.e. Fibonacci Retracements & MA s) for identifying SUPPORT & RESISTANCE, let s put it all together, with a few examples Trading Concepts, Inc. 139

140 UPTRENDs After identifying an UP trending market condition you want to look for a buying opportunity on the first retracement (pullback) back to a SUPPORT level. Trading Concepts, Inc. 140

141 34 EMA 50 EMA NH2 NH1 HIGH AL2 AL1 LOW Buyers are in control Look to Buy on a retracement back to SUPPORT (i.e. Fibonacci Retracements and/or the EMAs). Trading Concepts, Inc. 141

142 34 EMA 50 EMA NH1 HIGH AL2 AL1 LOW Fibonacci Confluence will act as SUPPORT in a UPTREND Pulling multiple Fibonacci Retracements from the LOW to NH1 and from the most recent AL (AL1) to NH1 identifies a Fibonacci Confluence Zone. Trading Concepts, Inc. 142

143 DOWNTRENDs After identifying a DOWN trending market condition you want to look for a selling opportunity on the first retracement (pullback) back to a RESISTANCE level. Trading Concepts, Inc. 143

144 HIGH 34 EMA 50 EMA AH1 AH2 LOW NL1 Sellers are in control Look to Sell on a retracement back to RESISTANCE (i.e. Fibonacci Retracements and/or the EMAs). NL2 Trading Concepts, Inc. 144

145 34 EMA 50 EMA Fibonacci Confluence will act as RESISTANCE in a DOWNTREND Pulling multiple Fibonacci Retracements from the HH to NL2 and from the most recent AH (AH1) to NL2 identifies a Fibonacci Confluence Zone. Trading Concepts, Inc. 145

146 Trading Strategies Trading Concepts, Inc. 146

147 As we discussed earlier, a minimum of 80% of your trades should be those trading with the TREND. Trading Concepts, Inc. 147

148 Concentrate more on TREND trades as opposed to trying to pick tops and bottoms (CT trades). Once again you ll find trading not only less stressful, but also much more rewarding and profitable as a result of simply sticking to trading with the TREND. Trading Concepts, Inc. 148

149 Now, let s go through the entire process, A-Z, of identifying market condition, entries, stop placement, and profit targets. Let s focus now on TREND trades only. Trading Concepts, Inc. 149

150 Specific Criteria for a DOWNTREND REVERSING into an UPTREND In order for the market to change TREND from DOWN to UP, it must penetrate up through the Most Recent Active High (MRAH) & the current candlestick (price bar) must have penetrated up through the 50 EMA by more than 75% of the range of the current candlestick (price bar). Trading Concepts, Inc. 150

151 34 EMA 50 EMA Trading Concepts, Inc. 151

152 Specific Criteria for an UPTREND REVERSING into a DOWNTREND In order for the market to change TREND from UP to DOWN, it must penetrate down through the Most Recent Active Low (MRAL) & the current candlestick (price bar) must have penetrated down through the 50 EMA by more than 75% of the range of the current candlestick (price bar). Trading Concepts, Inc. 152

153 34 EMA 50 EMA Trading Concepts, Inc. 153

154 Trade Set-Ups LONG Trades (BUYs) will be executed at a logical SUPPORT level in an UPTREND and SHORT Trades (SELLs) will be executed at a logical RESISTANCE level in a DOWNTREND. Trading Concepts, Inc. 154

155 LONG Trades (BUYs) will be executed at a logical SUPPORT level in an UPTREND. Trading Concepts, Inc. 155

156 SHORT Trades (SELLs) will be executed at a logical RESISTANCE level in a DOWNTREND. Trading Concepts, Inc. 156

157 Initial Trend Entry Initial Trend Entries will occur on the first pullback to the 34/50 EMA after a change in TREND. Trading Concepts, Inc. 157

158 When looking to execute an Initial Trend Entry, you want weight of evidence or confirmation that the market has traded back into SUPPORT or RESISTANCE offering a high probability of success. This weight of evidence is quite often a Fibonacci Retracement level coinciding with, or in confluence with, the 34/50 EMAs on a pullback immediately following a change in TREND. Trading Concepts, Inc. 158

159 Initial Trend Entry UPTREND After identifying a new UPTREND look for a BUYING opportunity on the first retracement (pullback) into logical SUPPORT. LONG Aggressive Entry: automatic BUY at SUPPORT (i.e. the 34 EMA in confluence with a Fibonacci Retracement level) LONG Conservative Entry: just above the HIGH of the low bar in a pullback at/near the 50 EMA SUPPORT Trading Concepts, Inc. 159

160 Initial Stop Loss (ISL) UPTREND The Initial Stop Loss (ISL) needs to be placed slightly BELOW whichever is lower: either the Lower Moving Average (i.e. 50 EMA), OR the Fibonacci Retracement level (38%, 50%, or 62% from the LL to the NH the market retraced DOWN from) that is at or just below the Lower Moving Average. Trading Concepts, Inc. 160

161 Initial Trend Entry & Initial Stop Loss (ISL) UPTREND LONG Aggressive Entry: automatic BUY at SUPPORT (34 EMA in confluence with 50% Fibonacci Retracement level LOW to HIGH) ISL 34 EMA 50 EMA Trading Concepts, Inc. 161

162 Initial Trend Entry & Initial Stop Loss (ISL) UPTREND LONG Conservative Entry: just above the HIGH of the low bar in a pullback at/near the 50 EMA SUPPORT ISL 34 EMA 50 EMA Trading Concepts, Inc. 162

163 Initial Trend Entry & Initial Stop Loss (ISL) UPTREND NH2 NH3 HIGH NH1 AL3 AL1 AL2 ISL LONG Aggressive Entry: automatic BUY at SUPPORT (34/50 EMAs in confluence with 38% Fibonacci Retracement level LOW to NH1) LOW 34 EMA 50 EMA Trading Concepts, Inc. 163

164 Initial Trend Entry & Initial Stop Loss (ISL) UPTREND NH2 NH3 HIGH NH1 AL3 AL1 AL2 ISL LONG Conservative Entry: just above the HIGH of the low bar in a pullback at/near the 50 EMA SUPPORT LOW 34 EMA 50 EMA Trading Concepts, Inc. 164

165 Initial Trend Entry & NH2 Initial Stop Loss (ISL) UPTREND NH3 HIGH NH1 AL3 AL1 AL2 ISL LONG Aggressive Entry: automatic BUY at SUPPORT (34 EMA in confluence with 50% Fibonacci Retracement level LOW to HIGH) 34 EMA 50 EMA Trading Concepts, Inc. 165

166 Initial Trend Entry & NH2 Initial Stop Loss (ISL) UPTREND NH3 HIGH AL3 AL1 AL2 ISL LONG Conservative Entry: just above the HIGH of the low bar in a pullback at/near the 50 EMA SUPPORT 34 EMA 50 EMA Trading Concepts, Inc. 166

167 Profit Objectives (P.O.s) UPTREND Profit Objectives (P.O.s) for an Initial Trend Entry in an UPTREND will also be at logical attainable levels: Profit Objective #1 (P.O.#1) is the HALF WAY (50%) point from where you bought LONG up to the New High (NH) the market retraced DOWN from. Profit Objective #2 (P.O.#2) is slightly BELOW the New High (NH) the market retraced DOWN from. Trading Concepts, Inc. 167

168 Profit Objectives (P.O.s) UPTREND P.O.#2 P.O.#1 34 EMA 50 EMA Trading Concepts, Inc. 168

169 Profit Objectives (P.O.s) UPTREND NH2 NH3 HIGH NH1 AL3 P.O.#2 P.O.#1 AL2 AL1 LOW 34 EMA 50 EMA Trading Concepts, Inc. 169

170 Trailing Stop (TS) - UPTREND Continue to move a Trailing Stop (TS) UP 2.00 ATR BELOW the Highest High in an UPTREND as the market moves higher in your favor. Trading Concepts, Inc. 170

171 Profit Objectives (P.O.s) UPTREND NH2 NH3 HIGH AL2 P.O.#2 P.O.#1 AL1 34 EMA 50 EMA Trading Concepts, Inc. 171

172 As we discussed earlier, TREND Entries will be at a logical SUPPORT level in an UPTREND & at a logical RESISTANCE level in a DOWNTREND. Trading Concepts, Inc. 172

173 Initial Trend Entry DOWNTREND After identifying a new DOWNTREND look for a SELLING opportunity on the first retracement (pullback) into logical RESISTANCE. SHORT Aggressive Entry: automatic SELL at RESISTANCE (i.e. the 34 EMA in confluence with a Fibonacci Retracement level) SHORT Conservative Entry: just below the LOW of the high bar in a pullback at/near the 50 EMA RESISTANCE Trading Concepts, Inc. 173

174 Initial Stop Loss (ISL) DOWNTREND The Initial Stop Loss (ISL) needs to be placed slightly ABOVE whichever is higher: either the Upper Moving Average (i.e. 50 EMA), OR the Fibonacci Retracement level (38%, 50%, or 62% from the HH to the NL the market retraced UP from) that is at or just above the Upper Moving Average. Trading Concepts, Inc. 174

175 ISL SHORT Aggressive Entry: automatic SELL at RESISTANCE (34/50 EMAs in confluence with 50% Fibonacci Retracement level HIGH to NL1) 34 EMA 50 EMA Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 175

176 ISL SHORT Conservative Entry: just below the LOW of the high bar in a pullback at/near the 50 EMA RESISTANCE 34 EMA 50 EMA Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 176

177 ISL 34 EMA 50 EMA SHORT Aggressive Entry: automatic SELL at RESISTANCE (34/50 EMAs in confluence with 38% Fibonacci Retracement level NH1 (HH) to NL1) Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 177

178 ISL 34 EMA 50 EMA SHORT Conservative Entry: just below the LOW of the high bar in a pullback at/near the 50 EMA RESISTANCE Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 178

179 ISL 34 EMA 50 EMA SHORT Aggressive Entry: automatic SELL at RESISTANCE (34/50 EMAs in confluence with 38% Fibonacci Retracement level HIGH to NL2) ISL is placed ABOVE either the Upper Moving Average OR, the Fibonacci Retracement level (38%, 50%, or 62% from the HH to the NL the market retraced UP from) that is at or just above the Upper Moving Average. Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 179

180 ISL 34 EMA 50 EMA SHORT Conservative Entry: just below the LOW of the high bar in a pullback at/near the 50 EMA RESISTANCE ISL is placed ABOVE either the Upper Moving Average OR, the Fibonacci Retracement level (38%, 50%, or 62% from the HH to the NL the market retraced UP from) that is at or just above the Upper Moving Average. Initial Trend Entry & Initial Stop Loss (ISL) DOWNTREND Trading Concepts, Inc. 180

181 Profit Objectives (POs) DOWNTREND Profit Objectives (POs) for an Initial Trend Entry in a DOWNTREND will also be at logical attainable levels: Profit Objective #1 (P.O.#1) is the HALF WAY (50%) point from where you sold SHORT down to the New Low (NL) the market retraced UP from. Profit Objective #2 (P.O.#2) is slightly ABOVE the New Low (NL) the market retraced UP from. Trading Concepts, Inc. 181

182 34 EMA 50 EMA P.O.#1 P.O.#2 Profit Objectives (P.O.s) DOWNTREND Trading Concepts, Inc. 182

183 34 EMA 50 EMA P.O.#1 P.O.#2 ISL is placed ABOVE either the Upper Moving Average OR, the Fibonacci Retracement level (38%, 50%, or 62% from the HH to the NL the market retraced UP from) that is at or just above the Upper Moving Average. Profit Objectives (P.O.s) DOWNTREND Trading Concepts, Inc. 183

184 Trailing Stop (TS) - DOWNTREND Continue to move a Trailing Stop (TS) DOWN 2.00 ATR ABOVE the Lowest Low in a DOWNTREND as the market moves lower in your favor. Trading Concepts, Inc. 184

185 34 EMA 50 EMA P.O.#1 P.O.#2 ISL is placed ABOVE either the Upper Moving Average OR, the Fibonacci Retracement level (38%, 50%, or 62% from the HH to the NL the market retraced UP from) that is at or just above the Upper Moving Average. Profit Objectives (P.O.s) DOWNTREND Trading Concepts, Inc. 185

186 Key Times of Day Trading Concepts, Inc. 186

187 Now that we have discussed Volatility and how we measure it, wouldn t it be great to know when the market is likely to be more volatile or less volatile intraday? Here s the good news: You Can! You will be amazed at how predictable the market can be when you completely understand these key times. Trading Concepts, Inc. 187

188 The next series of slides will provide you with a roadmap for knowing how and when to trade the E-Minis intraday and will also greatly help you to determine what the E-Minis are likely to do intraday, with incredible accuracy. Trading Concepts, Inc. 188

189 The E-Minis are perhaps the most predictable of markets, in terms of when and where the market should make a reversal and/or resume the trend of the trading day. Trading Concepts, Inc. 189

190 The E-Minis (along with many stocks that closely follow the E-Minis) have a somewhat definable time pattern that occurs at consistent intervals throughout the trading day. Although this isn t 100% accurate (nothing is though), it s powerful enough to help gauge what the market "should do" and "when" it should do it. Trading Concepts, Inc. 190

191 These patterns occur frequently and consistently enough to make it a very, very valuable trading tool to have at your disposal during the trading day. Let s take a look at these time patterns Trading Concepts, Inc. 191

192 Key Times of Day MORNING Price Action: 10:15am ET to 10:45am ET Expect a Counter-Trend (CT) move of some sort in the first 45 to 60 minutes of the day s trend or bias, if there is one. Trading Concepts, Inc. 192

193 MORNING Price Action: 10:15am ET to 10:45am ET 34 EMA 50 EMA HIGH 10:15 10:45 34 EMA 50 EMA LOW LL Normal Retracement (UPTREND) (10:15am ET to 10:45 ET) Reversal of First Hour TREND (10:15am ET to 10:45 ET) Trading Concepts, Inc. 193

194 LUNCH Price Action: 11:45am ET to 1:00pm ET This is perhaps the dullest and least volatile time of the trading day. A majority of the time, this period is when the market is the least volatile & makes the smallest swings during the day. Trading Concepts, Inc. 194

195 LUNCH Price Action: 11:45am ET to 1:00pm ET 34 EMA 50 EMA Mid-Day Lunchtime Doldrums Lunch Dull Price Action (Mid-Day Doldrums) Trading Concepts, Inc. 195

196 POST LUNCH Move: 1:00pm ET to 2:00pm ET Expect a resumption of the overall day s trend (or upward or downward bias of the day) if: the overall trend is UP and the market is trading DOWN off the high of the day, or the overall trend is DOWN and the market is trading UP off the low of the day. Trading Concepts, Inc. 196

197 POST LUNCH Price Action: 1:00pm ET to 2:00pm ET 34 EMA 50 EMA Mid-Day Lunchtime Doldrums Lunch Dull Price Action (Mid-Day Doldrums) POST LUNCH Price Action Resumption of Trend Trading Concepts, Inc. 197

198 POST LUNCH Price Action: 1:00pm ET to 2:00pm ET POST LUNCH Price Action Resumption of Trend Mid-Day Lunchtime Doldrums Lunch Dull Price Action (Mid-Day Doldrums) 34 EMA 50 EMA Trading Concepts, Inc. 198

199 AFTERNOON Move: 2:00pm ET (give or take 15 minutes) Expect either: a resumption of the day s trend if there was no move from 1:00pm to just before 2:00pm, or a Counter-Trend (CT) move of the day s trend if the market is testing the high or low of the day. Trading Concepts, Inc. 199

200 AFTERNOON Price Action Move: 2:00 ET (+/- 15 minutes) 34 EMA 50 EMA AFTERNOON Price Action Look for a Resumption of the day s TREND if the market is trading down off the HIGH of the day at 2:00pm ET. Trading Concepts, Inc. 200

201 AFTERNOON Price Action Move: 2:00 ET (+/- 15 minutes) AFTERNOON Price Action Look for a Counter-Trend move of the day s TREND if the market is trading at the LOW of the day at 2:00pm ET. 2:00 34 EMA 50 EMA Trading Concepts, Inc. 201

202 DELAYED AFTERNOON Move: 3:00pm ET (+/- 15 minutes) (the 2:00pm move will help dictate what may happen at 3:00pm) Expect either: a Counter-Trend (CT) move of the day s trend if the market is testing the high or low of the day, OR a resumption of the day s trend if a counter-trend move occurs around 2:00pm and the market is trading down off of the high of the day in an UPTREND or up off the low of the day in a DOWNTREND. Trading Concepts, Inc. 202

203 DELAYED AFTERNOON Price Action Move: 3:00 ET (+/- 15 minutes) 34 EMA 50 EMA CT Move at 3:00 DELAYED AFTERNOON Price Action If the market does not move off of the HIGH or LOW of the day in and around 2:00pm ET, then expect a counter-trend move to occur around 3:00pm ET. Trading Concepts, Inc. 203

204 DELAYED AFTERNOON Price Action Move: 3:00 ET (+/- 15 minutes) 34 EMA 50 EMA DELAYED AFTERNOON Price Action CT Move at 3:00 3:00 If the market moves off of the HIGH or LOW of the day in and around 2:00pm ET, then expect a resumption of the day s TREND to occur around 3:00pm ET. 2:00 Resumption of Trend CT Move at 3:00 Trading Concepts, Inc. 204

205 The 2:00pm ET and 3:00pm ET times are real important to be aware of for the E-Mini futures day trading session because of the buying and selling pressure that usually comes in the market around these times. Also realize that the volatility in the market also increases during these afternoon times. Trading Concepts, Inc. 205

206 Key Times of Day SUMMARY These are general guidelines where you normally would expect some type of move in price action depending on where the E-Minis are trading at that particular time. Trading Concepts, Inc. 206

207 3 General Statements concerning these Key Times of Day 1) Always know what time it is & know what to generally expect at these times. 2) These Key Times of Day are only a general rule of thumb of what to expect in the market. 3) There must be a trade set-up providing the technical reason to trade. Trading Concepts, Inc. 207

208 Once again, I want to stress that these Key Times of Day are great general time patterns for the E-mini futures markets, along with stocks that mirror the E-mini futures. Nothing is perfect, however knowing these key times will help give you an edge over other day traders that aren t aware of these times. Trading Concepts, Inc. 208

209 Alright, you ve learned a whole lot by now so let s quickly recap what we ve covered here today 1. What are Futures and Commodities? 2. What are E-Mini Futures? 3. Technical vs. Fundamental Analysis 4. Charting Price Charts 5. Identifying Market Condition The UPTREND Process The DOWNTREND Process 6. Retests & Failures 7. SUPPORT & RESISTANCE 8. Types of Traders 9. Trading Styles 10. Trend vs. Counter-Trend Trading 11. Volatility 12. Fibonacci Retracements 13. Moving Averages 14. Trading Strategies Trend Determination Trade Set-Ups Initial Trend Entry Trade Management 15. Key Times of Day 16. Summary 5 Step Process for Trading Mastery Trading Concepts, Inc. 209

210 Remember Keep it Simple! The 5 Step Process for Trading Mastery 1. Identify Market Condition Is the market in an UPTREND, DOWNTREND, or SIDEWAYS Trading Range? 2. Identify a Trade Set-Up Is the market trading at logical SUPPORT in an UPTREND or at logical RESISTANCE in a DOWNTREND? Trading Concepts, Inc. 210

211 3. Determine Trade Entry Look for a weight of evidence or confirmation that the market has traded back into SUPPORT or RESISTANCE offering a high probability low-risk entry? 4. Determine Initial Stop Loss Place Initial Stop Loss outside of the normal ebb and flow of the market just below SUPPORT in an UPTREND or just above RESISTANCE in a DOWNTREND. 5. Determine Profit Objectives Pay yourself as the market makes money available to you and take profits at high probability logical attainable levels. Trading Concepts, Inc. 211

212 Trading Concepts, Inc. 212

213 Trading Concepts, Inc. 213

214 All rights reserved. This Training Program, or parts thereof, may not be reproduced in any form without the prior written permission of Trading Concepts, Inc. Trading Concepts, Inc. 214