Watch Rick talk you through an emini futures trade in this quick 5 minute video.

Have any questions? Leave a comment below!

Why choosing the right day trading strategies for the market conditions is crucial to your trading success.

One of the most common day trading mistakes is applying the wrong day trading strategies for the current market conditions.

That’s pretty much guaranteed to give you a series of losing trades, high stress levels, and negative P&L.

The goal of this article is to provide a basic understanding of how markets really work and how to determine which day trading strategies may provide the best trading opportunities & results on any given day.

So let’s jump right in and get started…

According to dual auction market theory, markets can do only one of two things;

They can either move sideways, ‘rotating’ up and down between two price levels – otherwise known as a ‘consolidation’ or a ‘trading range’.

Alternatively, the markets can move directionally – otherwise known as ‘trending’. This occurs when the market breaks out from its trading range and moves directionally until the market begins to consolidate sideways again.

Understanding this dynamic is crucial for consistent day trading success. Why? Simply because being able to identify the current  market conditions means we can apply the most appropriate day trading strategies for those conditions!

Each of these two basic market conditions (consolidating vs trending) require very different day trading strategies. There is no one-size-fits-all solution. We must be able to adapt our strategy accordingly to fit the market conditions.

Why does this matter?…

As an example, ‘directional’ day trading strategies are typically most effective when the market is trending strongly. However, trying to employ a directional strategy while the market is consolidating in a tight trading range will more often than not get you chopped around and stopped out of trades.

The intraday emini Euro chart below illustrates these principles of consolidation vs trend discussed in this article so far.

Hopefully you now understand why we need different strategies for different market conditions. So let’s take a look at two basic day trading strategies.

Almost every other technical day trading strategy in existence is a variation on the basic themes outlined below. It’s important to understand them.

Reversion to Mean

In a trading range the market typically ‘rotates’ slowly up and down without much directional bias, usually on low volume from one edge of the range to the other. The market will continue to behave like this until a break out occurs.

When these market conditions exist there is only one strategy to consider; To buy the prices near the bottom of the range, and sell prices near the top of the range. The idea is to exit these directional positions as the market returns to ‘value’ by rotating back towards the middle of the trading range.

This is what’s known as a ‘reversion to mean’ trade, or playing ‘ping pong’.

The success of this day trading strategy relies on the market continuing to rotate sideways within its defined trading range. In other words we are betting that the market will continue to rotate up and down inside the established range.

Break Out & Directional

Sooner or later a consolidating market will transition to a directional / trending market. This occurs when the market ‘breaks out’ of its trading range, typically on higher volume and continues to move directionally in one generally sustained direction. When the market does break out, we have a couple of options…

Option #1 is to take a directional position during the break out itself, although this can often be a risky entry as ‘false break outs’ are common.

Option #2 is to wait until the market makes its first pull back after the break out and then take a directional position for any directional continuation. This is the safer entry.

Bottom Line

During an established trading range the smart choice is to either sit on your hands, or play ‘ping pong’ with the edges of the range taking profits when you can.

During a trending market however you want to use a break out or directional strategy and get on board the momentum to maximise your profits.

Whether you trade emini futures, forex, stocks, etf’s or options, being able to identify when the market is consolidating or trending is one of the most important skills a discretionary trader can develop when it comes to consistently applying the right day trading strategies for the market conditions.

Want to learn more?

For a high probability directional trading strategy with easy to understand trade rules, look no further than our very own 9/30 method. Get instant access at the top of this page.

Looking for a high probability trading methodology?

In this quick 6 minute video you get to see exactly how the 3X trend method may enhance your trading performance.

Whether you trade futures, forex, or stocks, no matter what timeframe, the 3X trend method is a solid approach to taking advantage of a trend moves and trend continuations.

Watch as Rick introduces you to the basic components and ideas of the 3x trend method and how they may bring in good profits as illustrated in a theoretical 3 minute ES (mini S&P500) setup.

This video is just a little taster of what full members can expect inside the Traders Club.

Welcome to the video update for Thursday, March the 25th. Today’s video update will focus entirely on the emini ES futures contract. This is a good practice to follow at the beginning of the trading day, to see how the smaller timeframes fit in to the larger timeframes, hopefullly allowing you to better define risk and identify higher probablility setups. As Trader Rick has stated before, successful consistent profitable trading depends greatly on trade selection.

Watch Trader Rick start with the weekly ES chart and go thru smaller timeframes, down to the 5 minute chart. Knowing where price is on the larger timeframes will help you make decisions on the smaller timeframes. Ideally, a larger timeframe will provide support in taking a smaller timeframe setup.

One primary purpose of doing these exercise is to identify if a trend is in force or not, what the momentum is, where support resistance is, then take advantage of what we know. There will be times when the best trade is no trade.

Good trading!

Welcome to the video update for Friday, the 26th of February. If you are a bond or note trader please start moving to the June contract (M). Ok, first up is the daily Canada chart where we have two patterns under watch. One is the ab=cd pattern. The other?

Trader Rick discusses the weekly EUR/USD forex pair where we may finish this week with another doji. What follows several weeks of contraction? At some point, expansion.

The pattern to watch in Thursday’s trading for the stock indexes was the ab=cd pattern. Trader Rick reviews the 60 minute day session charts for the YM, ER and the ES. The ES was a perfect ab=cd. After 3 more hours of trading, price took off to the upside, closing on the highs in all 3 markets. Pays to watch the larger timeframes, both day session and all session!

Good trading!

Welcome to the video update for Friday, February the 19th. If you trade crude oil, today is the last trading day for the March contract. In this video update, Trader Rick reviews two setups from Thursday’s trading and offers a few trading tips from his vantage point. First chart is the 4500 volume euro currency chart where a 9/30 or a 3x trend method long is setting up. See any warning flags not to take the long? Well, you have a confirmed setup here but the lesson today is being aware of the larger timeframes. Take a look at the higher timeframes to see if they provided any clues.

Next market Trader Rick reviews is the 5 minute ES globex chart. Based on the emini globex fib extension methodology, the 1.27 fib identified a possible shorting opportunity at the 1102 area in early Thursday trading. For higher probability trade setups look for other factors that also point to the same area to enter a position. In this case, Trader Rick pointed to the 14400 volume chart which showed a 1-2-3 or 3 pushes up pattern. This is an actual trade that Trader Rick took, exiting the full position at the target of the 1-2-3.

Good trading!

Welcome to the video update for Wednesday’s trading.  The focus is on the emini (ES) and Trader Rick begins with the daily chart where a 3 candlestick pattern completed at the close on Monday.  What will happen next?  Keep an eye on the slingshot pattern too.

Next chart is the 60 min day session ES chart and after trading outside the keltner channel on Monday price moved in to the buy zone on Tuesday.  Trader Rick then reviews a 1-2-3 pattern on the 14400 volume chart that took place shortly after the open on Tuesday.  Combine this pattern with a setup using  the globex fib extensions gave reason to take a short position that resulted in price moving down to the opposite 1.27 fib at 1054.00.  These are high probability setups when you get a confluence of a setup taking place at a target.   Price eventually moved 11 points to the downside.  The lower globex 1.27 fib extension yielded a potential of 8 points to the upside. It is important to be selective in your trade setups.  Wait for the high probability opportunities and have confidence to pull the trigger.

Good trading!