Options Training

Free DAYTRADING E-Book / Guide. Learn how to read charts and learn the strategies to be consistently profitable. Avoid easy mistakes, and learn how to navigate the market.

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Options Training

Free DAYTRADING E-Book / Guide. Learn how to read charts and learn the strategies to be consistently profitable. Avoid easy mistakes, and learn how to navigate the market.

finance, investing, learning, option trading, guide

There are a few🗒 things that I want to go over before showing the actual strategies.

When you are Day Trading, you are essentially buying and selling the same day.

A single Day trade can take about 5 minutes - several hours.

As long as you sell it the same day, it’s a DAY trade.

ALWAYS RISK what you’re WILLING to essentially LOSE.

Of course you don’t want to lose it, but make sure ego always have that in your conscience.

Always come in to the market without a BIAS.

Meaning, don’t come into the market expecting a stock to go a certain way.

Always be OPEN to directions

Whenever I come into the market, I never have a bias of where a stock may go.

If a stock that I’m looking at, meets my requirements for an entry, I will enter it in the direction that the stock price is potentially pushing / breaking.

For example,

Let’s say the Market just opened.

You are looking at stock XXX because there was great news the previous day.

You should never have a bullish BIAS, just because of the news.

The price will always usually react to sentiment, not news.

Although news can create sentiment, it may not be the case for some occasions.

Back to the stock, let’s say stock XXX falls at market open, and continues to go down, and passing the support line.

In this case, if it meets your requirements for a potential PUT entry, that’s what you execute.

Just because it had great news the previous night, does not determine its “bullishness” the next morning.

With that being said, NEVER have a BIAS.

1️⃣ Make sure to have SUPPORT & RESISTANCE

lines drawn on your chart.

To have an established SUPPORT & RESISTANCE, you must use the 2-3 touch rule.

Here is an example of an ESTABLISHED Support & Resistance.

Notice how SUPPORT & RESISTANCE also creates ZONES.

Since the prices can’t be PERFECT all the time, this creates “zones”.

If the past resistance is .50 cents away from the new resistance, that .50 cent difference turns into a zone.

Notice the top “RESISTANCE ZONE” and the bottom “SUPPORT ZONE”.

This zone acts as a support area.

This means that whenever the price retraces to this ZONE, the stock may bounce.

Which essentially means…….

The BUYERS control this support zone.

The SELLERS control the resistance zone above it.

The next time you create SUPPORT & RESISTANCE,

Always use the concept

“BUYERS” & “SELLERS”.

Here is an example of how your SUPPORT & RESISTANCE should look like.

You can see that the SUPPORT & RESISTANCE from the left, retests itself on the right.

What does this mean?

This means that once buyers & sellers establish their levels, these levels will continue to serve as areas where the buyers/ sellers will then buy or sell back at that same level.

This is why you’ll have resistance & support levels from the past retest again in the future.

The buyers and sellers continue to hold the area.

This is why it’s important to identify these levels because once you’re able to find the most established levels, you can GAUGE buying & selling strength just from the amount of times these levels retest over the time frame.

Going back to the example….

Look where there was a

“HARD INDECISION AFTER GAP UP”

You see how far apart the “Hard Resistance” & “Hard Support” is from each other?

That is your potential move for a trade.

Let’s use the first strategy we’re going to talk about.

We’re going to be using the “TTM SQUEEZE” as our first indicator.

The TTM SQUEEZE captures the moments where a market is in a period of consolidation right before a big move.

Now.. you can see that it made a HUGE move to the upside but failed to continue and instead started to consolidate HEAVILY, thus triggering the squeeze indicator to indicate a consolidation.

When you see this consolidation, especially after a big move, the first thing you want to look for are the candles.

Just by judging the candles, which seem more likely?

In this case, after the big move the sellers stepped in and pushed the price down to the “HARD RESISTANCE” which turns into support.

When a resistance turns into support it is usually a good sign for a continuation to the upside.

But in this case we had an EMA crossover to the DOWNSIDE as the price was squeezing.

The exponential moving average is a line on the price chart that uses a mathematical formula to smooth out the price action.

An exponential moving average tries to reduce confusion and noise of everyday price action. Second, the moving average smooths the price and reveals the trend. It even sometimes reveals patterns that you can’t see. The average is also more reliable and accurate in forecasting future changes in the market price.

Now, when you have a SQUEEZE + a CROSSOVER,

This is usually a good signal. In this case, this is a signal for PUTS because the 9EMA crossed below the 21EMA.

What about the profit target?

Since you entered at the “HARD RESISTANCE”, your profit target is the nearest support, which in this case is the “HARD SUPPORT”.

ONLY MAKE CRITICAL / HARD LEVELS YOUR PROFIT TARGET / ENTRY.

The reason why you make the critics levels your profit target / entry is because these are ESTABLISHED areas.

You have to find the levels where the buyers and sellers are known to test the most.

The more times it becomes tested, the stronger the level.

How far back can I look?

You can go as far back as you want when looking at levels.

There’s been times where a level has tested years prior, and it continues to test in the present.

Be very vigilant and thorough when making these levels.

MAKE SURE WHEN YOUR PROFIT TARGET HITS TO TAKE YOUR PROFITS.

ALWAYS FOLLOW YOUR RULES & PLAN!

This strategy is called the “CROSS - SQUEEZE”

This is very similar to the last strategy, it’s just that in the case, you don’t need an established support / resistance as an entry.

In this example we have a small consolidation range,

And our entry in this example would be the breakout of the range.

But before that, you want to have a Squeeze followed by an INCREASE in VOLUME with the crossover.

You enter as the candle breaks out!

Your profit target can be the next support.

Here is an example of what an actual “BUYING ZONE”

looks like.

“BUYING ZONES” are essentially just areas where the stock was previously trading at, but is now trading higher than, because of an INCREASE in DEMAND.

When you get an increase in DEMAND, it pushes the price higher. When the DEMAND increases right at a Resistance line (as you can see on top), the resistance then TURNS into a SUPPORT level.

In this example, you can treat this bottom area as “BUYING ZONES” because the support has held for a few days.

This means that in those few days, the buyers have been strong enough to sustain the price ABOVE the support.

Once you have the “BUYING ZONES” established, you should color the box GREEN.

This way everything is color coded and you can spot these areas better, at least that’s what I do.

The green area let’s me know that these are “BUYING ZONES” so that I won’t easily sell my position just because it’s going against me.

I can use the BOTTOM of the “BUYING ZONE” as my stop loss.

This is a REOCCURING sequence that forms so very often.

The BEST way to use the AHPMB (After Hour / Pre Market Breakout) strategy is by FIRST looking at the previous days HIGH / and or previous days CLOSE.

Then what you want to happen is you want the previous days HIGH or previous days CLOSE to be a resistance level throughout after hours / pre market.

This means that this high or close has been established as a HARD resistance.

Because what usually happens is.. after hours / pre market you can see very big moves because this is when Institutions will step in to buy.

In this strategy.. you want to trade the OPEN, or CLOSE to the open, and what you want to do is wait for the VOLUME to SPIKE, and the EMA to cross.

You want to set your STOP LOSS a little BELOW the RESISTANCE and you want to be patient because sometimes it’ll RETEST the resistance turning it into a SUPPORT, and then finally launching up.

Here is another example of establishing HARD SUPPORT and HARD RESISTANCE.

If you have it simply like this, you can’t really tell if there is more BUYING STRENGTH or if there is more SELLING STRENGTH.

What about when I color code the zones?

See how much easier it is to understand SUPPLY & DEMAND when you have this zone on?

Treat the NON colored zone as a NEUTRAL zone.

The NEUTRAL zone can have either buyers/ sellers within the zone, but as it gets closer to its RESISTANCE or SUPPORT, depending on which color it comes close to, expect the buyers / sellers to come in according to its respective color.

Let’s take a look at a 1 HOUR RANGE strategy.

In this example we have a 1 hour RANGE that lasted about 6 days.

In this example you want to first wait for a CROSSOVER to happen.

Once the crossover happens you want to look for RESISTANCE ZONES to break and HOLD before entering the breakout.

Look at the first ORANGE arrow.

You can see it broke above the first RESISTANCE zone and sold off.

Look at the GREEN arrow.

You can see the price broke above the zone again, and this time you have it HOLDING.

Look at the EMA’s on both occasions.

You can see one started to point down and eventually cross,

And the other stayed pointing UP.

You can also GAUGE the VOLUME bars on the bottom.

On the left example the VOLUME kept repeating red and the right, BUYING volume came in every hour.

You want to either enter at the PRE MARKET high level or the level where it actually breaks out of its range.

Let’s look at this GAP o

Options Training
Info
Tags Finance, Investing, Learning, Option trading, Guide
Type Google Doc
Published 11/04/2024, 06:09:09

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