{"id":1879,"date":"2010-02-21T09:30:22","date_gmt":"2010-02-21T13:30:22","guid":{"rendered":"http:\/\/club.ino.com:80\/trading\/?p=1879"},"modified":"2010-02-24T13:20:09","modified_gmt":"2010-02-24T17:20:09","slug":"a-simple-strategy-for-day-trading","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/","title":{"rendered":"A Simple Strategy for Day Trading"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" style=\"float: left;\" src=\"\/img\/sites\/ino\/email\/2466.jpg\" alt=\"\" width=\"200\" height=\"150\" \/>Today I'd like to welcome Markus Heitkoetter from <a href=\"http:\/\/broadcast.ino.com\/redirect\/?linkid=1247\" target=\"_blank\">Rockwelltrading.com<\/a>. Markus' article below dives into what most traders just don't get. Enjoy the article, comment below, and visit <a href=\"http:\/\/broadcast.ino.com\/redirect\/?linkid=1247\" target=\"_blank\">Rockwelltrading.com<\/a> to see what Markus's next webinar event is.<\/p>\n<p>==================================================================<\/p>\n<p>With dozens of indicators, hundreds of chart patterns, and thousands of combination's between the two, it\u2019s no wonder that many traders struggle to find and enter trades with confidence. \u201cAnalysis paralysis\u201d is a common problem for many traders, and it can even keep experienced traders from taking good trades. It\u2019s easy to plot a dozen indicators on your chart, but what are they really telling you? Are you able to make split second decisions when there is an opportunity in the market? If not, it\u2019s probably time to simplify your trading.<\/p>\n<p>One of the easiest ways I\u2019ve found to keep things simple, and avoid being a victim of \"analysis paralysis\", is to use a strategy that I call, \"The Simple Strategy\".<\/p>\n<p><!--more--><\/p>\n<p>This strategy is a trend following strategy that identifies entries in trending markets. Although this strategy should work in any market, as a day trader I prefer to trade the futures markets. My markets of choice are:<\/p>\n<li>E-mini S&amp;P 500<\/li>\n<li>E-mini Dow<\/li>\n<ul>\n<li>Euro FX<\/li>\n<\/ul>\n<ul>\n<li> 30 Year T-Bonds<\/li>\n<\/ul>\n<p>The Simple Strategy is based on 2 popular indicators: MACD &amp; Bollinger Bands. Using MACD, I rely on the following standard settings to identify the trend of the market:<\/p>\n<ul>\n<li>26 for the slow moving average<\/li>\n<\/ul>\n<ul>\n<li> 12 for the fast moving average<\/li>\n<\/ul>\n<ul>\n<li>9 for the moving average of MACD (known as the \u201ctrigger\u201d or \u201csignal\u201d line)<\/li>\n<\/ul>\n<p>MACD is a very powerful indicator. To confirm strong trends in a market, I look for the following conditions:<\/p>\n<ul>\n<li>An uptrend is present if MACD is above its signal line AND above the zero line.<\/li>\n<\/ul>\n<ul>\n<li>A downtrend is present if MACD is below its signal line AND below the zero line.<\/li>\n<\/ul>\n<p>By waiting for MACD to be above or below the zero line, we can avoid being whipsawed when a market isn\u2019t in a clear trend.<\/p>\n<p>MACD helps us identify the direction of the market, but our actual entry point is going to be based on Bollinger Bands. The Simple Strategy uses the following Bollinger Band settings:<\/p>\n<ul>\n<li> 12 for the moving average<\/li>\n<\/ul>\n<ul>\n<li> 2 for the standard deviation<\/li>\n<\/ul>\n<p>When price tags an upper or lower Bollinger Band, we usually see a continuation of a trend. Using MACD to identify the direction of the market, we look for entries when price is tagging or pushing through a Bollinger Band. This gives us the following entry rules:<\/p>\n<ul>\n<li><strong>Long<\/strong> entry with a <strong>buy<\/strong> stop order at the value of the upper Bollinger Band, if the market is in an uptrend based on MACD.<\/li>\n<\/ul>\n<ul>\n<li><strong>Short<\/strong> entry with a <strong>sell<\/strong> stop order at the value of the Lower Bollinger Band, if the market is in a downtrend based on MACD.<\/li>\n<\/ul>\n<p>With stop orders at the value of the Bollinger Band we will ONLY be triggered if price pushes through the Bollinger Band. Using Bollinger Bands as our entry point we can stay out of markets that are ranging from upper to lower band, and avoid many \u201cfalse signals\u201d.<\/p>\n<p>Now that we have our entry rules down, we need to know when to get out of a trade. Our Simple Strategy uses volatility-based exits by keeping track of the Average Daily Range. Our goal is to accommodate different market conditions by using stop losses and profit targets that adjust to the ranges of the market we are trading.<br \/>\nThe Average Daily Range (ADR) is simple to calculate. To calculate ADR on your own, find the average range (difference between session high and session low) over the last 7 days (total range for 7 days divided by 7).<\/p>\n<p>Once we have the ADR we can calculate our stop loss and profit target.<br \/>\n\u2022\u00a0\u00a0 \u00a0Stop Loss = 10% of the ADR<br \/>\n\u2022\u00a0\u00a0 \u00a0Profit Target = 15% of the ADR<\/p>\n<p>If we\u2019re trading the E-mini S&amp;P 500 and the ADR was 20, our stop loss would be 2 points (20x.10) and our profit target would be 3 points (20x.15). Although there will be times when the market continues to trend, I personally always use set exits so I can take profits before the market goes against me. In addition to an ADR stop loss and profit target, I want to get out of a trade when the market is no longer trending. An easy way to determine when the market is no longer trending is to go back to the MACD indicator. When MACD crosses back below the trigger line in an uptrend, or back above the trigger line in a downtrend, I\u2019ll go ahead and exit a Simple Strategy trade.<\/p>\n<p>The Simple Strategy can be traded on any intraday timeframe. Traders that I work with have shared decent results on 5 minute and 15 minute charts, but my preference isn\u2019t a timeframe at all. Instead I use range bars.<br \/>\nThe Simple Strategy is an easy strategy to understand and execute. Once you know the basics, consider adjustments depending on your trading personality and experience; like scaling in and out, using trailing stops, and by using Pivot Points for support and resistance.<\/p>\n<p>If you are interested in learning more about the day trading strategies we use at Rockwell Trading, I\u2019d like to invite you to an exclusive webinar available only for INO traders:<\/p>\n<p><a href=\"http:\/\/broadcast.ino.com\/redirect\/?linkid=1247\" target=\"_blank\">Rockwelltrading.com<\/a> webinar<\/p>\n<p>All the best in your trading.<br \/>\nMarkus Heitkoetter, CEO Rockwell Trading<\/p>\n<p>Markus is a professional day trading coach and author of the international bestseller \u201cThe Complete Guide to Day Trading\u201d.<\/p>\n<p><input id=\"gwProxy\" type=\"hidden\" \/><\/p>\n<p><!--Session data--><\/p>\n<p><input id=\"jsProxy\" onclick=\"jsCall();\" type=\"hidden\" \/><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Today I'd like to welcome Markus Heitkoetter from Rockwelltrading.com. Markus' article below dives into what most traders just don't get. Enjoy the article, comment below, and visit Rockwelltrading.com to see what Markus's next webinar event is. ================================================================== With dozens of indicators, hundreds of chart patterns, and thousands of combination's between the two, it\u2019s no wonder [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2937,1278,2050,2929,62,2918,2928,2927,2916],"class_list":["post-1879","post","type-post","status-publish","format-standard","hentry","category-general","tag-average-daily-range-adr","tag-bollinger-bands","tag-e-mini","tag-hybrid-strategy","tag-macd","tag-markus-heitkoetter","tag-trend-fading-strategy","tag-trend-following-strategy","tag-wwwrockwelltradingcom"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A Simple Strategy for Day Trading - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Simple Strategy for Day Trading - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"Today I&#039;d like to welcome Markus Heitkoetter from Rockwelltrading.com. 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Enjoy the article, comment below, and visit Rockwelltrading.com to see what Markus&#039;s next webinar event is. ================================================================== With dozens of indicators, hundreds of chart patterns, and thousands of combination&#039;s between the two, it\u2019s no wonder [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\" \/>\n<meta property=\"og:site_name\" content=\"INO.com Trader&#039;s Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/inocom\/\" \/>\n<meta property=\"article:published_time\" content=\"2010-02-21T13:30:22+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2010-02-24T17:20:09+00:00\" \/>\n<meta name=\"author\" content=\"The INO.com Team\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The INO.com Team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\"},\"author\":{\"name\":\"The INO.com Team\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/d86a8cce826b7bd105200d88bb28a280\"},\"headline\":\"A Simple Strategy for Day Trading\",\"datePublished\":\"2010-02-21T13:30:22+00:00\",\"dateModified\":\"2010-02-24T17:20:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\"},\"wordCount\":923,\"commentCount\":38,\"publisher\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\"},\"keywords\":[\"Average Daily Range (ADR)\",\"bollinger bands\",\"e-mini\",\"hybrid strategy\",\"MACD\",\"Markus Heitkoetter\",\"trend-fading strategy\",\"trend-following strategy\",\"www.rockwelltrading.com\"],\"articleSection\":[\"General\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\",\"url\":\"https:\/\/www.ino.com\/blog\/2010\/02\/a-simple-strategy-for-day-trading\/\",\"name\":\"A Simple Strategy for Day Trading - 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