Day Trading Setup Technique

First and foremost, the Trader has to relax and see the terminal in the morning hours and jot down the rates and prepare for his trade setup. After exactly 1 hour, the rates could suggest a fair bit of idea as to how the market is moving. The historical data are so very important that the Trader writes his draft setup on a clean paper and should have the following data upfront to do his work.

1. The Monthly Chart - OHLC (Open, High, Low and Close) data for the previous candle.

2. The Weekly Chart - OHLC for the previous week or the previous candle.

3. The Daily Chart - OHLC for the previous day.

4. The Equivalent Moving Average for 100 Day period.

5. The pivot data for the day, as per the OHLC of previous day.

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When you are a stock trader, the trade setup need to be based on weekly charts and for currency and commodities, the daily chart.

The price action tells you the master trend whether it is bullish or bearish. Now, we move on to Daily chart. When the EMA-100 rates are below the current levels, and if the previous candle has closed well above the EMA-100 levels, you should get prepared for the Buying opportunities. On the contrary, when the price action is below the EMA-100 levels, we should only be looking for the Sell opportunities. The rule is, if the price action is above the EMA-100 levels, it will have a very significant movement towards higher side, and therefore, switch over to the lower charts like the 4 Hour and 1 Hour to place your entry level rates. Once the order is placed, initiate your stop loss equivalent to 3% of your trading capital and the profit level to 15% of the equity levels.

It should be carefully done because, when the price action is above EMA-100 levels on the Daily Chart you should never go for short, though the other signals may force you to do so. We will stick to our setup that all price action above EMA-100 on Daily Chart are meant for only long positions and all price action below the EMA-100 levels are only short positions. There is no deviation to this rule.

Be patient, the setup opportunities will be there somewhere around the corner and never jump quickly to place the orders.

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