Article / 06 July 2016 at 13:00 GMT

What should your trading day look like?

Hypothesis Testing
United Kingdom
  • Structured trading sessions allow for steady returns
  • Post-closing bell analysis key to informed investing
  • Determining market skew allows you to calculate bias

Day trading
Trading can be the stuff of sleek images or the stuff of cautionary tales. 
The difference? Routine and analysis. Photo: iStock 

By fxtime*

As you read through this timetable, do not assume it starts at 0700 as a lot of trades commence at 2100 (the night before) and complete at 0800 (usually), or are instead left to run on depending on the trade setup.

One further caveat... I haven't included continuous contract referencing nor any intraday positional trades to maximise profit. I have also not given any suggestions of partial profit-taking and trailed stop scenarios but obviously they are relevant to compound your profits for the day. 

Another ''trick'' is the scaling orders you can do, for example where and when to build trades (as the topic hasn't as yet been covered in my prior articles).

Since January, I have been posting trade structures that either lay the foundation for the scalp setups described or more usually, they overlap with each other to give stronger, more viable trade signals and thus reduce any loss potential.

May I suggest you read the full intraday diary so you will see the full loop of events for today and tomorrow? Then we can look at the daily diary...

Ensure that you are fully aware of what economic or market-moving events are going to affect your trading for today and tomorrow. Always plan for a 48-hour window.

'It's go time': 0700

  • Look for early momentum in forex pairings and follow.
  • Overlay areas from the prior day's charts that have high confluence of 15-minute candles as they show volume support/resistance that will affect today's trade; in forex as well as the FTSE and Dax indices.
  • Ensure you know where the market is in relation to weekly charts (and monthly ones too!). Orders should be preset to catch any breakouts/trend changes.

Alec Baldwin in "Glengarry Glen Ross"
"Coffee? Coffee is for closers!" Photo: IMDb, New Line Cinema

Your trading day: 0800 

  • Close any profitable overnight strategies for a minimum of plus five on the FTSE and plus two on the SPX.
  • Has the market shown a positional stance above or below yesterday's volume areas to determine bullishness/bearishness and where scalps will meet resistance points?
  • Ensure the ''ice cream strategy'' has a trailed stop and is in profit.

Your trading day: 0900

  • Trade the price breakout of the FTSE100 using the 0800-0900 range (seek plus 10).
  • Trade the price breakouts of EURUSD and cable using the 0700-0900 ranges, seeking plus 10.
  • Start looking to adjust stops on the momentum-based, three-day trades that are running.

Your trading day: 1000

  • Trade the price breakout of the EURUSD and cable from the 0900-1000 range (seeking plus seven).
  • Markets can often give a successful long trade followed in the afternoon with a short trade or vice versa.
  • Trade the price breakout of the Dax from the 0900-1000 range seeking plus 10 and trail.
  • Markets can often give a successful long trade followed in the afternoon with a short trade or vice versa

Your trading day: 1100

  • Watch for a reversal in the FTSE intraday trend, usually good for plus 10.
  • Adjust stops on the momentum-based, three-day trades that are running.
  • Start placing orders for a contra break of a rolling, three-hour contra trade range break on the FTSE.

Your trading day: 1200

  • Trade the price breakout of the USDCAD using the 1100-1200 range seeking net plus five.
  • Markets can often give a successful long trade followed in the afternoon with a short trade or vice versa... do only one long and one short trade per day.
  • Adjust your order on FTSE for the contra rolling three-hour trading range.

Your trading day: 1300

  • Watch USDCAD for a close above or below the 1100-1200 range... if it closes beyond range, trade as an intraday positional trade in that direction (Bayesian trade).
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust stops on the momentum three-day trades that are running.
  • Overlay areas from yesterday's S&P 500 charts that have a high confluence of 15-minute candles as they show volume support/resistance from yesterday that will affect today.

Your trading day: 1400 

  • Adjust order on FTSE for the contra rolling, three-hour trading range

Your trading day: 1430

  • Make a note of the trade range for a Bayesian trade on the S&P 500.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Has the S&P 500 opened above/below the prior day's 15-minute volume cluster zones to determine areas for immediate resistance in any scalp trades and to market bias (bullish/bearish)?

Your trading day: 1500

  • Trade the price breakout of the S&P 500 using the 1400-1500 range seeking 1.5 points.
  • Trade the first 30-minute close beyond the 1430-1500 range and trade in that direction until your profits equal the 1430-1500 range distance.
  • Every 30 minutes look for a close above or below the 1430-1500 S&P 500 range and open a trade in that direction seeking the equivalent of the 30-minute range.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.

Your trading day: 1600

  • Every 30 minutes look for a close above or below the 1430-1500 S&P 500 range and open a trade in that direction seeking the equivalent of the 30-minute range.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.

Your trading day: 1700

  • Every 30 minutes look for a close above or below the 1430-1500 S&P 500 range and open a trade in that direction seeking the equivalent of the 30-minute range.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.
  • Adjust order on SP500 for the contra rolling three-hour trading range.

Your trading day: 1800

  • Every 30 minutes look for a close above or below the 1430-1500 S&P 500 range and open a trade in that direction seeking the equivalent of the 30-minute range.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.
  • Adjust order on the S&P 500 for the contra rolling three-hour trading range.

Your trading day: 1900

  • Cut-off period for opening any Bayesian trades.
  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.
  • Adjust order on SP500 for the contra rolling three-hour trading range.

Your trading day: 2000

  • Adjust order on FTSE for the contra rolling three-hour trading range.
  • Adjust order on USDCAD for the contra rolling three-hour trading range.

Closing time: 2100

  • Closing bell and have a wine – I assume you've banked your profits throughout the day!

Wine
This can affect both the quality and quantity of wine consumed. Photo: iStock 

Determining market skew

Review the US opening range against the closing range for market bias. Set orders accordingly.
Review the open range against the closing range on the FTSE 100 for market bias. Set orders accordingly.

Review and set orders for long-only overnight positions using EoD RSI 5 and Price looking for gap-up potential trades... for example, a "Lady Luck" strategy with enhancements to maximise profits. RSI 5 weighting must be used.

Count consecutive days ascending/descending and open orders at close for contra trades such as the "drowning in ice cream" trade. Use a trailing stop.

Establish standard deviation parameters and set orders accordingly. Only open trades, however, for the 84% rule manually.

If there was a major move in the market then play the probabilities for a missed move. After all, there is a 73.8% probability of success on this.

The three day sentiment trend/range can be adapted for hourlies and dailies and overnight orders should be preset for potential trend changes intraday and end-of-day.

Finally, we need to look at the market as a positional move/shift. Consider where today's open ranges stood as they will be retested within three subsequent days on balance – is there a trade for us to go for?

Consider also the daily pattern using a 15-minute chart. Look only for clusters of 15-minute candles as they will represent volume areas that act as magnet levels. View them as micro support/resistance levels which will affect the next day's trading. Should today's volumes be below the major bands of the prior day, then clearly there is a bearish sentiment so you expect tomorrow to open and remain below the current volume areas. 

If it doesn't, then assume we have an early marker for a potential change in trend.

All the above then repeats each day!

Romanesco
Consider your trading career as a sort of fractal structure... Photo: iStock
 
It is the discipline to do the end-of-day analysis and constant updating for the subsequent day that will truly build your account balance. 

None of the above includes ROC or matrices and running multiple FX pairings as a single trade structure as I am trying to keep things simple to begin with... this is purely organising prior articles into a complete daily plan.

Then we can develop our trading into a major revenue stream in later articles.

Now ask yourself, do you do the above or react in real time to price movements?

I have mentioned money management and stop controls in an earlier article, but that really is down to your risk-aversion.

One other key pointer? Do not ignore the obvious.

You might be surprised at just how much information and background detail are in this one article, but it may be worth reading each trade structure and overlaying them to make a single strong trade strategem.

Sadly, there really is not enough room to overlay accounting practices that you can use to reduce your margin requirements and cost basis. This is just too big a topic. Nor can I include Value at Risk models here which may be of use... these will have to find their way into later articles.

If any one of the elements listed above helps you to trade better and more profitably, however, then I consider it a success.

— Edited by Michael McKenna

*fxtime is a pseudonym for a TradingFloor.com trader whose strategy is statistical hypothesis testing
06 July
fxtime fxtime
Update;
Using the strategies (links highlighted in blue) and timed structures of the article;
July 4th points/pips gained +125
July 5th points/pips gained +140 and 50 of those were posted live for the USDCAD yesterday.
Mechanical trading it may be but if it earns then perhaps it has some worth in your trading armoury of strategies :-)
06 July
Philidor Philidor
Ok, just showed the wife how to withdraw funds from my account, so she can shoot me and take the money and the kids to some remote island the day I work from 07:00 to 21:00. :-)
06 July
fxtime fxtime
LOL.
06 July
niktzo niktzo
Excellent article!!!
06 July
fxtime fxtime
Thx Niktzo :-) There are at lest 11 strategies in those links within the article....hopefully you didn't need to read all those too ? LOL.
06 July
Raj-900 Raj-900
fxtime,
I loved your articles. I'm new to trading, although I am here for the last few years, but normally inactive.
Where can I refer to your earlier articles which you had posted since Jan this year? Here only in tradingfloor.com?
At times I fail to understand your trades. Will post questions for you.Thanks for your article
06 July
fxtime fxtime
Raj....thanks for the feedback.
As for finding earlier articles you can firstly click on the highlighted blue text in the above article and it will take you to other trade strategies I have posted since January....I couldn't include all the strategies in the above as some are for end of day and 3 days or more duration and this article is for intraday scalping so you will have to click on my ''fxtime'' heading and scroll through prior postings I am afraid. The only postings I do are on Tradingfloor which TD and Soc Gen also link upto. Any problem let me know.
06 July
Raj-900 Raj-900
Thanks a lot
06 July
zefy zefy
Excellent summary. I do not remember if we discussed earlier what would be optimal hours to trade std dev model?
06 July
fxtime fxtime
Use the close price of yesterday as your reference point...then determine skew and preset orders from that closing bell. Otherwise if using a 3 day signal use the pivot as your reference point.
06 July
fxtime fxtime
RSI 5 cannot be ignored in either instance in relation to the chart shown or skew.
06 July
fxtime fxtime
Actually Zefy...have I done the three day trade model? You know better than me LOL.
06 July
zefy zefy
Yes, three day model was discussed. Based on my trade sheets, std dev trades that get opened before noon will reach 2nd dev guite fast. Afternoon trades not similar. That's why I asked about optimal trading hours for str dev model.
06 July
zefy zefy
Today, XAG and FESX trades reached 2nd dev very fast.
06 July
zefy zefy
In the morning....
06 July
fxtime fxtime
The afternoon trades are usually USA hours eg SP500, DJIA, QQQ but as Europe opens before them what-ever occurs here in Europe will have an impact on the USA quotes and moves quite often are already ''priced in''...that said i am not sure how many here have access to binary trades or short term options as they can enhance your trade substantially.
06 July
fxtime fxtime
Yeah I saw but that is a residue move from Asia which we benefit from.
06 July
zefy zefy
I think those are available in Saxo platform, I have used short term options in my Saxo account...
06 July
zefy zefy
Ok, got it, morning move was impacted by activity in Asia.
06 July
zefy zefy
And in the afternoon liqvidity and direction are combined Europe+USA open bell.
06 July
zefy zefy
Thanks.
06 July
fxtime fxtime
Yep you've got it...you will be surprised how often the pattern repeats intraday. Funny thing is....I have been trying to write an explanation for you but it was getting too long but your single line entry sums it up far better. :-)
06 July
trading4fun trading4fun
hi fxtime, no doubt, you are quite a unique guy on TF to follow ;) On the contrary, just imagine the other guy, who is having a full time job a galaxy away from trading industry while having barely no time to observe platform. Unfortunately, thats me. However, this fact made me over the time to develop a simple trading strategy which can even work in such an environment. Comming back from thousands of repeated mistakes which ended up in huge losses I finally felt confident and decided to publish some of my trade ideas here on TF ;)
07 July
fxtime fxtime
trading4fun....I agree this is for intraday trading and is described as such within the article. Since January you will find many of my articles relating to end of day and positional plays to make for the very reason you comment on....where we just don't have the time to watch our screens. The posted articles are all high probability trades that last anything from 1 day to 1yr. Great to see you back on TF mate :-)
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