If you want to make money in this market then you can’t be afraid to take your shot when you see it.
And that’s exactly what I did yesterday when I knocked down a huge profit on my trade of the day.
I’m not saying that to brag… not at all.
The reason why I’m bringing it up is because I believe the setup is repeatable…
A setup that if you study, you could potentially return over 50% a day*
And it all starts in the pre-market, hours before a single trade is placed!
Ready to learn more?
Daily Deposits is a trading strategy based around determining the strength of the markets using a blend of technical analysis and premarket momentum data.
My edge in these markets come from where the algo’s can’t research or trade because of a lack of liquidity.
And that’s exactly why I focus on the pre market trading session each and every day.
It’s important to remember that algos can’t feel or understand the market price action outside of the liquid trading session of 9:30 am – 4:00 pm.
Because of the lack of trading and liquidity means erratic and even random prices can occur.
And if a computer analyses that data, it could end up bankrupting firms with its unknown behavior.
Which is why no firm wants that type of risk and most if not all of the algos are turned off! It’s just not a good time for a computer to be trading the markets!
Pre Market Momentum Analysis
By starting before the market opens it allows me to get ahead of the algos that turn on at 9:30am!
So, where do I start?
I review the global markets from the top to bottom! I start with what’s happening in the Asian markets, European markets and then the U.S. premarkets on the e-mini futures.
It’s important that I do this to understand what traders are doing in those markets… any fear or uncertainty will cause a huge impact to the US markets if there is anything major happening…
This is what alerted me to the severity of the Coronoavirus coming out of China in February (and yes, I bought puts that day at the open!)
Let’s break down what happens every hour before the market opens for you to understand how my flow works.
I started my scan of the world markets.
These markets include:
- Foreign Exchange
- Economic Data
- Asian markets
Then I continue to watch the markets for volume, earnings, fed announcements, and any signals coming from the central banks with monetary policy changes.
These are all critical pieces of information the markets will signal to you in the pre market session that will cause the price of the stocks to dive at the open.
Next up… the Trade of the Day.
I send a Trade of the Day alert signaling the direction I believe the markets are going to head in at the open.
The Trade of the Day includes:
- The option contract (put or call) to trade
- The specific week or month
- The specific strike price
- The entry price of the trade
- The stop loss of the trade
- The profit targets of the trade.
Why do I start looking for trades at 9:05am instead of waiting for 9:30am?
I do this to get ahead of the markets and try to anticipate where the price will move in order to stay ahead of what is happening.
Fundamentals Help Determine The Direction
It might seem odd that a day trader would care about the macro market signals around him…
But in fact, fundamental information could be one of the best analytic tools any trader can leverage when it comes to understanding the core of the markets.
Let’s take a look at what I use to get ahead of the markets every day.
3 Key Fundamentals Factors To Watch:
- Macro Indicators
- Currencies – Equities have an inverse relationship to the Japanese Yen
- Bonds – Equities have an inverse relationship to bonds
- Market Sentiment
- US futures markets
- Overseas futures markets
- Commodities – Oil, gold, copper, etc
- Momentum Indicators + Overall Trend
- 10 and 20 SMA
- TTM Squeeze
- 5 min, 10m, 15m charts
So how does this break down?
If we see a sentiment at the open that is extremely strong, it’s saying that the buyers are in control and the markets should continue their upwards trend. And the inverse occurs for weak markets as well.
What I Saw In The Pre Markets
Remember, I start to plan the trades for the upcoming day hours before the market even opens.
Which means getting an understanding of the overall market sentiment throughout the world and overnight trading.
This is key in figuring out which direction the market is looking to go for that day, since trading momentum is all about going with the trend and not against it.
It’s the same thing with the SPY.
When looked at together, these indicators are all part of an overall “scorecard” that helps me decide which direction to take the trade.
So…What is this scorecard exactly?
Let’s take a look at what the scorecard reported in the pre market trading session from the other day.
It’s a gauge that gives me a quick overall of the feeling of the markets for the day ahead.
And it’s the way I can get an edge against the markets day in and out without complicated indicators.
You see, many indicators are historically focused, or known as backward looking, and can give false signals.
But these 5 markets are actually “leading indicators” to what the U.S. markets are going to be doing in the trading day coming up.
Now that I have a clear understanding of what the pre-market session is doing, I start searching for an option to trade.
One of the best approaches I like to use is to make sure I pick an option that has some “bang” to it.
Typically weekly options are one of the best ways to make sure you get that explosion in the options prices.
Like what I saw yesterday…
Why Join Daily Deposits?
Every morning, Daily Deposits subscribers get a recap of my pre-market analysis to start their trading day
Every morning I review:
- The global outlook overnight
- Sectors for the US Markets
- Daily chart on SPY with Technical Analysis reviews
It will teach you how I read and decipher the overnight trading sessions before the bell at 9:30am.
Then, I place my SPY trade based on which direction I think it will move.
To learn more about the strategy, click here and register for my upcoming live event, scheduled for October 8th at 2 PM ET.