It’s hard to ignore that the markets are in a blood bath because of the Coronavirus… but having triple-digit winners, one after another is enough to get anyone afraid of the zombie apocalypse excited.

I know… I sound like a broken record by now… but I just cannot stress enough—the benefits of having a trading strategy that captures the market volatility.

It is paying off huge in weeks like this.  

Momentum indicators are the cornerstone of the trading strategy at Daily Deposits and we are just getting started it feels like.

If you’re wondering by now… why do we only focus on momentum?

Simple—a great strategy for trading momentum is hard to beat!  

It’s easy to follow, simple to trade, and produces mind-blowing returns!  And I don’t even have to break a sweat when trading which makes it that much easier.

For those who missed it, last week was one of the best trading weeks of my career.

I’m talking about nearly 400% with a monster single-day record hit on Wednesday of 256% profits in just a few short hours!

As the markets are hitting new lows, my account just keeps hitting new highs over here at Daily Deposits as the momentum trading strategy is starting to really flex its muscles.  

Here’s what you missed from one of my huge trades last week…

 

 

With all of this uncertainty in the markets about the virus, every trader should be taking advantage of this opportunity!  

It really is once in a lifetime.

Not to mention, there is nothing more satisfying than trading a simple strategy that can bring in monster profits with nearly perfect timing each and every day.

So, are you ready to get started?

I’m about to let you peek inside my process on how I find my momentum plays. 

It works in bear and bull markets, as well as, slow and fast-moving markets. 

 

Momentum Indicators Are Critical

 

Momentum indicators are the cornerstone of the trading strategy at Daily Deposits!

Why?

Because a great strategy for trading momentum is hard to beat.  It’s easy to follow, simple to trade, and produces mind-blowing returns and I don’t even have to break a sweat.

In my mind, this is one of the only ways to take advantage of the markets especially during environments like we are in now. 

The first steps to finding trades to make these types of profits all start around momentum indicators on a 5, 10 and 15-minute chart.

The 3 key momentum indicators are:

  1. Price action and volume
  2. Moving averages confirm trend
  3. TTM Squeeze

Let’s take a look at how to correctly use these three pre-market momentum indicators to determine the direction of the markets before each trading day.

 

3 Key Indicators

 

Momentum is all about catching the right stock, at the right time and in the correct direction.

But if you fail to identify any one of those three components, you are left stuck holding a losing trade.

Let’s take a look at how each of these work to determine exactly what direction you should trade the markets in.  

How it works:

  • Understand the major trend based on the highest timeframe first
  • Use lower time frames for immediate trend analysis
  • Confirm momentum using moving averages, TTM and volume analysis

Here’s an example of the SPY’s on the 3 main timeframes to analyze momentum using the 5,10, and 15-minute charts.

But it all starts with the premarket sessions.

Premarket chart:

Here is a chart of the futures in the premarket trading session.

 

 

 

 

 

 

 

 

 

 

Source: Thinkorswim

 

Here are some key points you want to keep an eye out for before placing any trades.  It’s best to use the pre-market session to get an overall view of the day ahead and which direction the markets may want to take at the open.

Key factors on the SPY Futures in the pre-market session:

What I see:

  • Short term trend is point to a lower open
  • Long term trend is point to a lower open
  • The 10 MA < 20 MA to show continued weakness
  • The TTM squeeze set up (the red dots) showing periods of low volatility going into the open
  • There was a steady increase in volume through the morning session heading into the open

Before you place any trades, it’s best to identify those key factors in the pre-market session.  This will help identify direction and quality if trade.

If possible, this is where you would want to begin searching for hardstops, targets and other exits based on technical patterns you may see as well.  

Here are the Support and Resistance prices that I came up with based on the pre-market SPY chart.

  • Resistance: 305.78, 306.16, 306.47
  • Support: 305.16, 305, 304.54

Now.. let’s take a look at the pre-market SPY charts instead of the futures.

It’s a similar story all around on these charts but let’s break it down now.

 

5 Min Chart:

 

What I see:

  • Shorter-term trend is pointing to a lower open
  • Longer-term trend is pointing to a lower open
  • The 10 MA < 20 MA, showing continued weakness
  • The TTM squeeze indicator is setting up with red dots going into open
  • Steady increase of selling volume going into open

 

Source: Thinkorswim

 

10 Min chart:

 

And there are similar patterns seen in the 10-minute charts as well.

What I see:

  • Shorter-term trend is pointing to a lower open
  • Longer-term trend is pointing to a lower open
  • The 10 MA < 20 MA, showing continued weakness
  • The TTM squeeze indicator is setting up with red dots going into open
  • Steady increase of selling volume going into open

 

Source: Thinkorswim

 

15 Min Chart:

 

And there are similar patterns seen in the 15-minute charts as well.

This is not painting a good picture for the SPY’s.  This is now the 3rd supporting timeframe of lower markets to come.

This is what I see:

  • Shorter-term trend is pointing to a lower open
  • Longer-term trend is pointing to a lower open
  • The 10 MA < 20 MA, showing continued weakness
  • The TTM squeeze indicator is setting up with red dots going into open
  • Steady increase of selling volume going into open

Here is the chart of the SPY’s on the 15m chart.

 

Source: Thinkorswim

 

The Trade

 

Now that I have a clear understanding of the price action going into the market open after analyzing the pre-market session, it’s time to place the trade.

The best approach is to trade this position using near-term options, such as weekly or monthly options that are also at-the-money or slightly out-of-the-money.

This is an example of where you can locate call options using thinkorswim.

 

Source: Thinkorswim

 

Looking at the image above, the highlighted box on the left are the call options on the SPY’s and the transition between the purple and black areas are the at-the-money contracts.

Let’s see how this did for members of Daily Deposits.

 

 

And the members were alerted to this trade before it happened.

 

 

These puts were bought at the open for $4.15 and rallied all the way up to almost $8!

Here is a chart of exactly how the options erupted in profits shortly after the open…

 

Source: Thinkorswim

 

This trade just soared making a whopping 90% return for the day!

 

Wrapping up

 

This is one of the most reliable systems for a trader to trade the markets based on premarket futures and momentum indicators.

This is so effective it completely reduces the need for any complicated day trading strategies, it’s really a set it and forget it type of trade.

So if you’re looking for a simple and consistent way to crush the markets….

What are you waiting for?

Click here to join Daily Deposits and be part of the real March madness… 

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

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