The Power Of The 30 Minute Breakout

by | Jun 16, 2020 | Editorial | 0 comments

The most volatile trading periods of the day are the first and last hour. 

More often than not, these first minutes of the day can determine which direction the market is going to head for the rest of the session.

And by using a simple 30 minute range indicator and monitoring the SPY…

You can gain an edge against the pros and pull down huge profits!

Now let me show you how I use the 30 minute range indicator in Daily Deposits

 

Daily Deposits

 

The strategy deployed using a proprietary blend of pre-market indicators to target and execute on momentum throughout the trading day.

Why momentum?  

Well…because a great strategy to take advantage of market trends is hard to beat.  

And strategies that follow the trend are easy to follow, simple to trade, and can generate mind-blowing returns without breaking a sweat.

Daily Deposits come with 3 key indicators to determine what the market could do once the stock exchange opens 

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.

 

Pre Market Analysis

 

Let’s break down how I use the pre-market analysis every morning to make my trading decisions.  

I monitor everything coming across the markets so you don’t have to. 

I take in the good news and the bad, and make sense of what I am seeing from my years of experience.  

I do this to make sure that I don’t go into the trading day and miss news. 

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. pre-markets on the e-mini futures.

 

Hourly Breakdown

 

At 7am I start to scan the markets to prepare the trading day ahead.

7:00am:

I scan every market from:

  • Foreign Exchange
  • Economic Data
  • Commodities
  • Asian markets

 

9:05am:

Once all of the premarket review is done the next thing to do is find the contracts and strikes to trade the SPY.

And 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.  

 

Fundamentals Help Determine The Direction

 

At first, it might seem odd that a day trader would care about the macro market signals of the markets.

But most of the time, fundamental factors can drive the largest move in the markets.

Let’s take a look at what I use to get ahead of the markets every day.

2 Key Fundamentals To Watch:

  1. Macro Indicators 
    • Currencies – Equities have an inverse relationship to the Japanese Yen
    • Bonds – Equities have an inverse relationship to bonds
  2. Market Sentiment 
    • US futures markets
    • Overseas futures markets
    • Commodities – Oil, gold, copper, etc

 

Technical Analysis

 

On top of all of the fundamentals, monitoring the markets using technical analysis is a must for making huge returns while trading.

This is where the real trade information comes from.  

And with technical analysis, you get your buy levels, sell levels, stops, targets, and position sizing information.  

Here are some of the momentum tools that I use on a daily basis:

  • 10 and 20 SMA
  • TTM Squeeze
  • 5 min, 10m, 15m charts

 

An Example Trade

 

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 is a chart of the SPYs

 

Source: Thinkorswim

 

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

  • Short term trend is point to a higher open
  • Long term trend is point to a lower open
  • The 10 MA > 20 MA to show continued strength
  • The TTM squeeze setup (the red dots) showing periods of low volatility going into the open

 

30-Min Range Breakout

 

Now that you have the major trend identified and the other sources of momentum outlined, the next step is to confirm this trend and enter the trade.

And that’s where the technical indicator that looks at a range breakout is incorporated into the pre-market momentum strategy.

 

Directional Bias

 

From the pre-market analysis that was done earlier, the trade is inherently biased to the short side. 

There are many criteria that go into creating directional biases, but for the Daily Deposit, we will be focusing on the technical indicators to give us what we are looking for.  

Here’s an example of the trade on the SPY:

 

Source: Thinkorswim

 

And as we can tell, once that 30-minute range is officially broken the markets picked up upward momentum and closed near the highs!

Here’s a checklist for trading an opening range breakout combined with market momentum

  • Have a bias:  Long/short/none.  Don’t take a direction if you don’t have a supporting bias from the overnight session.
  • Establish your bias:  Base on daily, 15 min, and 5 min chart price action and pre-market momentum
  • Trade in direction of the breakout and your biased direction
  • Never be afraid to call for a change of plans (audible alerts!)

 

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!

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

Click here to join Daily Deposits

 

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