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Millionaire Reveals Top Trade Idea Each Week

RagingBull.com CEO, Jeff Bishop, shares his top pick for the week each Monday, straight to your inbox.

“My strategy aims to help you pull one winner out of the market each week, regardless of market conditions!” – Jeff Bishop


Buy the dip or sell the rip?

Many call it catching a falling knife and others call it buying stock at a discount.  

And in the words of the famous Warren Buffet…

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” – Warren Buffet

Mr. Buffet must be drooling at his mouth at the sights of this market and the tremendous amounts of buying opportunities that are available to him!

Which is exactly what Daily Deposits signaled yesterday to all members in the premarket trading session—enabling us to lock in a day of solid profits!

Last week the system absolutely crushed the markets… with back-to-back-to-back winners!

And believe it or not, I had one of my best trading weeks of my career during that market selloff!. 

I had total profits last week of 358%… from trading SPY options!

On Friday I locked in a 30% gain, Thursday I banked 72%, and Wednesday I had a monster 256% gain…

And to start this week my streak continues with another 100%+ winning trade!

Tonight, I’m going live to discuss why my Daily Deposits strategy is so darn effective, even in this turbulent market. Click here to register

But before we get into tonight’s fun, let me share with you what I’m currently seeing in the market, and I have been able to pick it up apart so cleanly.

 

Focus on momentum only

 

To be an effective trader in chaotic markets you must be laser focused on one task instead of trying to be focused on everything all at once.  

And you definitely don’t want to be holding overnight positions.  

…To me that’s just madness!

Nobody knows what is about to happen next and having exposure throughout the overnight trading session is just nuts!

So why even bother holding trades that long when one of the most exciting trading systems you can deploy is a momentum strategy.

With a well-defined momentum trading strategy you can pull in huge profits in just hours!

Just check out my gains last week when the markets were in a free fall… all intraday and never holding a trade overnight!

 

 

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.

 

The 3 key momentum indicators

 

Momentum is all about catching the right stock, at the right time, and determining the right direction it’s going to take.

Failure to identify any of those components may leave you stuck in a trade that goes nowhere… or even worse..one that goes against you quickly.

So let’s take a look at each one of these indicators and how to use them to determine the direction of the markets.

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 SPY in the premarket trading session.

 

Source: Thinkorswim

 

There are a few key points you need to look for before placing any trades.  This period is used to get a general idea of what direction the trade is going to take going into the open.

 

Here are the key factors into trading the SPY’s long today.

 

  • The short term trend is pointing to a higher open after the premarket lows
  • The long term trend is pointing to a higher open after the premarket lows
  • The 10 MA > 20 MA to show short term strength
  • The TTM Squeeze indicator started to show red dots, or periods of low volatility before a breakout
  • Steadily increasing volume throughout morning heading into the open further supporting the price direction.

 

Before placing any trades its best to identify those key factors in the pre market session in order to identify direction and quality of the trade.

Once you have done all the pre-trade analysis, it’s time to dig into each time frame and confirm the same momentum indicators are supporting the direction of the markets .  

5 min:

Just like the overnight futures, the premarket SPY chart looks similar. 

Here are the key points to identify:

  • The short term trend is pointing to a higher open after the premarket lows
  • The 10 MA > 20 MA to show short term strength
  • The TTM Squeeze indicator started to show red dots, or periods of low volatility before a breakout
  • Steadily increasing volume throughout morning heading into the open further supporting the price direction.

 

Source: Thinkorswim

 

10 min:

Similar to the 10 minute chart, there are still bullish signals being identified in the markets.

  • The long term trend is flat
  • The short term trend is heading higher
  • Increasing volume in premarket

As you can see, there is less supporting technical information on this timeframe and that’s expected.

Luckily, this timeframe is still supporting the major trend and does not invalidate the trade.

 

Source: Thinkorswim

 

So, there is nothing alarming about this timeframe and everything points to a bullish opening market.

Let’s take a look at how the 15 minute time frame works next…

15 min:

Similar to the 10 minute chart, there are still bullish signals being identified in the markets.

  • The long term trend is flat
  • The short term trend is heading higher
  • Increasing volume in premarket

As you can see, there is less supporting technical information on this timeframe and that’s expected.

Luckily, this timeframe is still supporting the major trend and does not invalidate the trade.

 

Source: Thinkorswim

 

The trade

 

Now that we have a clear understanding of the price action in the pre market trading session, it’s time to place the trade.

The best approach to trade this position is to use weekly or monthly options that are at-the-money call options.

This is an example where call options are located in 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 purple and black highlighted rows are the at-the-money contract.

Let’s see how did this look for members in Daily Deposits

 

 

The calls were bought at the open for $3.50 and rallied all the way up to $8.00 per contract!

What would the profit be for a trade like this on a single day?

A whopping 125% gain for the day!

So what are you waiting for?  

Click here to join me tonight at 8 PM ET, for a live training where I cover my Daily Deposits strategy!

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