Divergence Day Trading Method; Day Trading Euro with Dollar Index Futures

– The divergence method

o Watch the video, and follow along with the notes that are posted in the adv course
o When does the trade signal become invalid?

– Using the dollar to trade the Euro

o Buying pullbacks and selling retracements
o How many bars in a pullback?

 Never know how many bars in the pullback
 You will know what a GOOD pullback vs/ a BAD pullback
 You will know the reversal before it takes your money from you.

• Watch the video in the advanced course
• Ask questions in the trade room when you see pullbacks you need help confirming
– Inside days vs Outside days

o Inside = we are trading inside the range from yesterday (above the lows and below the highs)
o Outside = we trade above / below the range from yesterday
o Why does price move?

 People react on their opinions, biases, their emotions of fear and greed

o Why would price be moving?

 Because traders see more/less value at that current price level
 If price is rising into the highs of day, then we assume people see price as TOO CHEAP
 So why would price move nowhere?

• Traders don’t KNOW if the price is too cheap or too expensive

– Profit targets and trade management

o Section 11, managing the trade
o Scalpers will use the same standardized trade management

 6-8 tick stop
 5/10/Runner
 4/8/Runner
 Never touch our first 2 targets unless 3 strike rule

– Sharing volume during contract rollover

 o How do you know when the markets roll over?

 Your broker will usually email you
 Go to the exchange website
 Use our blog and look for the contract specifications

– Contract Rollover today on the e-mini, currencies, bonds

– Why range charts?

o ALL the pattern look the same b/c all the candlesticks have the same range inside them
o Compare that to a minute chart and the range charts look nice and clean
o I make money when the market has trading range

 Do I make money when the market uses a lot of TIME? No.
 Do I make money when the market uses a lot of TICK? No.
 Do I make money when the market uses a lot of VOLUME? No.
 Do I make money when the market uses a lot of RANGE? YES

o Easy to predict the risk on the trade

 Assuming you enter a trade at the highs of the bar, and your stop is placed at the lows of the bar
 We always know the amount of risk

– Auto Trader, fully-automated trading system

o 20 tick stop
o 75 tick target
o Very low RRR
o Very low drawdowns
o Takes on avg 1.5 trades per day