Winning Edge Trading: Successful and Profitable Short- and Long-Term Trading Systems and Strategies

CHAPTER 11

The Winning Edge System for Day Trading

In this chapter we describe the Winning Edge System trading signals for day trading two popular markets: e-mini S&P futures contracts and QQQQ, an example of ETF.

DAY TRADING E-MINI S&P FUTURES CONTRACTS

For this discussion we use a one-minute chart for our examples. You could also use any other timeframes, such as 2-, 3-, 5-, or 10-minute charts. However, as you increase your trading time, your stop-loss and target profits should increase accordingly. Furthermore, longer timeframes produce fewer signals, so it might take a longer time to reach your profit targets. Nevertheless, let’s start by discussing trading based on a one-minute chart in the following sections.

Short Signals

We look for DPO and RSI to provide us two confirmations for short-signal price entry. A bearish divergence between the DPO and price bar is one confirmation. For the second confirmation, we look for RSI to cross above the overbought 70 percent boundary, oversold condition. Consider Figure 11.1, which depicts a one-minute chart for e-mini S&P June futures markets with the indicators. As the chart in Figure 11.1 indicates, the e-mini futures market was making a higher high from price point 1 to 2; simultaneously, the DPO indicator made a lower high from point 1a to 2a. Finally, the second confirmation for a short-sell signal occurred when the RSI indicator crossed the overbought 70 percent boundary.

FIGURE 11.1 Winning Edge Trading System Generates ...