Wednesday, 25 May 2011

Day Trading the SPI

A lot of my trading energy of late has been spent day trading the SPI on the SFE (ASX200 futures). I have been registering some really good results of late and I am in the process of writing up a more thorough Day Trading programme for trading this market. This is not just a programme covering trading setups but encompasses the characteristics of our market and the essential skills needed. I think this will be of great interest to many readers here and those on the convore chatroom who are day trading Australian stocks. I genuinely believe that successful trading is all about skill development, having a back tested trading plan, and discipline. This is even more apparent in Day Trading which requires a very particular skillset. It is my hope that my programme builds on all these areas and will be of great value not just to myself, but for others.

I do gain a lot of inspiration from the works and teachings of SMB Capital, a proprietary trading firm in the US that is a real pioneer in trading development and education. Why can't this model be replicated here in Australia? It certainly can. I write this blog to offer educational material and I hope to take these initial steps even further. Yesterday was a great trading day in the SPI. I called out some of these setups on twitter  and missed others. As ever, I find so much value at the end of the day from studying my recorded video via Casmasta and the charts. Look at this 2min chart below and ask yourself how many of these setups are in your trading repertoire? When you combine these setups with strong trading skills and the ability to read the order book, you are on your way for a truly profitable trading career.

SPI 2mins:

1) Fading the morning gap down- these trades play on the herd behavior and panic. Target is yesterdays close i.e. the open gap.
2) Joining the downtrend to get short- the morning rally ran out of steam at the moving averages. Note the bearish reversal candle right at the gap target. Short as supports break.  Higher timeframe trend is firmly down (see 60mins chart)
3) Cover short at previous intraday low- possible low risk Long at these level? Stopped out
4) Buy major support- the SPI is always defended at the round numbers. I called out size on the bid at 4601 and 4600. A real low risk play
5) Breakout play- strong thrust off 4600 with a higher low formed. Buy as price makes a new high thus defining a new uptrend. I called out big offers at the lows 20s- once they lifted we were off back to the 40s.

SPI 60mins Downtrend: