Day Trading Strategies: Expert Advice and Techniques

Some thoughts and pointers to help you day-trade by Cannon Trading:

Trading carries inherent risks, but adhering to eight essential money management principles can help safeguard your capital while enhancing your trading skills with Cannon Trading.

1. Seek out markets with high volume and narrow spreads to ensure prompt order execution and high volatility, offering 2 to 4 viable trades daily. The Emini S&P500 Index Future exemplifies such a market, with each point valued at $50, divided into 4 ticks worth $12.50 each, and 4 contracts annually traded on the Chicago Mercantile Exchange. For smaller accounts, explore the Micro NQ, Micro crude oil as well as gold and other markets. Cannon broker can be an excellent resource if you like feedback on different futures markets.

2. Try to limit your risk to 1% of your capital per trade; this way, your funds can withstand 100 consecutive unsuccessful trades. Even top-tier systems encounter 20% losing trades, so this rule provides flexibility. If your account size is not big enough, you can try adjusting the above to 2-3% and the math will still make sense.

3. Maintain a minimum risk capital of $10,000-$15,000 per Emini S&P500 contract traded—a loss of $1,000-$1,500 then represents just 10% of your capital, a recoverable amount unlike a $3,000 account where the same loss constitutes 50% of your funds, increasing the likelihood of depleting your capital. If this is not viable, consider trading the MICROS which are 1/10 the size.

4. Constrain your trading hours—we advocate for the initial 60-90 minutes of the market, which often sees a solid trend before the midday lull, a preferred window for many professional traders. As of late we noticed that the last 10-30 minutes of the CASH MARKET trading session brings in high volume and large moves as well.

5. Cease trading if losses reach 5-10% of your capital in a single day; such losses are manageable and suggest a misinterpretation of the market. Pause, assess your mistakes, and document them in your Trading Journal.

6. Maintain a Trading Journal, chronicling all transactions. Over time, the mind tends to overlook unsuccessful trades and habits. Record detailed charts and emotional responses. Noteworthy considerations include:

• Ensuring you’re trading based on the charts, not desperation after a few losses.

• Avoiding weak signals due to missing a significant move, which leads to chasing trades or opting for countertrend positions based on the assumption that the market can’t rise further. FOMO (Fear of Missing Out)

·        Take note of the different economic reports and market behavior!

7. Strategically set your stop loss and targets based on chart analysis, not random point selections. Utilize technical indicators like double tops, swing highs and lows, or retracements to moving averages for tighter stops and more favorable profit-to-risk ratios. Trade what the chart presents, not your desires or emotions.

8. Exercise patience!! If possible, try to trade a minimum of 2 contracts, securing 1 for a 2-3 point gain, your initial target, and allow the other to run with a break-even stop. A successful runner can outperform numerous small gains.

By following these guidelines, you can hopefully navigate the trading landscape more confidently and effectively with the help of a Cannon Trading broker when needed.

IMPORTANT PLEASE NOTE: TRADING COMMODITY FUTURES AND OPTIONS INVOLVE SUBSTANTIAL RISK OF LOSS. THE RECOMMENDATIONS CONTAINED IN THE LETTER IS OF OPINION AND DOES NOT GUARANTEE ANY PROFITS. THERE IS NOT AN ACTUAL ACCOUNT TRADING THESE RECOMMENDATIONS.  THESE ARE RISKY MARKETS AND ONLY RISK CAPITAL SHOULD BE USED. PAST PERFORMANCES ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

If you are a day trader, below you will see markets that our proprietary ALGO has identified as being more suitable for attacking either from the long side or the short side for the next trading session.

Questions? We are happy to help!

Daily Levels for May 22nd, 2024

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.