The Keys to Start Short-Term Trading or Even Day Trading

WYCKOFFPRO joined discussion · Dec 9, 2021 22:34

Swing trading is my main focus so I thought I would share my story how I started my day trading journey. I started day trading 4 years ago after I have been consistently profitable in swing trading (holding from weeks to months).

Instead of compounding the profit in months, why not compounding in weeks or even days? Eventually, the price action trading method is fractal and works in all time frame, right?

I confidently dived in trading $Micro E-mini S&P 500 Index Futures(JUN5) (MESmain.US)$, yet I just can't make it profitable after 2 weeks. There was just too much noise in the M1, M3, M5, M15 timeframe, unlike the daily swing trading timeframe. I even tried other instruments like $Micro E-mini DJI Index Futures(JUN5) (MYMmain.US)$ , $Micro E-mini Nasdaq-100 Index Futures(JUN5) (MNQmain.US)$ , $E-mini Russell 2000 Index Futures(JUN5) (RTYmain.US)$ , or the hot stocks like $Apple (AAPL.US)$ , $Advanced Micro Devices (AMD.US)$ , $Tesla (TSLA.US)$ , $NVIDIA (NVDA.US)$ etc...and the end results are the same, just wouldn't cut it!

Risk Management

Fortunately, I adhered very stringent risk management rules, which I considered is the most important thing in day trading, to only risk 0.25-0.5% per trade and no more than 1% at any one time. This actualy saved me big time when I started day trading.

Reflection

Why would price action trading method fail in day trading? That's the question I pondered 1 month after started day trading.

Here are my key findings in day trading

1. Yesterday high/low level during the regular trading hours (RTH), which is the US session together with the high/low formed during the non-regular trading hours (Asian, European timezone) are the key levels to lean on.

2. Textbook style Wyckoff phases seldom occur in the intraday chart like 3 minutes chart (M3) as compared to the daily chart. So in day trading, it is best to lean on levels + volume and to trade "Wyckoff spring" and "Wyckoff Up thrust" as the trading setup instead of a full blown Wyckoff phase analysis.

3. Majority trades happen during the first 1-2 hours and the last hour during the US session. So, as long as I focus for the first 2 hours, I am good.

4. Grade A+ trade do not show up every day, it is normal to "waste" 1-2 hours just by looking at the chart.

5. Patient is important. Instead of forcing a trade just to "avoid wasting time", it is better to set the alert at the key levels and come back to the screen every 15-20 minutes to check if there is favorable price structure or anything unusual.

6. Of course, you need a method that is working for you, that will fit your personality, lifestyle and risk profile. For me it is price action + volume in Wyckoff analysis.

7. Cultivate a habit to review your trade every day. This is the fastest way to speed up the learning curve.

Finally, it took me 6 months to become profitable in day trading, that's even I have been profitable in swing trading before I start day trading. It is a great way to sharpen the trading skill despite tiring.

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