Rick Edwards O.C. Traders Investools Group Day Trading the SPY Rick Edwards O.C. Traders Investools Group

Overall Strategy Put the odds in MY favor Only trade stock Strategy is based on timing—Market orders SPY spread is minimal, commisions lower than other market ETF’s Every tick counts Win smaller amounts more often Use fixed targets Target is always less than average SPY move but more than the minimum required to be profitable Only one trade at a time Minimize amount of time exposed to market risk In and Out quickly if possible

My Rules . . . Since only one trade at a time, all cash is used for trading With Risk CAREFULLY managed Stop trading when . . . Lost more than 1.5% of portfolio Won more than 20 day average of winnings Always close positions back to CASH by end of day No overnight holds Reduce position size when . . . Volume is low Choppy market Losing streaks Pay special attention to Pivots and common reversal times 10:30A, 2:00P, 2:30P, 3:00P

MY Rules . . . Position sizing and Risk Management Based on 2x ATR Risk for 10 min intraday candles Always use trailing stop Market internals should confirm trade VIX, Breadth, and A/D lines should agree

The Three Screen System Entry/Exit is loosely based on system developed by Dr. Alexander Elder From his book -- “Trading For A Living” Align indicators from multiple timeframes based on a multiple of five For Example Trading timeframe = 10 minutes Long Term timeframe = 5 ten minute intervals (approx 1 hour) Short Term timeframe = 1/5 ten minute interval = 2 minutes When indicators align the odds are in your favor for continued movement in the indicated direction

The Trades All trades were based on a breakout/breakdown Price is moving to higher high or lower low Only trade in direction of Long Term MACD 2 line + Histogram MACD – follow short term line Reset sentiment each ½ hour Entry—Must move above previous high by 1/3 of ATR Tries to avoid topping and bottoming tails Exit Fixed Target Long exit at first resistance line above entry + $0.30 Short exit at first support line below entry – $0.30 No Fixed Target Exit with market order 10 seconds before market closes

Identifying Targets

Example Breakout Trade

Example Breakout Trade

Example Breakout Trade Recent Low = $84.26

Example Breakout Trade

Example Breakout Trade Entry at $84.08 Recent Low = $84.26

Example Breakout Trade Stop at $85.30 Entry at $84.08 Recent Low = $84.26 Exit at $83.30

Trade Analysis Max Risk Reward Time exposed to market risk = 40 min 167 Shares * $1.36 Risk = $227.12 Reward Captured $84.08 – $83.30 = $0.78 167 Shares * 0.78 = $130.26 Time exposed to market risk = 40 min

The Trading Zones Apply different tactics for different zones Ameteur Hour Prior to 10:30A reversal Breakout trades with fixed target Mid-Day Momentum trades—allow to run Professional Hour After 3:00P reversal Breakout trade—allowed to run

Useful Tools Investools TOS VV% Economic Data Prophet charts Shows volume compared to average volume at that time during the day Economic Data Government reports and expected economic data and when they will be released Prophet charts TOS Index Graphs (SPY, QQQQ, DIA, IWM) Market Internals (VIX, TICK, A/D, Breadth) Order templates OCO, Cancel/Execute order at specific time

Useful TOS Charts

The Results

The Results Oct Nov Dec Total Win % 47% 73% 64% 58% Reward/Risk 113% 96% 88% 94% Expectancy 0.01 0.44 .21 0.13