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

2. 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

3. 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

4. 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

5. 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

6. 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

7. Identifying Targets

8. Example Breakout Trade

9. Example Breakout Trade

10. Example Breakout Trade
Recent Low = $84.26

11. Example Breakout Trade

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

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

14. 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

15. 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

16. 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

17. Useful TOS Charts

18. The Results

19. 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