The Simple Day Trading Strategy That Can Yield Big Returns
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Chapter 1: An Overview of Day Trading Options
Many critics dismiss the idea of buying options, labeling it a "fool's game," and claim that day trading options is futile. However, this perception is misguided. The following content outlines a straightforward day trading strategy focused on taking long positions in call and put options. I once shared with someone how to achieve a 100% return from day trading options, and I suspect he was skeptical.
To initiate a SPY options day trade, two crucial levels must be monitored: the opening price of the options and the lowest price of the day (LOD). If the call options are trading above their opening price, it’s a signal to buy. Conversely, if the put options exceed their opening price, those should be purchased as well.
Section 1.1: Market Conditions on 05/17/2023
On May 17, 2023, the market conditions indicated a potential shift. Although it may be premature to declare, it seems this bear market could be transitioning into a bull market this year. My primary market-breadth indicators, the NYMO and NYSI, exhibit noteworthy behavior. When these indicators function correctly, they provide valuable insights. When they deviate from expectations, they often signal that something significant might be occurring.
Historically, when the NYSI declines, market participants can anticipate a downturn for the market and its stocks. However, following a substantial rally from the year’s lows, major indexes—represented by SPY, QQQ, and IWM—have either continued their upward movement (as seen with the Nasdaq) or have traded sideways within narrow ranges (as seen with the S&P and Russell).
As Trader Vic Sperandeo famously remarked, “If the market does not behave as expected, it will often do the opposite with greater intensity.” On days when my day-trading models indicate unusual activity, I find myself pondering whether this intensity might soon materialize.
Subsection 1.1.1: The Performance of 411CALL
Today's 411CALL experienced a 34% drop right after the market opened but has since rebounded to an impressive gain of nearly 400%. This remarkable turnaround raises questions: Will SPY break through the upper limits of its trading range, which it has been confined to for over a month?
The QQQ index, driven by leading tech stocks, has already surged past its resistance levels. Is the IWM, which has lagged behind, poised to climb back to its highs? It’s certainly a possibility. Should these scenarios unfold, bears may be forced to cover their short positions, prompting both them and others who are currently under-invested to chase rising stock prices, which would further escalate the market.
Section 1.2: Considerations for Traders
However, it’s essential to maintain a cautious perspective. If the NYSI remains low by the end of the trading day, I wouldn’t be surprised if the bears reassert their influence, leading to a sell-off that could nullify my current speculations.
Chapter 2: Insights from Recent Trades
In the first video titled "I Have Made $600,000+ Trading $SPY This Year: This Is Exactly How," the speaker shares their successful trading strategies, providing valuable insights for aspiring traders. This video dives into the methods that led to impressive gains in SPY trading.
The second video, "HARD TRUTHS to DAY TRADING in 2024 (No One On YouTube Will Tell You) - P&L EXPOSED," reveals the realities of day trading in today's market. It emphasizes the importance of understanding market dynamics and the challenges traders may face in 2024.