Daytrating Strategy for emini S&P 500

Posted on 25 September 2009


1. Time (London local time ): Trading is divided into two sessions:


· Pre- market session: trading 1 to 2 hours between 7am to 1pm;

· US session: trading for 30 min between 3pm to 5pm;

The reason why I divided trading into two session is because in the morning, before US market open the volume and volatility are low and there is usually big movement between 7am-9am, often related to the UK news as an indicator what will follow later in the afternoon . The range is very low between 2 to 5 points, and more look like congestion, but thats good, because quite opposite of other traders I dont avoid it, and even take few quite very low risk trades when market is moving sideways. Number of trades taken in the morning session is around 10 trades.

The period between 1pm to 2.30pm is when most of the news data are released and is often followed by high volatility in price action in literaly few minutes.

When US session open I dont trade for the first half an hour and wait for the first reversal and also for the daily trend to be established. I am in maximum for 30 min just to profit from more quick price movement and to take few points.

So overall time needed to reach the daily target is no more than 2 hours. Remeber the aim of this strategy is not only to make consistently profits but also to give you freedom to do other things in your life, so do not spend all day stuck to the screen and trading.

2. Broker and Platform: Thinkorswim

3. Number of contracts and margin : At the present I use 1 ES contract for which Thinkorswim margin requirements are $5625.00 for overnight position and $3000 for day trading.

Please note that I use the overnight margin for calculating the return ratio

4. Risk Management

· Daily target: $400/8 points /32 ticks;

· Daily return: 7% [400/5625*100]


· Daily loss limit: 2% on account size of $10000


· Return to Risk Ratio per trade: [1 point = $50; 1 point =4 ticks; 1 tick = $12.50]

- Pre-market session: 3 : 2 in ticks [which means for every 3 ticks profit I risk 2 ticks, or profit target of 3 ticks = $37.50, stop loss 2 ticks = $25]

-US session: 2 : 1 in points [which means for every 2 points I risk 1 point or profit target of 2 point = $100 and stop loss of 1 point = $50]


5.Trading history for the period from 01 September 09 to 07 October 2009:

· Number of trades: 250
· Wins: 230 or 92%
· Loss: 20
· Total profit: $10257

6.Chart Setup:

On 5 min ES chart are plotted 47ma, 20ema and 10ema; and also trendlines conecting important highs and lows to show Support and Ressistance.

For specific entry and exit signals and the chart patterns that I use for guidance please find it posted in category "Chart Patterns"