What type of Trading Day is it? & Trading Levels 2.13.2019

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Trading 102: What type of Trading Day is it?
The strong contrast between the last few days speed and behavior of different markets across the board compared to what we witnessed in January, brought me to share this piece:
  • My opinion is that there are 3 main types of trading days.
1. Most common is two sided trading action with swings up and down - this type of trading day is most suitable for using support and resistance levels along with overbought /oversold indicators.
2. Strong trending day, mostly one directional - this type of trading day is the least common, many times will happen on Mondays and maybe 3-5 times a month at most - this type of trading day is most suitable for using ADX, MACD crossovers and pretty much looking for pullbacks to jump on the trend
3. Slow and/ or choppy trading day - this type of trading day is best suited for taking small profits from the market by looking at volume spikes, using stochastics as possible entry signals and usually wait for a pullback before jumping in.
  • Good question is how can one asses what type of trading day we will have while the market is still trading....I am doing some work about it and will be happy to hear feedback via email but here are some initial observations:
  1. Was the overnight session a wide, two sided trading range? If the answer is yes, good chances for similar trading day during the primary session ( primary session is when the cash/ stock market is open)
  2. Mondays have the highest chance for trending days
  3. The behavior of the first hour of trading can also suggests the type of action for the rest of the day.
  4. If the first 30 minutes have good volume, better chances for type 1 or type 2 trading days.
  5. low volume during first 30 minutes can suggest a choppy (type 3 trading day)
Feel free to reach out to your current Cannon broker or contact person if you like to expand on the topic.

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Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.