Intraday Chart Setup

  • October 1, 2020

Do you have an intraday chart setup? You've been dreaming of freedom for years, and you've finally decided to try your hand at day trading; I congratulate you. Not only is day trading quite lucrative, but it can also provide you with the freedom to do what you want with your time. 

You're going to want to keep reading because without understanding what intraday chart setups to look for, and the right trading strategy, the freedom you so desire will continue to remain a pipe dream.

How Do I Put Together an Intraday Chart Setup?

  • An intraday chart setup is going to be your bread and butter if you're day trading. Whether you're using a bollinger bands trading strategy or moving averages, you're going to want to right timeframe. 

1. First Things First: What Is Intraday Trading?

Like we've mentioned in other blog posts, intraday means "within the day." We use this shorthand term in the financial world to describe securities that trade during regular business hours.

In case you are wondering, securities can be anything from stocks, futures and exchange-traded funds (ETF's). 

By the same token, intraday also refers to the highs and lows the security makes throughout the day. Not only are these highs and lows significant, but they are also crucial to day traders who capitalize on them.

Finally, at the close of the market, traders will settle all their positions when the market closes.

But the question remains: How do I identify the correct intraday chart setups to time my entries? 

My answer is this: Price action trading. 

No, you don't need to know all the fancy candlestick patterns. Yes, you might like the three white soldiers, morning star or the hanging man pattern, and that's ok.

An astute price action trader's ability extends far beyond price patterns. Learning price action trading and applying it to your intraday chart setups will change your life, just ask Rose!

2. The One Trading Strategy Crucial to Your Success as a Intraday Trader

Without a doubt, price action trading is the holy grail of trading strategies for day and even swing traders. For starters, we know that with day trading, timing is crucial, and price action offers the natural tool for timing market entries.

Even when we are wrong - which happens more than you think - well-timed entries will limit our losses. Likewise, by timing your entries with market tipping points, it is possible to profit from swift trades.

Here are some price action trading tips for intraday traders.

3. Steer Clear of Tight Congestion

No one likes to be stuck in rush hour traffic. It's busy, it's noisy, people won't let you merge, all around it's not a good situation to be in.

The same goes for trading during congested times. The price is barely moving; there's practically no chance of making money.  

A tight congestion or consolidation area hardly offers any high probability trades with a solid reward-to-risk ratio. All you end up doing is wasting your time trying to squeeze a 10-tick profit from a 2-tick trading range.

The main point here is that scalping a point or two might make sense if you're a guru like Rose. But, it can be a tedious trading strategy for beginners.

Do yourself a favor, and take a break when the market is in a tight congestion phase.

Is Intraday Profitable?

  • When we're trading an intraday chart setup, we want to make money right? Most new traders think about making homerun trades each and every time they buy a position. However, intraday trading is all about the small victories. You're looking to make small profits on trades. Think $0.10 to $0.20 a trade. That doesn't sound like much. But you never go broke taking your profits. And your risk management will be better with smaller profit goals.    

1. How to Identify Tight Congestion on the Intraday Chart Setup?

The market is predictable, especially if you're trading the ES or MES; it's almost like clockwork. We see wild movements at certain times of the day, and during others, it quiets right down. Towards the middle of the day, the market typically enters a congestion phase. 

Congestion patterns or consolidation phases happen when the market fails to close higher (lower) for at least three consecutive price bars. Similarly, once you find that the market is in a congestion phase, I suggest you stop trading.

Generally, the best time to day trade the stock market is the first hour after the open, from 9:30 am EST to 10:30 am EST and the last hour of the day from 3:00 pm - 4:00 pm EST.

Have a look at the intraday chart setup of the ES on the 10-minute chart:

intraday chart setup

This chart tells us a story of a typical intraday volatility pattern.

  1. The market opened with a nice push-up.
  2. Towards midday, we start to see congestion characterized by small candle bodies. It's smart not to look for trading setups here.
  3. We have a clear breakout with a 3 candle push up. Don't buy at the top of the third green candle; wait for the pullback to buy. Alternatively, a more aggressive approach would be to enter at the close of the first bull candle or the open of the second.
  4. Finally, we see the market continuing upwards.

However, it's vital to keep in mind; the volatility patterns differ depending on the market you are trading.

2. Intraday Chart Setup: Trading the Bull Push Up

I will now turn to a less conservative trading approach for those who don't want to wait for the push up and pull back to enter.

In this approach, you wait for the push down and enter on the reversal. Your cue to enter is the long lower wick on the first bull candle; this signifies buying pressure pushing the price up.

Furthermore, the bull candle closed higher than 50% of the previous bear candle. You can enter on the close of the candle or the open of the second.

Regardless, you need to be quick as price gets rejected starting at candle 17. Confirmation of rejection is the long upper wicks. 

intraday chart setup

The image above is taken directly from Rose's futures trade room; this is just one of many. If you want access to multiple intraday chart setups, join us today!

My Parting Thoughts

In my books, time wealth is more valuable than money. But, your freedom comes with a price. And the price you pay is in sweat equity. If you want success trading an intraday chart setup, it requires dedication, hard work, patience, quick wit, and the desire to learn. 

Successful day trading involves 10% execution and 90% patience. If you want to gain expertise in day trading, hone your trading skills and earn your freedom, sign up with Bullish Bears now. 

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