If I Had to Make $500 by Tomorrow, I’d Use This Trading Strategy

You know, if my back was against the wall, my chips are down, and I've got to make $500 trading by tomorrow, this is the strategy I would use. And it wouldn't make a difference if I had little to no money, little to no experience, or if my entire trading career up to this point felt like I was auditioning to become Mike Tyson's punching bag, it's still the trading strategy I would use. And that's because it's simple, it's repeatable, and best of all, it's scalable. You see, one of the hardest lessons I ever had to learn as a trader is that stupid simple always wins when it comes to trading. The more simplistic and basic that our trading strategies are, the more decisive we become. And of course, the more decisive we become, the more money we're going to make. It's that simple. And that's why for a lot of us, the harder that we try to make trading work, and the more we immerse ourselves in these complex theories and strategies, the worse we get. And if you're not confident and consistent with your trading decisions right now, chances are your trading strategy just isn't stupid simple enough. Now, my name is Doug, and I've been day trading now for 26 years. And in today's video, I'm going to show you exactly what I would do if I had to make $500 trading by tomorrow. Now, before I do that, I want you to understand something. Trading is not a show and tell me sport. It's a learn and do. And that's what you need to see. You need to see me do this in a real market with real money and real consequences. So, I will be trading this strategy live today. And I'll be doing it without taking excessive amounts of risk, or using excessive amounts of leverage, or making the process any more complicated than it needs to be. So, let's go ahead and get started with today's video. All right. So, let me start with this. One of the biggest mistakes that traders make, a mistake I certainly made way too many times when I started trading, and a mistake that's just not discussed enough in most of these videos that you are watching, is this. Most traders never will understand who's on the other side of their trade. Since in theory, trading is a zero-sum game, for every buyer, there's a seller and every seller there is a buyer, let me ask you this question. When you buy something, do you know who's on the other side of that trade? Who is selling simultaneously while you are buying? Is this a retail trader? Is this an institution? Is this big money? Who is it? And if you're selling something, who is on the other side buying what it is that you are selling? You have to know this, otherwise all of these trading strategies and theories that you've been studying, they never will make you consistent. And this is the ultimate problem we all suffer from. Because if a trader isn't consistent, what we tend to do is think we don't know enough. We don't have enough knowledge. So we start to seek more knowledge. We start looking for different strategies, more indicators, more software, more news, just more and more stuff. And this is actually compounding the problem, making us work. And we don't need to do any of that today. So in less than 1 minute, I'm going to show you how you can figure all of this out and who's on the other side of your trade. You see, no matter what chart you're looking at, I don't care what chart that might be, there are only four points of interest. Four main points that you need to be focusing on when you make a trade. These four points will help you get the proper entry that you need, help you accurately in most cases predict the direction of the asset that you are trading. It will help you manage your risk and control your targets, putting you always in the best position to be successful. And those four areas are the range high, the range low, the swing high, and the swing low. Anything else, you are guessing, and that's not what we do as traders. So let me show you here on your charts how you're going to figure this out. So for today's video, I'm going to start out by using the asset YM, which is the Dow futures. As this video progresses, as always, I'll show you what this would look like with foreign currency, cryptocurrency, commodities, and other assets. What is important is we're going to start each day with the 15-minute chart, and we'll go into this here a little bit more in detail in just a second. But, step number one is setting the range high, the range low, the swing high, and the swing low. And this is how we're going to do it. The range high and the range low is the previous day's high price and low price of the asset you're trading. So, if I just kind of scoop my eyes over here to the left of my screen, this black shaded area represents the previous day's price action in the asset YM. And all I'm looking to do is either box in or mark the previous day's high price print and the previous day's low price print. So, you can use whatever you want. For today's video, to keep the chart clean, I'm just going to use a horizontal line. And I'm going to lay one line on the top at the highest price point and another line down towards the bottom at the lowest price point. Get as close as you can. This represents the range high and range low. For long-time viewers of the channel, this is the box theory, and normally I would box these in. Now, the next is figuring out what is going to be the swing high and the swing low. The swing high is the next high above the range's high. So, this is the previous day's high price. Just simply start looking over to your left and find the next highest price you see, which is right here. Sometimes you don't have to go far, other times you do, but we're going to lay a line right on top of it just like that. It's the swing low. We're going to do the opposite for the lower part. We're going to go to the low of the previous day, and then we're going to search over to the left. Now, in this case, it's to the right where you actually had a little drop earlier that's below the previous day's low, and that's what we're going to make our swing low, and we're going to lay a horizontal line right there. And that's pretty much that's all that's involved in step number one, setting the highs and lows of the swing highs and the swing low. What I want to spend a moment with right now is highlighting what I mentioned in the intro or just a little bit earlier on why these are so valuable and what these four lines mean and why this is really the essence of what you're going to be doing this trading. The very top part of these, the swing high and range high, represent the market or asset you're trading's strongest sell side collective. Hence, in this case, this is why the YM dropped so aggressively the day before. This is not retail order flow up here. This is institutional flow. So, to make things easier, there is an institutional seller or a collective of institutional sellers located up here in between these two lines. Now, we need to know this because if they are challenged, which most likely they will be, we need to know if they're going to show up, and that's what we're going to talk about in a second. Inverse relationship to the bottom is that the bottom two lines represent the strongest buy side collective, hence why the asset bounced so aggressively. Again, this is not a combination of retail order flow. This is institutional order flow, and that's what's important to know. The biggest buyer and biggest seller. The biggest seller's at the top, biggest buyer's at the bottom. Now, to make this very, very easy part of the video, what I want you to think, if the asset you are trading moves up into that area, you want to assume the seller will come back. You also want to start thinking sell. If the asset you're trading is moving towards the bottom, you want to buy as well, not sell. That's the original theory. Now, what we have here in this case is that the asset is opening up in the middle, and many of you heard me say in the past, don't diddle in the middle. We're going to talk about that as well. But, here's something I want to touch on right before we get into that, which is the highlight nuance of this trading strategy and why it works so well. Because in any market you trade, again, I don't care what it is. Most of the time, most being 90% of the time throughout the year, the asset you are trading is going to go after either the high seller area or the low buyer area. And in some cases, if the market you're trading is volatile enough, it's going to do them both. But, we do know for sure at some point during the trading session, it's going to go after one of those two areas, if not both. That's what's called a liquidity sweep, because that's where the largest amount of liquidity rests, and that's what markets do. So, here is what's going to happen. Whenever this market opens, you are only going to get one of two moves. Either it immediately shoots straight up to the high or straight up or straight down to the low, excuse me. And if it does so, and that's immediate, we immediately want to sell up here, we immediately want to buy. Nothing more, no indicators needed, just sell it or just buy it. Or the second move is a slight stall at the open, then an attack at either the high or the low. Now, this will bring me to step number two, because this is going to tell you which one's going to happen, and there are two versions of this strategy. This is where we're going to use the 15-minute chart, because what we need to do with step number two is identify the opening range, which is the 15-minute range. So, what I'm going to do is this. I'm going to move this chart forward and let the first 15-minute bar close for the day, and there it is. That's the first 15-minute open. Now, from here, what we want to do is box in the high and the low of that 15-minute range, okay? Now, back to something I said earlier. If [snorts] this would have shot up immediately within the first 15 minutes to the high, we would have sold. If it dropped immediately to the bottom, we would have bought. But, now we are in the middle, and this brings me to the diddle in the middle, because today I'm going to show you something I haven't yet on this channel, which is how do you diddle in the middle? And here's what we're going to do. After the 15 minutes is done, we're going to take this chart, and we're going to move it down to a intraday 5 minute to dial in the entry. And the first of the strategies is trading from the middle to the top or the middle to the bottom. Here's how we do it. If the asset you're trading breaks the top of the opening 15-minute range right here, chances are it attacks the high-side seller. Now, remember earlier I said, most likely what happens in most situations it wants to go after the high or the low. Now, this is the thing about being in the middle. We don't know yet, because it's like a fork in the road. It can go either way. So, if it breaks the top of the 15-minute box, we buy and we sell up here, or that's the origin of the trade. If it breaks the base of the box, we look to sell it, and then buy it back down towards that big buyer. We must wait for confirmation in this area, otherwise you don't have enough data to ensure that your chances are that you reach the top. So, what I'm going to do is just kind of move it bar by bar here real quick, and you'll see the next bar coming down. Now, this is why I want to talk about this, why it's so important about waiting and understanding these ranges, because here's the deal. It looks like a short, am I correct? It looks like it's going to break down. But, it hasn't. It hasn't broken the structure of that box. You wait. Whether it's 5, 10, 15, an hour, you wait. Otherwise, you're guessing. We're just guessing here because we don't have a confirmation. Next candle does what? Blows right back through it. You guys been in this? Again, you're chopped up in the mess here when you're diddling in the middle, so you have to have these confirmations. So, now it looks like a breakout, but is the next one going to be red? Next one going to be blue? I don't know. So, we kind of play it forward right here, and it's oh, right there. It's real close, but still it's not ready yet. So, we've had to wait a little while. Next candle comes up. There it goes, right through the top. Now, in this case, what we want to do is we would buy it as it broke through the top. Okay? Now, one thing I want to say here real quick, so everybody follow along. Because I'm using TradingView, and this is a playback, it only allows you to enter the order at the end of the candle. For this one, I would have entered right there at 53112, which is about a 50-point difference. So, keep that in mind when you see the target numbers and the stop-loss numbers, because it makes a difference. So, our target is going to be up into the high-side seller. We're going to get up there and attack either this line or that line. Uh again, this is 50 points off, so keep that in mind. So, that means the stop can't be too much at this level. That's one of the downfalls of doing it. So, we have to kind of keep that really, really tight in that area. Again, this is going to be a little higher than it needs to be because of the 50 points, but that is the trade if you diddle in the middle. So, if I just kind of play this forward, moves right up in there, and look, tags into that line. Now, this will bring me to strategy number two, which is the one I do daily, the one I love the most, which is actually reversing from the highs or buying from the lows. And I like to do this because the risk and reward is phenomenal on this. But I gave you an idea on how you can actually trade in the middle. Here's the difference. When you're up against a known seller that we've established, we don't need that much confirmation to make the trade. All I really need here is for one of these candles to close under the other one. That That's I don't need the confirmation that I needed there. So if I kind of move this forward real quick, you take a look, what do we have here? It's getting pretty close. And as soon as you kind of break that real quick, there it is. Note the difference. So if I just kind of back that up real quick, right there on that break, I want you to take a look at this. If you sell that there, note the difference. The stop loss goes right above the high side buyer, but the target price is where this type of strategy wins because you usually find yourself back into the range itself. So if you kind of play it forward, this is what you're going to see as it finds its way all the way back down into that opening box that you made for yourself, right? But the only reason that this type of strategy works is because what you are doing is you are positioning yourself against the large buyer and also the large seller, if that makes any sense. That's where you want to be. This is why when you're trading without that knowledge, you're just trading blindly. Now, right before we jump into By the way, that's that's pretty much it with the strategy. No, we don't need any indicators for this. We don't need to overcomplicate it. It's just a matter of buying and selling and understand the importance of these four points. Now, here's a few things I want to touch on before we get into the live trading because these are common questions that get asked. One of those questions is if you have this theory, then you're saying that every day the asset always sells there and buys there and stays there indefinitely. That's incorrect. Actually, what happens is each day your your premiums your prices change on the asset you're trading. So, for example, you will have gap downs and gap up. So, in this case, I've got the SPY. You're going to see I have a gap down in this situation. So, in a gap down, you use the high from the gap. You use the low from the gap as the range high and range low. And then you go one above that, which was the gap itself, right? And then you use one below that, which is this one. But the same rule applies. Now you have different levels. So, the lines change, but the result is still the same. So, if I'm going to play this one forward, note what happens as soon as you get down to the swing low, the thing bounces, right? It bounces. Now, in this case, on that particular day, there wasn't a whole lot of value and it wasn't able to touch the top, but that's exactly what it did. Now, the other one I want to answer as a two-part question, does it work with other assets and what happens when it actually breaks the upper range? For this, I'm going to use gold because people always ask me, does it work on gold? So, what I've done is I left gold on a 15-minute chart and I'm going to go ahead and let the very first bar open for the day. Now, in this case, the range high is the previous day's high price and the previous day's low price. So, there's your previous day's high. And there is your previous day's low. Your swing low would be right down here, [snorts] right at that pivot. And of course, your swing high will be way up here. Now, the difference with this one and the YM is that you're already starting at the upper range. So, the decision is easier. This just simply is not a buy. You're too high and you're too far up against the known seller. But, I just want to play it through so you see what happens. I'll move it down to a 5-minute chart so you really get an idea of how these things work, but take a look at what we see here. Right? Gold fails to go higher. Now, unlike the YM, it was, you know, it wasn't able to go all the way back down into the range, but note, it wasn't able to go much higher either. Now, here's how I want to use this one to answer the other question about breakouts okay? In order for something to break out, it usually spends a lot of time trying to clean out that seller. So, if we look at this area and we know this is a seller, look how much physical time it has taken to finally dispatch of the seller and not really get too far away from them. This is several hours upon hours of trade of trading before this thing actually broke above that. So, when we're talking about breakouts, they will, in fact, break the top of the box every so often, but they only do that after they've had a chance to build. So, now we're going to move on to the live trades and see what we end up with that. And as I said there in the introduction, what I want to do is trade this on a very low risk, very low margin, something that's realistic for just about everybody watching to be able to participate in, and we're going to try to target that $500 using nothing more than these basic steps I just showed you right here. All right. So, the voice is scruffy, the eyes are puffy because it's very early in the morning here on the West Coast of the United States. I feel a bit sleepy, so I apologize for the appearance, but I am ready for some live trading. Now, ironically, I already know where we're going to go today, and that's going to be the YM. So, if you take a look at the screen, we have the YM 15-minute chart set up here. I love trading this thing, but we do have a very good setup on this, and I'm going to walk you through it. Now, because we're doing live trading, I'm using the ThinkorSwim software here, so it's a little bit different than the TradingView that we used for the video. So, if you take a look up here in the corner, I have YM selected, 15-minute chart. Now, these dashes that you see represent the previous day's trading activity. There's no shading on there, it's just dashes. So, this right here is the previous day's In between these two lines is the previous day's trading activity for the YM, and that's where we start, right? We begin by marking the previous day's high price and the previous day's low price, and that's our range high and range low. So, I'm going to mark that. It'll be right here in this area. And then the low of the day was all the way down here. Now, obviously, you guys can see we have a different situation, and this is good for education. We have currently a pretty hardcore gap up and a bit of a parabolic going on here, it's getting pretty jumpy in the pre-market. We got about 30 minutes to go before the market opens. So, what do we do in these cases? We need to adjust these lines. So, the first thing that we do is let's make a new range high and a new swing high. So, when in doubt, go to the nearest pivot, the current price, which is pretty much right here. This becomes our new range high, which is almost the current price, just slightly [snorts] above it. That's going to be the new range high. After that, we just want to move over to the left, and let me draw this line out so it's a little bit easier for everyone to see. And then we want to pick the next high price above that, which is right here in this area. So, I'm going to draw another line up here. And these two lines represent the new range high and swing high. Now, the This one here, the previous range high, can now constitute as the range low, and what we can do in this case, because this swing low is so far down there, it's kind of be right now. We can just lay a line at the nearest pivot beneath that. And now we have some new adjusted lines. So, I think you already know where we're going here. The decision is made for us. We're beginning the day, we're pressed up against the range high and the swing high. So, the decision is to think about selling. Now, the market doesn't open for another half an hour, and anything can happen here, but let me give you two trading ideas because I believe one of these two will pan out. Here's what we're going to do. Because this is such a solid parabolic, I'm kind of hoping it does just press right up into the range high and the swing high. We find some sort of break of structure, John Wick power tower, engulfing candles, and we try to trade that back down into either the center of this range or back into our new range low. We're kind of looking to sell up there using risk somewhere up here, okay? The next would be if it happens to sell before the pre-market. We would be looking for this thing to drop early into the session, somewhere around that range low, and then try to buy it and see if we can cash out back into the range high. So, there are two options. Uh this is why we're going to allow the first 15 minutes to pass because we're not going to predict this. We're going to let the market tell us what we should do. So, I will come back. We'll take a look at the first 15 minutes and see where we are. So, we're about 30 minutes into the market, not quite, and I want to give you an update here what we have with this YM cuz it is setting up. So, now we're on the 5-minute chart here. And the red lines that you see there are the swing high and range high that we drew earlier. Now, I just want you to take a look at what you have here, so you get the idea. So, notice that you pushed up here early. By the way, this was the opening candle right here. But you pushed up early here, and note all of the wicks and the drag on this chart as you push towards the swing high. So, notice that once it pushed through the range high and swing high for the last 15 minutes, it's really been struggling trying to get through. And this candle right here almost broke the top of that range. So, all we really need to do here or look for here because we're at the range high and swing highs, we just need a break of this structure which right now would be about 53 510s. Somewhere in that neighborhood it would be. So, if this can kind of just break down there, just give us some hint of selling, we can go for the short. Now, if it just kind of remounts and pops through the high, I'm not looking to to trade this. It's too high for me because we're almost 400 points in the green here. So, I'm I'm I'm definitely not going to buy it here. We'll have to go find something else. So, I'll come back a little bit later. Let's see what what the ultimate outcome is. It will either break the high or low here. It's just a matter of waiting. Okay, we are now short the YM 53 502. It's right there on the screen. This happened pretty fast, but this is exactly what we talked about earlier. Once you break that structure, we should get a little bit of momentum. So, now that we are in this and earlier I said I want to keep the risk low. The risk can be right above the candle here. We can stop out. Oh, by the way, if you're new to trading, shorting means we are profiting if this thing goes lower. We broke our structure. Right there was the ideal entry on this. You could stop out above the high here, but let's go ahead and stay with a very tight risk. Now, let's talk about potential targets here. I would at least like for us to get somewhere down into this pivot here, which is around the 53 400 level. I think that's pretty good considering how high it is. Now, there's a good chance we can get somewhere down in here, but let's work with one level at a time. So, right now we are 53 502 short. This two contracts of the YM. So, as also said earlier, not using excessive leverage here. That's about a thousand dollars worth of margin for most brokerage accounts. We're keeping our risk around a hundred bucks and we're going to target that 500. Maybe we get a little bit more here, but look how aggressive this is. Now, one thing I want to note here is sometimes when they get really aggressive like this and start piling in some pretty heavy reds, they tend to snap back. So, I'm going to come back here in just a minute. We'll see exactly where we stand with this trade. All right, boys and girls, sorry for the quick update, but I am out of this. I promised you five, I gave you nine. My concern here is Well, first of all, we hit the first target and I decided let's just go ahead and take all of this because my concern is when you get this much of a rapid drop, the tendency is this thing wants to snap back. Uh the market's moving around awful violently here. It's very volatile lately. I do not want to give any of this back. Now, in this case, it it still may go lower. There's always different options. We could have covered one and put a stop there and see if we could get a little bit lower. That's definitely a possibility. But, I said five, I gave you nine. That's what we're going to stick with. Now, this low in the grid here, if you see something like this, this actually might be a buy somewhere between this level and this level. It wouldn't shock me at all if you kind of pulled down in here, based and remount. Cuz much like I said there earlier in the videos, is that when they break out, they often kind of pull real hard, then go after the break. I still wouldn't want to buy the breakout up 400 points, but it's not like it couldn't happen. So, anyway, that is the trade. The only thing you should take away from this here is what made this possible is the range high range low, excuse me, the range high and this the swing high. It's that you're backing yourself against a known seller. And when you do that, the trades have a better potential of working. Now, this is the exact same trade I took the other day, which was down low. It gapped down 380 points and bought into the range low and the swing low and played the bounce. This is where you should be most of the time. So, anyway, guys, I hope this video helped you out. Hope it made some sense to you and you see the value in it. Right before I sign off for today, I want to let you know if you're looking for some quality trading ideas, every week my wife and I put together a list that's called the Gains Guide. It has all the buy and sell points of all the best stocks and assets to trade for the week. It is free. The link is down there in the description. So, on that note, let me thank you for watching today's video. Take care and trade well. Cheers.