How to Get Profit Daily by Using a Day Trading Strategy

　　

As you probably already know, there are different types of traders with different characteristics and habits. While some trade longer than 24 hours, many prefer to close the trade within the day.

Traders as such are called Scalper traders and Day traders. If you think you have the characteristics of both, then you’ll find this trading strategy beneficial. 

Read on.

What is the 9/30 Trading Strategy?

Undeniably, the Moving Average (MA) is one of the most popular indicators out there, as traders and investors usually pay attention to moving averages within certain periods (9 MA, 20 MA, 30 MA, 50 MA, 100 MA, and 200 MA).

Even popular shows on Bloomberg TV and CNBC use the MA indicator to analyze stock price movements (or major stock indexes). 

But one trading strategy, based on the MA, takes a different approach. This technique generally makes decisions as per moving average crosses, aiming to take reversal signals.

The 9/30 trading strategy, devised by Mike Burns, was created to ride the trend by entering when the pullback occurs. As the saying goes: the trend is your friend. One of its best features is its simplicity. It is mechanical yet so easy to learn by anyone.

This strategy uses 2 Indicators:

1. Exponential Moving Average (EMA) with 9-period 

2. Weighted Moving Average (WMA) with 30-period 

9/30 strategy utilizes the space between the two Moving Averages after the occurrence of a cross between the two MAs as a Zone of Opportunity.

If you decide to use the 9/30 strategy, there are terms that you need to confirm before entering a position. This is the main rule that makes this trading strategy an extraordinary one.

These are the rules for BUY positions:

• 9-period EMA must be above 30-period WMA
• Both Moving Averages should separate from each other and form an Opportunity Zone (see chart below)
• The first candlestick that closes below the 9-period EMA will be the Trigger Candlestick to buy
• Place a pending BUY order above the highest point on the Triggered Candlestick

Note: The closing price of the triggered candlestick must close below the 9-EMA but remain above the 30-WMA for the signal to be considered valid.

This is the rule for SELL positions.

• EMA 9 should be below WMA 30
• Both Moving Averages should separate from each other and form an Opportunity Zone (see chart below)
• The first candlestick that closes above the 9th EMA will be the Trigger Candlestick to make a SELL entry
• Place a pending SELL order above the lowest point on the Triggered Candlestick.

Apart from requiring rules for opening positions, a strategy will not be complete if you don’t set rules for managing trading risks. It is crucial to determine how to place a stop loss to protect your capital and when it is time to exit and close the trade.

Risk Management

No matter how simple the 9/30 trading strategy is, you must have a set of trading rules before using it. So, let’s talk about Stop Loss and Take Profit strategies.

For a stop-loss strategy, you can use the highest/lowest price on the Trigger Candle as a place to put the stop-loss. Or, you can also set a Stop Loss a few pips above/below WMA 30.

To quote hedge fund billionaire Bruce Kovner:

“Place a Stop-Loss at a point, which, if that level is reached, would reasonably indicate that the trade you made was wrong, not at a point determined primarily by the maximum dollar amount you are willing to risk.”

In using the 9/30 strategy, you should never forget that the lower the Time-Frame you use, the more whips you will experience. Furthermore, a simple way to close your position with this strategy is to use WMA 30 as your trailing stop level.

This moving average exit strategy has two benefits:

• You don’t have to guess where you should put your Take Profit.
• You can continue to follow the trend until a reversal occurs.

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