Index 6-10 Strategy/Case Study
Have you been thinking about trading indices but do not know where to start? You are in the right place. We have created a simple but effective approach when it comes to trading indices. Once you have finished reading this strategy, make sure to dedicate a lot of time to back tests and practice in the live market even on a demo account because that’s the only way you’re gonna get better.
This is not really a tutorial on how to trade indices. The main objective of this lesson is to give you an insight on how indices move on a daily basis. Specifically during the first few hours of the New York session. We will focus on the US30 or Dow Jones Index.
The strategy that we provide is just a guideline, the past performance doesn’t guarantee the future results. Like any other strategy, trading indices are very risky. The market doesn’t have to follow your analysis. Your goal as a trader is to react defensively by managing your risk and respecting your stop-loss. Remember, you can always start fresh the next day.
Notice: Make sure you have read the previous learning materials before going over this pdf. Go back to the Intermediate and Advanced strategy if you need to.
What is Market Index/Indices?
A market index is a portfolio of investment holdings that represents a segment of the stock market. The overall evaluation of the index comes from the price of each underlying asset. The three most popular and well known stock indexes for tracking the performance of the U.S. market are the US30, S&P500, and NAS100 or Nasdaq Composite Index. We will focus more on US30.
IMPORTANT: What is the SECRET?
Sometimes, it’s not about HOW you trade but knowing WHEN to trade. You may have the best strategy in the world but if you are trading at the wrong time/ranging market you will most likely lose money. Why? Because there isn’t enough volume to move the price in a clear direction.
The U.S. session or what others refer to as the New York session begins at 6:00 AM MST. This is the time when you should get ready and keep your eye on indices. But most of the movement happens when the U.S. stock market opens at 7:30 AM MST. We will focus during the first 4 hours of the New York session from 6:00 AM MST to 10:00 AM MST.
Which Strategy works the best?
When trading with indicators, it’s best to have more confirmation. So, we recommend using the advanced strategy which is the entire Ichimoku Cloud system combined with the Noble Impulse indicator.
We will not go in depth about the advanced strategy in this pdf, you can go back to the advanced strategy section for more details. However, we will show a chart example from 6:00 AM MST to 10:00 AM MST using the advanced strategy.
Recommended Sensitivity Settings
Since indices are very volatile. We recommend using medium or low sensitivity settings. If you need more details about adjusting sensitivity settings, look for module sensitivity settings. Low sensitivity settings seems to show the best results when trading US30
Sensitivity #1 30
Sensitivity #2 15
Low Sensitivity (Works best for this strategy)
Sensitivity #1 50
Sensitivity # 2 15
For the examples below, we will be using the Low sensitivity settings
For this strategy, we won’t be holding any trades past the end of the day. Because our goal is to capture the market movement from 6:00 AM MST to 10:00 AM MST. Our recommended timeframe is anywhere from 1-Minute to 15-Minute whichever timeframe you’re comfortable with.
For the examples below, we will be using the 5-Minute timeframe. Based on our observation, this timeframe offers the best overall performance for this strategy.
Update: The 3-Minute timeframe works great for this strategy as well.
Few chart examples of US30 movement during the New York session between 6:00 AM MST to 10:00 AM MST.
Yellow line represents 7:30 AM MST or U.S. stock market open. This is the time when more trading volume comes in. This is very important to keep in mind, because you will see big candles that can possibly go against you. So, just monitor your trades if you entered before 7:30 AM MST.
This is one of the best types of signals you will ever get on US30 during the New York session. A good push to the upside that continues throughout the end of the day.
NOTE: Situations like this are the ideal setup for this strategy. Since we want to capitalize during the first few hours of the New York session. You want to see a ranging market or an accumulation period during the London session or couple of hours before the New York session starts. The outcome is most likely to be an aggressive trend during the NY session/U.S. market opens just like the example below.
You will also see a scenario like this. A valid signal that shows a consistent trend from the London session that continues throughout the end of the day.
Note: Also, another scenario would be. When there is a huge movement during the London session right before approaching New York. You may experience choppy movement in the New York session.
Like any other financial asset in the market, US30 does consolidate in order to keep breaking highs and lows. This is the typical scenario you will see when you choose to trade with this strategy. Even if you get a valid signal, you will experience a very choppy market.
This consolidation phase normally happens when there’s a huge movement during the Asian and London session.
Clearly, trading US30 isn’t all about strategy. Being able to trade at the right time will give you a huge advantage so you can maximize your gains and limit your risk.
These examples are just references. The past performance doesn’t guarantee the future results.
This type of US30 movement happens mostly everyday but this is not always the case. Make sure to pick your trades and do not FOMO or enter aggressively. Follow the rules of the advanced strategy to increase your chance of success. Trading is a probability game, even if you lose multiple trades but your winning trades always outweigh your losses. You will be profitable in the long run.
Reminder: The strategy that we provide is just a guideline. The past performance doesn’t guarantee the future results. The market doesn’t have to follow your analysis. Your goal as a trader is to react defensively by managing your risk and respecting your stop-loss.
Few points to keep in mind:
- Only trade between 6:00 AM MST to 10:00 AM MST to achieve best results.
- It’s best to have more confirmation. So, we recommend using the advanced strategy.
- Low sensitivity seems to provide the best overall results. Sensitivity #1 = 50, Sensitivity #2 = 15
- Recommended timeframe is anywhere from 1-Minute to 15-Minute. Based on our observation, the 5-Minute timeframe offers the best overall performance that suits this strategy. Update: The 3-Minute timeframe works great for this strategy as well.
- Consolidation normally happens when there’s a huge movement during the Asian and London session.
- NAS100 and SPX500 are also another great alternative that offers similar movement patterns.
You can also use this approach on currency pairs, gold, and stocks. Just focus on the first few hours of its most active session.
For those of you that are taking the free trial. If you see value in this, you have a lifetime to master this strategy.
You have finished the Index Case Study. We really hope that you learn something new today. Once again, be sure to dedicate a lot of time to back tests and practice in the live market even on a demo account. From here on out, it’s all up to you.
We are always looking for ways to improve our strategy. If you feel like we’re missing something, feel free to reach out to us via facebook or email to let us know.
If you need any assistance or have any questions, please reach out to us via email on our website under the contact us section or the email down below. Noble Impulse offers 24/7 support. But due to high traffic, it may take a few hours for our support team to respond. We will do our best to get back to you in a timely manner.
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