TRADING PROCESS DETAILS

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The trading process starts in premarket. It is best to set your key levels before the opening bell. I set the premarket high and premarket low by drawing a horizontal line at each of these levels. I then set the previous day’s high and low. After this, I look for possible ranges outside of premarket levels. I do this by looking for 30 minute double tops (supply zones) and double bottoms (demand zones). As you will see, these levels will give you key targets throughout most trading days. These levels will act as support and resistance throughout the trading day. These levels should give a good indication of what could potentially happen at these levels. 

The 9/20 crossover strategy utilizes the 9 and 20 simple moving averages to identify trading signals. Within this strategy, there are four distinct setups: Aggressive, Fishtail, Double Cross, and Conservative.

The Aggressive setup aims for high potential profit but also carries the highest risk. This setup involves initiating a trade before the price reaches either the 9 or 20 simple moving average. Due to this early entry, careful stop-loss placement is crucial.

The Aggressive setup is defined as follows:

• Call Entry: Initiate a call option directly at a major support level, with the current price action below both the 9 and 20 simple moving averages.
• Put Entry: Initiate a put option directly at a major resistance level, with the current price action above both the 9 and 20 simple moving averages.

When trading the Aggressive setup, monitor the price action relative to the 9 and 20 simple moving averages. These moving averages can often act as resistance when the price is below them and as support when the price is above them.

It is critical to only execute Aggressive trades at established major levels. Major levels are defined as:

• Premarket      Low
• Premarket      High
• 30-minute      Demand Zones
• 30-minute      Supply Zones

For the Aggressive setup, place your stop-loss order directly at the major level from which the trade was initiated.

The Fishtail strategy is characterized by initiating trades within the space between the 9 and 20 simple moving averages. This "fishtail" area, resembling a fish's tail, presents the second-highest potential for profit and the second-highest level of risk within the 9/20 strategy.

This setup involves entering a trade after the price action has crossed the 9 simple moving average but before it reaches the 20 simple moving average.

When utilizing the Fishtail setup, closely observe how the price action interacts with the 20 simple moving average. The 20 SMA often acts as a support level when the price is above it and as a resistance level when the price is below it.

Similar to the Aggressive strategy, it is crucial to only initiate Fishtail trades directly from established major levels(Premarket Low, Premarket High, 30-minute Demand Zones, and 30-minute Supply Zones).

The Double Cross setup is characterized by a specific candlestick pattern relative to the 9 and 20 simple moving averages.

• A      bullish Double Cross occurs when a candle opens below the 9 SMA      and closes above the 20 SMA.
• A      bearish Double Cross occurs when a candle opens above the 9 SMA      and closes below the 20 SMA.

When these Double Cross patterns occur at major levels (Premarket Low, Premarket High, 30-minute Demand Zones, and 30-minute Supply Zones), it presents a high-probability trading opportunity.

The high probability of this setup stems from the fact that the price action on a single candle has already broken through the major level, the 9 SMA, and the 20 SMA. By breaching these three levels simultaneously, the likelihood of the price continuing in the direction of the breakout is increased.

In this scenario, the 9 and 20 simple moving averages are less of an immediate concern as these levels have already been overcome. While the potential profit for the Double Cross setup may not be as high as the Aggressive or Fishtail strategies, the higher probability of success often leads to a greater expected value for this particular play.

The final setup within the 9/20 trading strategy is the Conservative play. This tactic emphasizes waiting for confirmation of the trend direction based on the crossover of the 9 and 20 simple moving averages.

• Call Entry (Conservative): Initiate a call option only after the 9 simple moving average crosses above the 20 simple moving average. This upward crossover is the signal to enter a long position.
• Put Entry (Conservative): Initiate a put option only after the 9 simple moving average crosses below the 20 simple moving average. This downward crossover is the signal to enter a short position.

While the Conservative setup is the most cautious approach within the 9/20 strategy, its expected value is generally lower compared to the other setups. This is because the entry signal occurs after the initial price movement, potentially reducing the profit potential of the trade.