I could go on in detail about why and what price spikes provide us short term trades with, and I will in a future article and video. Keeping things short and simple we will let the charts do the speaking for now because they paint a very clear picture of what they do and how quickly we should expect our profit targets to be reached.
The chart below shows the recent price spikes in the SPDR S&P 500 (NYSE:SPY). These spikes come and go, meaning some months we may only see a couple, and other months we see 10-20 of these incredible momentum trading opportunities.
As you can see below this is a 30 minute chart going back 4 trading sessions and we saw 4 price spikes with each reaching their price targets within 24 hours of the spike alert.
Types of Price Spikes I Focus On
I only focus on price spikes that take place outside of regular trading hours, so before 9:30am ET, and spike after 4:00pm ET.
And, the spike must be a minimum of 0.23% away from the current market price. Why 0.23%? Simple really. We need enough of a move to make the trade and risk worth our while to trade.
You may be saying to yourself that 0.23% is not much of a move… well you are correct, but that is why I focus on trading these moves with a high degree of leverage. I use the ES mini futures contract.
Recent Sample Spike Alert Trade Setup
See the sample Spike Alert that took place a couple days ago. It was small – only 0.43%, but amplifying the leverage can turn a small move into big profits. In this case, the spike alert generated a quick $425.50 profit within 24 hours, which is a 7.5% ROI base on one ES mini futures contract.
CONCLUDING THOUGHTS:
In short, spike alerts not only provide a steady stream of quick winning trades each month, but they also tell what the market bias/trend will likely be for that trading session.
If you day trade, then spike alerts are the ultimate tool for knowing which direction you should focus on trading that day, or at least until that price spike level has been reached.