First Red Day Trading Strategy [Day Trading Setup]

Summary

In this video, Cameron introduces an exciting giveaway for a 10-week free mentorship to 10 lucky subscribers. He then dives into the concept of 'first red days' in trading, explaining how to identify them and avoid false signals. Through various examples, he highlights key characteristics of a first red day, including price movements and consolidation patterns, while offering insights on invalidating signals. Cameron also discusses trading strategies, time of day considerations, and the impact of market cycles, emphasizing the importance of understanding trends and price actions to make informed trading decisions.

Takeaways

• 😀 A special mentorship opportunity is offered for 10 people, with free 10-week mentorship if the channel reaches 10,000 subscribers before January 1st.
• 😀 The video discusses strategies for identifying and trading 'first red days' in the market, focusing on how to avoid false signals.
• 😀 A 'first red day' typically follows a strong uptrend with multiple days of bullish movement, and is characterized by a price that trades higher before closing below the opening price.
• 😀 A first red day can signal the start of a three-day cycle, where day one sees a breakout followed by a pullback and day two often trends in the opposite direction.
• 😀 The importance of drawing 'end-of-day consolidation' levels (the last swing high and low) is emphasized to gauge potential market movements.
• 😀 The strategy relies on recognizing 'breakout-pullback-continuation' patterns, where a failed breakout signals potential weakness and trend reversal.
• 😀 An ideal first red day example involves two to three days of upward price movement followed by a red day, which closes lower than the open, signaling a potential market reversal.
• 😀 Market conditions such as news, the day of the week (e.g., Mondays), and the broader three-week cycle should be considered when evaluating a first red day signal.
• 😀 Invalidating a first red day signal may occur if a breakout fails, or if the market doesn't respect previous highs and lows, especially when there's significant volume or news influencing price.
• 😀 The script stresses the importance of waiting for the correct market conditions, such as consolidation, breakout, and reversal patterns, before making a trade decision on a first red day.

Q & A

What is the main goal Cameron has set for his YouTube channel?

Cameron aims to reach 10,000 subscribers by January 1st of next year. If this goal is achieved, he will select 10 subscribers for a 10-week free mentorship program, which will include pre-market and post-market analysis, a weekly review, and daily assistance with trading.

What does a 'first red day' mean in trading?

A 'first red day' occurs after multiple days of upward price movement, where the market trades higher and then closes lower, under the opening price. It marks a potential shift in trend and is considered part of a three-day cycle, with the first red day being the start of that cycle.

How does Cameron define an ideal first red day setup?

An ideal first red day setup includes a strong pump day followed by a price movement that breaks higher but then reverses to close below the open. This indicates immediate market weakness and is followed by a trend continuation in the opposite direction during the subsequent days.

What is the significance of 'end of day consolidation' in the trading strategy?

End of day consolidation refers to the process of marking the last swing high and swing low of the New York session. This helps identify key levels for potential breakout or breakdown, providing insight into the market’s direction for the following trading sessions.

How do breakout pullbacks work in the context of first red day trading?

A breakout pullback occurs when price breaks through a key level, pulls back slightly, and then continues in the direction of the breakout. In the context of a first red day, if the market fails to continue upwards after breaking a key level, it signals weakness and the beginning of a downtrend.

What does Cameron mean by 'trap volume' and how does it affect the market?

Trap volume refers to volume that occurs when the market moves in one direction and then reverses, trapping traders who took positions in the wrong direction. This often leads to a shift in market sentiment, as trapped traders are forced to exit their positions, creating momentum in the opposite direction.

What role does 'Monday trading' play in Cameron's strategy?

Monday trading is important because if the previous week's high or low hasn't been taken out yet, it could indicate that the market is reaching for liquidity. Cameron emphasizes that if the market is making a strong unidirectional move on Monday without taking out these key levels, traders should either trade in the direction of the move or avoid trading altogether.

How does Cameron use previous week's high and low to inform his trades?

Cameron uses the previous week's high and low as key reference levels. If the market hasn't reached these levels, he considers it a signal for possible future movements. A breakout beyond these levels can trigger significant price action, while failure to reach them might indicate a consolidation phase.

What is the relationship between the 'three-day cycle' and the first red day?

The three-day cycle refers to a market pattern where the first red day marks the beginning of the cycle, followed by a trend day (day two) and another move that could either continue the trend or reverse. The first red day sets the tone for the cycle, indicating a possible change in direction after a strong uptrend.

What mistakes should traders avoid when interpreting a first red day?

Traders should avoid getting caught in false signals during a first red day. For example, if a breakout fails early in the day and the market goes into consolidation, it could indicate that the trend is not continuing as expected. Additionally, trading without considering time, market conditions, and key levels can lead to invalid signals and poor trades.