Intraday trading, leverage, and opportunity

When analyzing historical price action on securities and ETFs for my trading style, I have always classified the data in different time frames. Basically, you have full market cycle. The full market cycle is the extension and compensation of an entire cycle, regardless of time frame. If an issue starts to extend intraday and does not compensate by the close, an opening gap can further extend the issue. The issue then continues to extend until compensated. Those who fade these extensions are liquidity providers. This same market behavior happens intraday on a daily basis. The launches of large market cycles very often begin with gaps, where tradable price movement extends beyond a reasonable level to average down. This is a launch, and market cycle extensions can run 30%ish now on ETF primaries, and 80%ish on volatile securities. This can make for a rather long trade. Intraday launches are often compensated the same day, and this is the basis for this post. When evaluating information on a day to day basis gaps are discarded. Each day begins at 9:30 and ends at 4:00, this is the data chuck to be analyzed. Each day starts a new day and disregards any historic price movement before the present time. I have been, for quite some time, developing an intraday technique which mimics my normal trade types. The technique is taking advantage of much smaller increments of price movement. This typically rules out options as a vehicle of trade for this technique. When capturing a smaller increment of price movement the spread has a much larger impact on profit margins. This requires the use of stock with tight spreads. Of course, using stock totally removes the effect of all greeks also. Trading stock itself also allows for 4x intraday buying power with Think Or Swim and most brokers.

The intraday trading technique will be based off the same criteria as my normal way of trade. It will consist of fading the major intraday move by averaging into the position, thus providing short term liquidity. Each position will be flat at the end of the day. If the extension has not compensated by the close (not typical), I will exit at that point. The largest loss and profit range will remain consistent from day to day, the only thing which would vary this is changing of entry and cover parameters. For instance, if I am playing QQQQ entry at 0.5% extension and covering up to 2.0% extension, while utilizing a 20 tier entry with a 120% position multiplier, the max loss on the day would occur if stopped out at 2.01% for 0.34% loss on buying power used (4x that of actual cash (1.36%). Profit range would vary from 0.01% to 0.45% (4x that when compared to actual capital). The probability for a successful trade is up near the 90% range.

Anyone looking to work with me on this trade technique, let me know.