When trading the same vehicle day in and day out it is good to keep your setups consistent. For trading the QQQ I have only about 4 valid setups that I look for on an intraday basis. The 30-minute breakout trade is my bread and butter and generally the first trade of the day for me. Below is an explanation of this trade and how I use this range to generate a trade signal.

This setup relies on the high and low of the first 30 minutes of trading. This is a very high volume time of the day and the highs and lows made during this period have significance, in that a breakout occurs, once these levels are violated for the first time no matter what time of day it occurs.

This early 30 minute range is something we watch for the duration of the day and a trade is triggered on the first break of the high and/or low. The question that follows the break of this range is, do you play for continuation of the break or a reversal following the break? This means, once the break of this range occurs will you look to enter in the direction of the break, or wait for a chance to play the reversal of the break.

This is determined prior to the break occurring so you know what to look for once the break triggers. It is important to identify several things prior to the breakout to alert to whether you should play for continuation or reversal. There are several steps to identifying and playing this setup and I will list and discuss them.

Identifying the breakout- Things to look for prior to the break of the range:

• Prior days action, last 90 minutes of the day - If you notice a lot of consolidation in the final 60-90 minutes of the prior day be more apt to look for a continuation upon range break.
• Width of 30 minute range - If you see a wide range bar as the first 30-minute bar, which is larger than the average of prior 5-10 days then be on alert for possible reversal play and a narrow range bar will suggest likelihood of a continuation.
• Location of moving averages - Look for location of the 20 period ma's on 15,30 and 60 minute charts, if they are above the high or below the low be on alert for possible reversals if high is broken under major ma for example.

What you really want to see is a group of clear signals when taking this trade. A narrow early range, consolidation from prior days 14:30-16:00 period, and no moving averages in the way of a continuation move. If you get 2 out of 3 that is usually fine and when no clear signal is present a reversal of the break is more likely.

Now that we have discussed what to look for we can move on to how to play the trade.

Continuation - How to play for continuation on break of 30-minute range:

• Entry is taken above the high for longs and below the low for short entries. The stop should be at the other end of the range meaning to stop out a break of the other end of the range must occur. If this is too wide for your taste, you may move down 1 timeframe and make your stop at the low of the prior bar on the 15-minute chart for longs and above the prior 15-minute bar for shorts. If this were still too wide for you I would advise passing on the trade, altering the stops arbitrarily would affect the outcome.
• Once you have entered on the break, the target for the trade is approximately the same distance as the stop, to as much as 1.5 X the stop. If the range of the 30-minute bar was .20, then your target should be .20-.30 from entry. You can also use a trailing stop by moving your stop with the 15 minute bars and using a pivot to exit, I would only do this once the trade has gone at least .10 in your favor. Only move the stop to breakeven once the trade has gone in your favor at least 75% of the established target. If looking for .20 target, then move stop to B/E once it has traveled .15 for example. ( targets and stops based on 2002 average moves )

How to play the reversal - When to enter and exit on playing the reversal of the 30-minute breakout:

As discussed above, you would like to see clear signals when taking the trade in the direction of the breakout, but when little or no clear signals are present I look to play for a reversal of the breakout. Whether the early range is too wide, a strong move occurred into the close the prior day, or there are moving averages in the way, a reversal will not give you as much profit as a continuation most times, but is a very easy trade to enter and the stop will be very clear as well as profit target achievable. Below is a list of how to play the reversal.

• Wait for the 30-minute range to be established - Make sure the signal is as unclear as possible for chance of continuation ( signals discussed above )of the break because you are basically betting the continuation will fail.
• The 30-minute range needs to break by at least .05 for the reversal to become viable. If the range is 24.25 - 24.55 then you want the price to print above 24.59 to begin looking for a reversal.
• The entry is taken on the first 5-minute pivot following the break of the range. For a short, I am looking for a break of the low of the prior bar on the 5-minute chart ( a pivot ) to enter short, and will place a stop over the high of the day, vice versa for a long.
• The target is generally 1/2 of the move prior to the reversal, meaning look at the move that has occurred prior to the reversal setting up. You can look for a larger move by trailing the stop with the 15-minute chart using a pivot ( break of prior bar ) for exit.

This is generally my first trade the day and should be held for either stop or target and a typical holding period may last from 10 minutes to 2 hours.

Often time's news may affect this play, as it will cause the break of the range to occur. In this case, either pass on the trade or extend the range period to 35 minutes and make the break occur of the range created for at least 5 minutes after the news occurred. Best bet is pass on the trade.

A wide range bar in the first 30 minutes may also be the result of a possible trend day to come. Before playing for the reversal when this is your main factor please look at the daily chart and see if a trend day is likely. For example, the day after a NR7, or inside day. Also, look for a possible daily breakout from the day before that may encourage a trend day. Just something extra to be on alert for.

One final note on this play. Some days there will be two breaks of this range, meaning that early in the morning the high of the range may be violated while late in the day a move to the lows may cause a break of the low of this range to occur. In this case you would play the break of the low the same way you played the break of the high. If it was played as a reversal then play the low the same way. When the break occurs does not matter as far as time of the day. I would avoid breaks that occur after 15:30, as it does not allow enough time for the trade to play out.

Below is a picture of a reversal entry.

Below is a picture of a continuation entry.

You will notice the above charts are of the NQ or Nasdaq 100 e-mini futures. These setups are mirrored for that vehicle as it tracks the NDX 100 the same way as the QQQ.