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Wise Day Trading Strategy Version 2 (FREE)

The reproduction, redistribution, resale, or commercial use of this document is forbidden

without the permission of Wise Investor Club Corporation Inc.
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Part 1 – Introduction

This strategy is a DAY TRADING STRATEGY that uses several important indicators as a
basis to gauge trend and direction. This strategy is to be used on $SPY (SPDR 500 ETF) and
is to be applied on the 15-minute, 5-minute and 2-minute time frames.

Below contains the indicators used in the strategy:

1. VWAP (Volume Weighted Average Price):

What it does: VWAP is a dynamic intraday indicator that calculates the average price of an asset,
weighted by trading volume. It represents the average price at which the asset has traded
throughout the trading day, with more weight given to higher volume trades.

Calculations: VWAP is calculated as the sum of (Price x Volume) for each trade during the day,
divided by the total trading volume for the same period. Essentially, it provides a price level
where most of the trading activity has occurred.

2. 13 EMA (Exponential Moving Average):

What it does: The 13 EMA is a short-term moving average that provides a smoothed
representation of recent price data. It's often used to identify short-term trends and potential entry
and exit points.

Calculations: EMA assigns more weight to recent prices, making it respond more quickly to
price changes. It is calculated using the formula: EMA = (Price - EMA (previous day)) x
Multiplier + EMA (previous day). The multiplier is typically (2 / (n + 1)), where n is the EMA
length.

3. 20 EMA (Exponential Moving Average):

What it does: The 20 EMA is an intermediate term moving average that provides a smoothed
representation of price data over a slightly longer period compared to the 13 EMA. It helps
identify intermediate-term trends.

Calculations: Like the 13 EMA, the 20 EMA is calculated using the EMA formula, but it
considers a longer period.

4. Pre-Market Highs & Lows:

What they do: Pre-market high and low levels represent the highest and lowest prices an asset
reached during the pre-market trading session, which occurs before regular market hours. These
levels serve as key reference points and can influence intraday price movements.
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Calculations: These levels are determined based on the highest and lowest prices achieved in the
pre-market trading period before the regular market opens. They can vary each day based on
trading activity.

5. Previous Day Highs & Lows:

What they do: The previous day's high and low levels represent the highest and lowest prices an
asset reached during the last regular trading session. They are significant support and resistance
levels that influence intraday price movements.

Calculations: These levels are determined based on the highest and lowest prices achieved during
the previous trading day. They serve as key reference points for intraday traders and are based on
historical data.

6. Pivot Levels (Demand & Supply):

What they do: Pivot Levels on a price chart are areas where significant buying or selling activity
has occurred, resulting in concentrated levels of liquidity. Traders identify these zones by
marking regions with notable market reactions, swing highs and lows, and often use volume data
to pinpoint areas of high trading activity. These zones can act as potential support or resistance
levels and are monitored for potential trading opportunities.

Calculations: These levels are manually added (Wise Investor Club will release an indicator that
automatically updates these levels for VIP members ONLY).

Note:

Kindly be advised that an in-depth educational recorded video of '6. Pivot Levels (Demand &
Supply)' is forthcoming for our esteemed VIP members. Regrettably, this detailed explanation
will not be accessible to non-VIP members; however, they are welcome to avail themselves of
this accompanying PDF download.
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Part 2 – High Time Frame Analysis

Part A – Macro-Trend Analysis

The high time frame (HTF) analysis is conducted to determine significant areas of confluence on
price. To keep it short and simple, the focus is on the macro-trend (i.e., is price making higher
highs, higher lows, lower highs, or lower lows). To determine this, we will look at the daily chart
of $SPY and analyze it below.

As you can see, clearly $SPY is trending down, which means that sellers are in control and
bidding down the price of $SPY. This is evident by the formation of lower lows (LL) and lower
highs (LH). An uptrend would be categorized by a formation of higher highs (HH) and higher
lows (HL).

Part B – Pivot Points (Support/Resistance)

There is a saying in trading which states, “old resistances become new supports and old supports
become new resistances”. This methodology can also be applied to drawing pivot points. A
‘good’ pivot point will be in an area price struggled to break above/below, coupled with many
wicks, and then re-tested the area as a support/resistance. Let’s look at an example of a good
pivot point on the 15-minute time frame on $SPY.
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Look how price respects this level! Looking at the 30-minute time frame, we can see that nearly
a month later, $SPY retested the pivot point we drew!
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As stated above, an area for a good pivot point must be an area of ‘congestion’ where price
previously struggled to break through. If you do these enough times on high time frames, you
will get a chart that looks something like the one below, with well respected- pivot areas for you
to trade.

We now have ‘ranges’ to trade for $SPY. By coupling these levels with indicators, such as the 7,
13, 20 EMA, VWAP, technical patterns and volume, we have a clear blueprint for identifying
trading opportunities. Combining these all together creates the premise of this strategy.

Part 3 – Strategy Walk Through

The strategy to buy and sell is simple, we first start with by looking at the 15-minute time frame
and identify the trend on a weekly basis. The key question we need to ask ourselves “is price
making higher highs, higher lows, lower highs, or lower lows”? If price is making higher highs,
our bias should be to go long (buy calls) as buyers are in control and driving the price up. If price
is making lower lows, our bias should be to go short (buy puts) as sellers are in control and
driving the price down. Below is an example of $SPY making higher highs (HH), which will
lead our bias to play calls intra-day. Also, notice the well-respected ascending trend-line acting
as a support for price (below).
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Next, we look at the 5-minute time frame and analyze the previous day(s) price action, taking
note of key levels, such as the pre-market highs, pre-market lows, previous day’s highs, and
previous day`s lows. Once this is done, we now have selected ranges for our current trading day.
We know where price is likely to reverse, reject, bounce and how it will react. Below is an
example of Wednesday, November 22, 2023. Using the Wise Levels indicator on TradingView
(available for VIP members ONLY), we have all these levels plotted for us automatically. Take
note of how price bounced off the previous day’s high. It is best to never enter right in the
morning as implied volatility (IV) is the highest which can be bad for options holders as
volatility accelerates decay of options contracts and makes price unpredictable. It is best to wait
for a clear and established trend before taking trades.
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On this time frame (5 minute), we need to identify the following:

1) Is Price > or < VWAP?

2) Is the 20 EMA > or < VWAP?
2) Where are the nearest pivot levels, resistances, supports or 200 EMA?

If Price > VWAP and the 20 EMA > VWAP, we can reasonably assume that the bulls (buyers)
are in control and to look for calls. If Price < VWAP and the 20 EMA < VWAP, we can
reasonably assume that the bears (sellers) are in control and to look for puts. We always should
take note of the nearest pivot levels, supports, resistances and 200 EMA as these areas are good
profit taking areas or entry areas, depending on how price reacts to them.

Below, we can see an example of the 20 EMA crossing above VWAP, indicating buyers pushing
price up.

Take note of how price reacts when this cross over occurs below. This criterion is not the end
all be all as we still need to look at the 2-minute time frame to optimize our entries.

The second element to this strategy is using the 2-minute time frame to gauge our entry and exit
positions. The 2-minute time is also used to identify any technical patterns forming that are not
obvious on the 5-minute time frame.

On this time frame (2 minute), we need to identify the following:

1) What technical patterns are forming and what does volume-price analysis tell us?
2) Where are the nearest pivot levels?
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2) Is price > VWAP?

2) Is the 7 EMA & 20 EMA > VWAP?
3) Is the 7 EMA > or < 20 EMA?

If Price > VWAP, 7 EMA > 20 EMA and the 7 EMA & 20 EMA > VWAP, we can reasonably
assume that the bulls (buyers) are in control and to look for calls. If Price < VWAP, 7 EMA <
20 EMA and the 7 EMA & 20 EMA < VWAP we can reasonably assume that the bears
(sellers) are in control and to look for puts. The technical patterns also tell us if price will
squeeze, which may foreshadow a volume spike.

It is imperative that the 7 EMA > 20 EMA and both moving averages are above VWAP if we are
looking to go long (calls) because this indicates the start of a small but quick uptrend.

Below is an example of how quickly price popped out of an ascending triangle. This would have
been a great area to take calls.

And on the 5-minute time frame, the 20 EMA > VWAP which lines up with the 2-minute time
frame. This area would have been good to scalp calls, preferably 1 – 2 days to expiry as we are
only looking for a short but swift movement up. Buying calls this close to expiry allows us to get
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cheaper contract prices and capitalize on the volatility of price (which can be use in our favour)
to lever our gains.
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Part 4 – Example
The example below is an actual excerpt from Wise Investor Club! This alert was sent out to our
members with entry and exit alerts, as well as take profit and stop loss levels!

First, we start looking on the 15 Minute Time Frame and determine which direction price is
trending; up, down, or sideways? Looking at the chart below, we can see price making a clear
formation of higher highs and higher lows while respecting the trend line. No volume spikes
occurred with any major reversals which shows that bears are not able to drive the price down.
From this, we can safely conclude that price is bullish on the 15-minute chart.

Next, we need to analyze the major pivot areas. The idea behind this is to analyze which areas
price may reverse and turn against us. These areas often serve as great profit-taking or entry
confirmation levels. Using the Wise Pivot Levels Indicator, which automatically plots key pivot
areas on any time frame, we can see that $455.12 was a crucial area to break through (11/20 high
of day). See the chart below.
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Once we analyzed potential areas where price is most likely to pivot, a pre-market plan was
posted to our discord server by Wise Investor outlining the exact contracts we would take with
entry criteria and profit targets. Note, that the pre-market high on this day (11/20) was at $455.17
and the pivot area is at $455.12. The initial profit target area (not pictured) sits at $456.82.

At 11:44 AM on 11/20, Wise Investor posted an alert to take the SPY $455 11/24 Calls. Below is
the official alert that was sent to our group (pictured below on the 5-minute chart). Let`s find out
why calls were a good idea and how they did below!

On the 5-minute chart, price was trending back up from an initial morning sell off. Although the
20 EMA < VWAP in this case, we got a big green candle with a close above the $455.12 pivot
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area which signified a strong rally was coming. Ideally, wait for the 20 EMA to cross above
VWAP.

The reason we entered early was because we anticipated strong buying volume to come in, which
was the case in the previous trading days of that week. Price had broken out of a bull flag and re-
tested it as support. Knowing this and seeing the gap of VWAP and the 20 EMA get closer, we
took a small risk entering early. The math was simply on our side, although nothing is 100%
guaranteed, we placed a stop-loss to limit any potential losses. We always suggest looking at
price action before entering a trade using this strategy. Sometimes it makes sense to jump in
early because of the risk to reward payoff of the trade. A stop-loss should always be used.
Volume remained relatively low up until this point for the bulls and price was still able to make
its way back up from an initial morning sell off. A stop loss under the 20 EMA was placed for
risk management. For the purposes of this strategy, consider entering when the 20 EMA >
VWAP only!
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On the 2-minute chart, the 7 EMA had crossed above the 20 EMA, and both averages were
above VWAP, which indicates an incoming bull rally. Price respected the trend line by breaking
above it, re-testing it as support, and rallying off it. At this point in time, it is very likely price
continues higher. The 5-minute time frame has a bullish 20 EMA and VWAP cross and the 2-
minute time frame has both the 7 and 20 EMA bullish cross above VWAP.

Now that we officially entered SPY 455 11/24 Calls, let’s see how the trade went below.

The trade ended in a net profit of 12% in our favor! The reason we exited the trade was because
price was gapping up very far from the 7 EMA as well as approaching a key pivot level. If we
had held these calls, we would have ended up losing the trade. The purpose of this strategy is to
be in and out while being calculated about our risk. No strategy is perfect, and losses do happen,
however, if you can limit them or manage them to be small, you can become a consistently
profitable trader.
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If we had held on to the calls out of greed, we would have given away all our gains and suffered
an unnecessary loss. On the 2-minute chart, sell offs happen quick. Any gains we have we should
be locking in. Take note of how fast the trend can change on the 2-minute chart.