The essence of this article is to show a few setups that could be used to
quickly capture two- to three-point trades in the S&P500 futures. Short
term 'scalping' and 'day-trading' is most effective in markets with high
volume and high volatility. Execution skills, as well as knowing when to
use market versus limit orders, can significantly impact your bottom line.
Money management also plays a critical role in day-trading success due to
the higher leverage normally employed. Stop methodologies can be both price
and time based. Another important aspect to day-trading success is
determining whether the market is in a consolidating, choppy mode, or
whether it is in a 'trend day' mode, where counter trend trades must be
avoided. Narrowing of ranges and declining volatility often precede trend
days. Market internals such as the NYSE 'tick' and the Dow 'tiki' show the
net number of stocks trading on either an up or down price change. These
indicators serves as confirmatory indications of the market's strength or
weakness, and they also help traders identify short-term overbought and
oversold conditions. The 'tick' is also useful for identifying intermediate
term 'bases.' Another tool available to the stock index day-trader is the
relationship between the futures market and related indexes, such as the
S&P500 versus the Nasdaq or Dow. Often turning points in one index are
marked by a failure in another index to make a new high or low at the same
time. Chart patterns based on simple price formations are also very useful.

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