Day Trading Strategies - Index Spring

​This is essentially the same format as the Spring setups in our Swing Trading for individual equities. Some days you’ll see five clean opportunities, other days none at all. Occasionally you’ll hit a trade that runs 5–10x your risk, and sometimes you’ll take two or three small losses in a row. That’s normal.

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Remember that markets are fractal which means it's doesn't necessary matter what time frame or market you're usiing. What matters is not the outcome of any single trade, but whether you:

• manage risk properly

• execute consistently

• and understand the edge behind the setup

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Over time, this can be a very attractive risk-reward framework for traders who have the time and focus to be at the screen. Here's a step by step walk through:

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Step 1: Context – Price Approaches a Key Level

In the left-hand side of the chart, price is trending higher and begins to approach a clear intraday resistance area.

You’ll notice:

• Multiple candles pushing into the same zone

• Upper wicks forming repeatedly, showing price rejection

• Buyers attempting to push higher, but struggling to hold above the level

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This is important. Fake breakouts tend to work best where other traders expect a breakout.

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Step 2: The Fake Breakout (The “Spring”)

Eventually, price pokes above the level.

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This is the moment many breakout traders enter long — but crucially:

• The breakout fails almost immediately

• Price closes back inside the prior range

• This is your tell

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That failure is the spring. The market briefly moves higher to:

• trigger breakout entries

• trigger buy-stop liquidity

• then reverses once that liquidity is filled

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The breakout itself isn’t the trade, the failure is. So then we move to the entry technique. 

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Step 3: Entry – Waiting for Confirmation

Rather than guessing the top, the entry comes after price re-enters the range.

In this example:

• We enter once price breaks below the first candle that closed back inside the range

• We must see the move back into the range within three price candles. The first candle is the one that closes above the range. If a second candle forms that doesn't break back in, you can use the third candle. Don't use the fourth candle - it's much less reliable and tends to mean a trend continuation. 

• The move back into the range confirms the fake breakout has failed

• Momentum has shifted back in favour of the short in the above example. 

• Entry for the FTSE 100 trade occurs 1 point below of the confirmation candle (including wicks).

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This approach avoids emotional entries and keeps execution rule-based.

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Step 4: Risk Management – Defined and Controlled

Risk is clearly defined:

• Stop sits above the fake breakout high

• This keeps risk tight and measurable

• Minimum 1:1 risk-reward is targeted

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Some trades will stop out — that’s part of the game. The goal is not to avoid losses, but to ensure losses stay small.

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Step 5: Trade Management – Letting Winners Run

Once price moves in your favour:

• When the trade reaches 1x your risk, take half and let the rest run

• The 21 EMA is used as a trailing stop

• As long as price stays below the EMA, the trade stays on

• This allows you to capture the occasional outsized move

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Most trades will be modest winners or small losers. A small number will do the heavy lifting for the P&L. It's very much like the Pareto Rule or often know as the 80/20 rule. 20% of your trades will result in 80% of your returns. So if you only get decent size profits on 20% of your trades, you have to be patient. That's so overlooked in trading. If you lose 4 times in a row and then don't continue with the system, because you think the edge is lost, or the market just isn't right, YOU LOSE. It would be the 5th trade that turns into a 10x and pays for all those losses and more. That's just probabilities and being able to follow your system. 

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Expectations (This Part Matters)

This setup works because it’s:

• frequent

• liquid

• asymmetric

But it’s not magic.

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You should expect:

• strings of small losses

• days with no valid setups

• emotional pressure to overtrade

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What makes it viable over time is:

• disciplined risk management

• consistency

• and patience

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If you take every valid setup, size correctly, and avoid forcing trades, the edge plays out over a large sample.

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Final Thought

This is a professional-style intraday setup — not because it wins all the time, but because:

• risk is always known

• reward can be multiple times risk

• and execution is rule-based

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For traders with the time to focus and the discipline to manage risk, the spring / fake breakout is a powerful addition to a day-trading playbook. But remember, you can use this technique across all time frames and markets. See a live example from our Ideas Section by clicking the button below.