Over the past couple of years I have been conducting countless webinars. In many webinars I presented a simple day trading strategy based on Bollinger Bands and MACD.

Many traders asked me if they can watch me trading this strategy LIVE, and therefore we opened our Live Day Trading Room two weeks ago. We have been trading this strategy every day, and haven't had a losing day thus far. As one of the traders in the room said: "This strategy is a money-making machine!"

Today one trader in the chat asked me: "How do you come up with these trading strategies?"

Actually, I am doing exactly the same things that I have been teaching for years:

1. Learn to identify the direction of the market and follow it, i.e. BUY when the market is going up and SELL when the market is going down.
2. Always know when to exit a trade, i.e. place a stop loss and a profit target after entering a trade. 
3. If you are using a trend-following strategy, find a trending market.

Obviously there are many ways to identify the direction of the market:

You can use chart pattern recognition like Trend Lines, Head-and-Shoulder Formations, Flags, Pennants and so on. Other chart pattern techniques include candlestick formations like Hammers, Dojis, Dark Cloud Covers (I am not making this up!), Morning and Evening Stars and others.

Or you can use indicators like Moving Averages, Parabolics, MACD, Bollinger Bands and hundreds of others. 

All these tools are crutches that should help you to identify the direction of the market. Once you know the direction of the market, you simply follow it. Jesse Livermore said it more than 100 years ago: "Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend."

As soon as you are in a trade, you place a stop loss order and a profit target. Make sure that your profit target is larger than your stop loss, because then you will even make money if you just achieve a 50% winning percentage. And you should be able to do better.

Oh, and not to forget: Watch multiple markets and look for a trending market. That's where the money is. If the e-minis are not doing anything, check out the currencies. Or the grains. Or oil. Or gold. These days we have more electronic markets than ever, and you shouldn't have a problem finding a trending market.

So how do I come up with these trading strategies? - I simply apply the principles above. Nothing magic about it. And in my webinars I show you the exact steps how to do it.

I know that many people like to make it more complicated than it actually is. Keep it simple!

And if you are interested in a day trading strategy, just watch this video:
http://www.rockwelltrading.com/free-day-trading-strategy

Enjoy your day!