Wednesday, January 30, 2008

Trading Plan- Residual Morning Momentum

This is my latest strategy and the one I've been using since the first few days of January 2008. I'm up 13% for Jan and have probably cut the amount of trades I do almost in half. This strategy requires extreme amount of patience and extreme discipline (still developing both of those myself)


The idea behind this strategy is that the stocks I pick I expect to continue the momentum from the day before and spill into the opening bell. I'm basically trading with the public because the stocks I trade I want to attract a lot of attention. I want there to be market orders to be placed at the open and have the previous days momentum continue into the morning, where I'll be waiting to ambush. I'll be in a trade for about 10 minutes at the most because the opening spike will probably fade away quickly once the public is in.


I don't have a set gain amount I'm looking for. Basically trading off of price action and when I feel is a good time to get out based on the amount of volume is being traded and how active the price is moving. I'm not looking to get out at the top but I am looking to get the bulk of the move if I feel it can continue to move.


Selling Criteria


edit: When determining when to exit a trade. What alerts to the possibility of selling is when the bottom of the most recent candle is starting to significantly run away from my 7 EMA I should look to either sell half or all of my shares. The gap between my EMA and the bottom of the candle creates a vacuum and the price will get sucked back down to the EMA. When it runs away from that value line, look to sell.


If the price is running tightly with the 7 EMA, you're in good shape, but as soon as it moves away and starts taking off. Be cautious.


 Stock Selection Criteria

I first go to the scan[T.T_EQ_S]![AS0,20,TV_GT_40000]![TV0_GT_AS1,20,TV*4]![TC0_GT_TC1] and I look at all the NASDAQ and NYSE stocks. Once I see what's available. I go to and enter in all the available stocks and see what I like. I'm looking for a stock that has shot up in price very high and backed with huge volume. Ideally there should be about 1-3 months of consolidation before the spike. The tighter and more consolidation the better!


Once I've picked out all the stocks I like (if there is any) then I put them in my watch list and look at them again with my chart setup (quote tracker). From here I'll narrow it down even more and get rid of the ones that don't look right.


I'll go to Google Finance and see if any of my watch list stocks are up after hours and get rid of the ones that are down big. Once I narrow it down again. I'll wait until pre market the next morning. I'll see what's stable and what's up pre market and get rid of the ones that are down. Once the opening bell rings it usually takes about 5 minutes to really see if the stock is going to take off or not. I'm looking for a stock that has a nice sized volume backed behind it and making higher lows.


That's all there is to it. It's pretty easy actually. Making money is easy, keeping it is the hard part. Constantly work on improving yourself every day. Doesn't matter how big or small the improvement is. Whatever it takes to get better bit by bit, every day. Whether it's a mental adjustment, a strategy tweak, skipping every other day to trade. Whatever, just improve!


Good luck.

Related Posts by Categories

Widget by Hoctro | Jack Book

No comments: