My thoughts on day trading

[Slyjoker]

I wasn't quite sure where to put this so I thought this subforum would work. Anyway, I have been racking up hundreds of hours of screen time and I have been seeing patterns in the market. I'm not saying I can predict anything but there are certain indications that the market wants to move in one direction or another. For instance, when I watch a candle chart and I start to see wicks in either direction, that indicates that the other side is starting to fight back. It is simply an indication and not a confirmation.

Support and resistance levels are huge for stocks. A lot of times, the Simple Moving Average acts as support or resistance. Also, previous days supports can help one figure out where a move is most likely to go. In day trading this is very important as you want to take money off the table before these points. This is because everyone else sees these points and will rush to grab the cash and sometimes that can reverse the move on the short term.

One of my news thoughts on how to day trade has to do with what stock to pick. I have been struggling to find solid plays but I think that will soon come to an end. I have a theory that successful day traders sometimes play many different sectors of the day. I think that if I were to watch as many sectors as possible, I could spot relative strength. If I plan ahead and do my homework on each stock that I might play, I can quickly look at my notes and see what I have said about the daily situation and look at key support resistance levels. From there, I simply buy on a pullback or when it is close to moving averages and set my stops slightly under the moving averages.

The reason I would set my stops under the MA is because if a stock is running up and it breaks moving averages, it has been my experience that the move is failing. Now, this doesn't mean it will for sure (it could be a shake out) but it helps to limit losses. It is also important to watch the level 2. I know that a lot of you may not respect the L2 but if you watch it closely you can see big orders coming through. On more than one occasion this has shown me strength or weakness. Be careful, though, as they will flash big orders sometimes to shake n' bake!

Anyway, its almost open time so I need to do my daily work beforehand. Lemme know what you guys think of my ideas and feel free to add any advice!

[cire2222]

If your going to take $ of the table quick and cut losses quick that means your will need to catch some runners to make solid profit. having your stops below MA's can get you stopped out on a wiggle move often, thats fine but you will need to catch some big moves to make up for it. IMO there is only two ways to make money speculating, one is to have a high probability play (75%) or cutting losses short and catching big runners. The question is, will you let your winners run? thats the hard part.

a tip on the technicals for day trading, toss up a shorter term MA to go with your trend following MA. I have found that some of the best pullback entries come when the MA's are penetrated but the two MA's don't cross, then a continuation move could be strong. good luck

[Slyjoker]

Originally Posted by cire2222

If your going to take $ of the table quick and cut losses quick that means your will need to catch some runners to make solid profit. having your stops below MA's can get you stopped out on a wiggle move often, thats fine but you will need to catch some big moves to make up for it. IMO there is only two ways to make money speculating, one is to have a high probability play (75%) or cutting losses short and catching big runners. The question is, will you let your winners run? thats the hard part.

a tip on the technicals for day trading, toss up a shorter term MA to go with your trend following MA. I have found that some of the best pullback entries come when the MA's are penetrated but the two MA's don't cross, then a continuation move could be strong. good luck

Good stuff Cire.

I am actually going to take a break for a bit. I have finals and I realized today that I just can't put the time needed to make good trades right now.

Everyone else feel free to give advice. I am just taking the next week off and then I can devote 100% of my time to the trading game.