Peter process 1120160717

Continuing with information for you to consider when trading is how to setup and then narrow a watch list without having so many picks you get lost.

Here are some helpful things to do:

1) Trade NASDAQ or ETFs (NYSE) only. We need good price movement or volatility to profit from trading. 

2) Only pick stocks priced $10 or more. My limit is $35-$40. Sometimes, I buy higher priced but not too often. The key here is leverage. Given my example last segment of $100,000 margin power (or 4 x $25,000 working capital) with 10% per trade, you only have $10,000 (+/-) to trade with. Buy 1000 shares of a $10 stock, 500 shares of $20 stock, etc.

3) Look for premarket stock moves based upon news and earnings for possible picks with a lot of shares traded. Remember this is day trading, not swing trading or long term holds. We need gas in the engine to drive the trade. There are a lot of sites online but I look at:

HB's focus list and his early AM picks
http://www.nasdaq.com/extended-trading/premarket-mostactive.aspx
https://www.barchart.com/stocks/most-active/daily-volume-leaders

4) Narrow this list to those stocks moving from 4% to 10% (up to 12%), for long trades, and, the opposite, -4% to -10% (down to -12%), for short trades. On Nasdaq.com, look after 8:00 am. On Barchart.com, sort the list by click "%" at the top of its column and remember to look after 9:05 am as it won't display earlier.

5) Next, create a watchlist in TC2000 Premium with the symbols you are following. List should have columns: flag, symbol, price, net change, % change, bid, ask, bid size, ask size and sector. I abbreviate these to squeeze the columns together. (More on why I like these in the next segment.)

6) Draw support and resistance lines in red with the horizontal line tool that displays a price. This is a key part of day trading. If HB has picks on your list, follow him on the 1 min premarket chart and then go to the hourly and daily charts to do the same. I utilize HLB bars (CTRL+B) to switch it to for this. Keep in mind that previous highs and lows will be what you are looking for. It takes a little practice to line things up with the horizontal tool but once you practice it, it's not that hard.

7) Next, draw channel lines on daily chart with the trend line tool. This was an invaluable thing I learned from HB. The channel is helpful to outline where the price is moving. I also draw mini-channels and flags, etc. as the trade develops as I am sure everyone does but charting is a key not to be overlooked.

8) For PC users, practice flipping through time charts each mornining until it becomes seemless. Do CTRL+ press 1, then keep holding the CTRL key and press 2, then 3, then 4. This will allow you to quickly switch from 1 min to 2 min to 5 min to 15 min charts - or - hold the CTRL down and scroll with your mouse. Easy once you know how to do it!

9) At this point you should have 2 to 5 stocks you are following. Switch back to candlesticks (CTRL+B a few times) and go to a 5 minute chart.

10) Watch the premarket futures to see which way the markets are trending. Most of my picks are from the NASDAQ but I keep a mindful watch of the SP500 to confirm trends. Depending upon the trend, I then look to trade long or short further enhancing my focus without deleting any picks from the list.

I do not trade anything from 9:30 am to 9:50 am (or as late at 10:20 am depending upon what develops). In these first 20 minutes and then some (which a good friend of mine in the room calls "voodoo time"), we will only draw lines to easily indicate what stocks can be considered good trades for profit. Why, I learned from HB about waiting for the pull back and watching how the price trend develops. Each day I remind myself, "practicing patience makes profit".

Last, I have included a couple of pics from Friday to show what I was looking at premarket and why as I marked it up. These were put together fast so I apologize for how my scratch marks look 

In the end, I did not trade any of them which I circled. Look at the % range, the price and the volume. Then, if you can, look at what MRVL and CRM did early morning on 5 min chart in TC2000 with candlesticks. I also did not play DRYS (way too risky) or PTCT (lack of premarket volume).

Next segment I will pick up on MRVL and CRM and then outline how to enter a trade, watch the price action, and exit (or stop out) for profit.