Peter process

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Following up on what I have posted to date for you to consider, here is how I make trades using a 5 min chart. This is founded in trying to absorb and learn as much as I can to trade successfully. (Keep in mind that I have different day trading strategies and also swing trade too.)

First, a quick refresher... with a few added details... and one miscellaneous thing, I tried to shorten this up but couldn't!

Remember that I compile a list of premarket stocks based upon price $10 and greater, premarket price move of 4% to 10% and not higher than 12% (long) or -4% to -10% and not lower than -12% (short) based upon earnings report (good or bad) and news (good or bad), higher premarket volume of shares traded, and are on the NASDAQ from HB, nasdaq.com (top gainers and losers), and barchart.com (volume leaders up and down sorted by %), I am set to go.

And I use TC2000 Premium, as mentioned in other segments, to

1) Add each stock to a watchlist which I call "Daily Picks" and click the FLAG blue. I focus on less than 5 but if you are more liberal you can always add more like all stocks from HB's focus list and/or day trade list will work. All of my watchlists have the columns: flag, symbol, price, net change, volume, % change, bid, ask, bid size, ask size and sector (which I have but look at very seldomly). I abbreviate the names in the columns and squeeze them together to save space.

2) Look at the premarket price action on a 1 min chart to look for support and resistance like HB has taught everyone. Granted this is easier if a pick is on his list as I follow HB; otherwise, I do my best to chart these levels. I draw lines with the trend tool and use HLB (CTRL+B a few times) to line up highs and lows accordingly. Use 60 min and daily charts (or 15 min and 30 min if need be as this will help at times too) with the horizontal line tool to mark price support and resistance levels from prior price moves. See if there is overlap with step 2's drawn lines. At times these line up other times they are close. Keep in mind the more picks you have, the longer this can take until you do it effortlessly.

3) I try to stop 10 minutes before the open and line up my charts. I use % scaling with price up the side of the chart and it has: 10MA; 21MA; 50MA; 100MA; 200MA; Bollinger Bands 20,2; Parabolic SAR .20,.02; and VWAP. At a minimum you need 10MA and 21 MA. I also use from HB, under the chart: Volume with On Balance Volume, Balance of Power with Moneystream, and Stochs 15,3 and 3 (with red lines at 20 for oversold and 80 overbought and white line at 50 for neutral ). The latter indicator is a key for me.

4) Make sure the premarket price action is turned off. I have mine set to switch off in TC2000 automatically once market opens. To set this: right click chart then chart properties then pre/post data tab then "only outside of normal market hours" then OK.

5) Switch to candlesticks (CTRL+B) on a 5 min chart (CTRL+3). And open trade multiple tabs in your browser to trade. I use Fidelity's website so I duplicate the page with my account on it 2 or 3 times.

My layout has the main chart, the Vol/OBV, BOP/MS and Stochs 15,3,3 all in one column top to bottom and 3 watchlists to its right in another column. Top right: Dow, Nasdaq, SP500 with Gold, Oil, Dollar, T2106, T2108 and VIX for easy reference. Middle: "My List" of premarket picks all with the FLAG checked (see above #2). Bottom: A WatchList called Market Movers (my name for it) with conditions set for: list to scan=nasdaq (or US stocks if you prefer), stock price>$10, volume>200,000.

When the market opens, I am only looking at "My List" a 5 min chart using candlesticks. And I keep an eye on my Market Movers list to see how my picks rank by % changed in descending order (for long) versus other trending stocks.

1) For each of the picks in My List, I draw short horizontal lines (with the trend line tool) from 9:35a to 9:50a and as late as 10:20a at the highest upper body and lower body (not wicks) points of the candlesticks.

2) I watch each until a break of the upper line (long) or lower line (short) depending upon how the market is trending as I like trading with the trend albeit sometimes this does not happen.

3) To determine if a break can be an entry (long), I look within the lines I drew for consolidation or bull wedge or an engulfing candle move up and price being greater than 10MA. I also look to see if there is a close bid-ask spread. A large bid-ask spread can indicate a lighter traded stock without a lot of interested investors. We want higher trading volume to further energize the trade at this point.

If so, I enter the trade with a limit order at a set price depending upon where the ask is not the bid because it is trending up and I don't want to miss the entry. I mark the entry this on my chart with a green horizontal line that shows the price.

4) At this point the 10MA is my guide on the chart within the Bollinger Bands which is confirmed by Stochs 15,3,3 crossing up or continuiung up. Price has to be greater than 10MA.

5) I then look to horizonal resistance levels I have previously set in red to see where things could pull back.

If the stock has room to run, I place a set limit to sell 10 cents or so lower than the resistance to lock in my profit if this is my mindset for profit that day; otherwise, I always do one of two things: wait for a break of the 10MA (or 21MA if there has been a strong run up) that is confirmed by a cross down on the Stochs 15,3,3 OR put a stop order in after my entry based upon the support price levels that develops as the price moves up and through resistance. Stops can be at times under the entry price to start with too given price at this point is greater than 10MA. I use a yellow horizontal line with the price stop for this after I enter that order on Fidelity. I check the Stochs 15,3,3 on other min charts as well as I like the 15min as that chart gives me a bigger picture when I am using stops. I glance at 1min and 2 min as well to get a feel for the trend within the trend as well.

At this point for a long (or short) trade, you have a green line for price $ entered, yellow for the stop as you are cautious to protect capital and red to warn/remind you of resistance (support if you are eyeballing the trade versus hard stop). You can use other colors but these colors are easy to look at and connect with mentally without it looking like Halloween on your chart!

If I am not exiting out of my trade by eyeballing a break of 10MA (or 21MA) or stopped out, I tend to wind things up of the first break of the 10MA by 11:30a to Noon or, at the latest, by 12:30p. Why? There is a lot less volume or liquidity once Wall Street goes to lunch as HB always reminds us and, as a result, larger share lots cannot be sold as quickly. I look at this trading strategy as a quick few hours NOT an all day event.

Last, if I don't trade, I am good. Why force a trade if it is not there. And keep in mind this trading style is something I have learned from HB, is book and many different sources as every trader learns to crawl before they walk and walk before they run as I have adapted as best I could to suit how I try to trade successfully.

How will this entry strategy help? It is structured. It's plain and simple and it allows for room for price of a stock with premarket and early trading energy to move within a determined range eliminating selling too soon or holding on too long with a predetermined sell (price break 10MA or 21MA or stop order) based upon simple rules.

Success is guaged every 10 trades by dividing profit by losses for my return. My goal is 3 or better. So if I profit $25,000 and lose $6,000, that's a return of 4+.

I will be adding more segments as to how I trade ETFs (which is traded this way but with a few other things to consider premarket and during the day) in the next few days.

>> I have included a picture of OCUL which I did not trade but liked how it set things out to show a short trade. <<
pic2

23:11:58

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