The Intraday Battle Begins
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After quantifying the market trend direction, duration, and strength
and identifying the stocks you are going to trade from your filtering
screens, you are ready for the trading day. Remember, you are looking
for only three to five of the highest-probability trades in a trading
day. You want a trend to develop that will sustain for 15 minutes
or longer, and for this reason an intraday trend trader usually will
not enter the market at the opening bell. You want to wait until
some form of trend establishes itself. In most cases, an intraday
trend trader will wait a minimum of 10 minutes or longer before
placing a trade either long or short. Let us examine intraday trading
and tactics from a high-probability perspective.
Intraday Charts and Tactics
One of the very first things you want to identify is whether the stock
you are following is in sync with the market or if it is trading counter
to the market. Countertrending stocks will many times trend in sync
with the major markets in the last 45 minutes of the day. This information
is especially important if you short an intraday trend. If you
are prepared for a reversal in trend you are less likely to be caught
off guard than someone who has no knowledge of this stock behavior.
Learning the personalities of stocks that you trade on a regular
basis is very important. In Chapter 3, we discussed a strategy called
"25 old friends." If you know the behavior of 25 stocks, you will have
a feel for the length of the trend, support and resistance areas, average
high-low intraday range, and whether the stock is currently
trending with the market or countertrending. This knowledge will
translate into confidence when it comes time to pull the buy or sell
trigger. Most stocks especially, high-tech stocks, move in sync with
the Nasdaq and the S&P 500. For this reason, the trend and relative
technical position of the market is of the utmost importance in making
a buy or sell decision. The time frame in which you view a stock
or a market intraday is critical to entry or exit success.
After quantifying the market trend direction, duration, and strength
and identifying the stocks you are going to trade from your filtering
screens, you are ready for the trading day. Remember, you are looking
for only three to five of the highest-probability trades in a trading
day. You want a trend to develop that will sustain for 15 minutes
or longer, and for this reason an intraday trend trader usually will
not enter the market at the opening bell. You want to wait until
some form of trend establishes itself. In most cases, an intraday
trend trader will wait a minimum of 10 minutes or longer before
placing a trade either long or short. Let us examine intraday trading
and tactics from a high-probability perspective.
Intraday Charts and Tactics
One of the very first things you want to identify is whether the stock
you are following is in sync with the market or if it is trading counter
to the market. Countertrending stocks will many times trend in sync
with the major markets in the last 45 minutes of the day. This information
is especially important if you short an intraday trend. If you
are prepared for a reversal in trend you are less likely to be caught
off guard than someone who has no knowledge of this stock behavior.
Learning the personalities of stocks that you trade on a regular
basis is very important. In Chapter 3, we discussed a strategy called
"25 old friends." If you know the behavior of 25 stocks, you will have
a feel for the length of the trend, support and resistance areas, average
high-low intraday range, and whether the stock is currently
trending with the market or countertrending. This knowledge will
translate into confidence when it comes time to pull the buy or sell
trigger. Most stocks especially, high-tech stocks, move in sync with
the Nasdaq and the S&P 500. For this reason, the trend and relative
technical position of the market is of the utmost importance in making
a buy or sell decision. The time frame in which you view a stock
or a market intraday is critical to entry or exit success.