There are many many ways to try and call bottoms/tops, but as a daytrader, the previous day's H/L work pretty well.
So, to trade ERICY tomorrow, look to SS ([S]ell [S]hort) at 26 3/8 and look to B at 29 3/4. Once one of your thresholds have hit, you can then use LII to tell you when to stay and when to bail.
Exceptions include morning gaps -- i.e. if it GAPS above/below one of your thresholds, what do you do? No hard and fast rules here. If it's a small gap, go for it. If it's a big gap, like ERICY was this morning, your history is shot and it's better to pass.
Other exceptions include News. Be careful of this. There is no way to predict the power of a news story in real-time.
There is also a pretty common day-trading strategy called High/Low that has simple rules. If a stock breaks the intraday high, go long. If it breaks the intraday low, go short. The success rate is slightly higher than just guessing...
You might want to check out Barry Rudd's book, Stock Patterns in Day Trading for more of this type of trading... |
