When to Enter:
Coincidentally, I have been getting a bit of email on this, so I'll just post a guideline here. Its not terribly technical or tough to do - in fact, one of the reasons I can trade intraday and still work 10 hours a day is this method:
Look at the 1 minute chart about 2 hours after open. Write down the high and the low so far in the day. Then place a BUY stop order at a couple of ticks above the high (or a short stop a couple below the low - not recommended for novices). That's it. This method was devised by Jake Bernstein in the middle 70's for daytrading futures - he called the first two hours the Critical Time of Day (CTOD). I just call it morning...
If you look at CPQ for today, you will see that by 11:30 it had a high of 35.8 and a low of 34.5 and your order wouldn't have been filled. ORCL's spread by 11:30 was a high of 24.75, and a low of 23.75 and you would have gotten filled on a buy stop at 25 (one tick for ORCL was 1/8, so two above would have been 1/4 more). ORCL closed at 27, so that would have been a $2/sh day. If you weren't sure if ORCL was going to continue up Monday, use this method that morning.
If you look at FORE or ASND you will see that this method meant your order wouldn't have been filled. Then go back at lunch to see if your order filled and set a stop - if it has enough trades, like the ones above, you will know by then.
The downside is that you can't go by yesterday's high & low, and you have to check what is going on that morning. However, if you decide you like the climb that a stock has been on, or buy using the trendlining method, you can use this method to get some assurance that it can be a profitable trade PROVIDING you set a stop above your entry + trading costs. If the stock levels or tanks, your order doesn't fill and you lost nothing.
I usually only look at the market at open and them sometime between 10:45-11:45, depending on whether I have meetings or whatever. It only takes a minute to log on and check and then a couple of minutes to place the stop or limit orders. During lunch I reset the protective stops so that thy are trailing any growth, and about a half hour before close I decide whether will exit or keep the position for the next day.
For end-of-day traders, I would recommend using the trendline on daily data and setting a buy stop at whatever the next day's low should be given your extended line (see previous post).
Now, knowing when to hold/exit is more intuitive than this. But if you are new to this, just set the sell stops at 8% below your entry and 15% above. You might not get all the rise, but if you are right 1 out or three times you will do no worse than break even.
I am trying to come up with a reasonable procedure for playing up and down gaps at open, and will try to post that this weekend. That is a little trickier to explain, so bear with me.
Email me if this doesn't make sense for whatever ticker you are looking at.
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