Donna,
Thank you!
When I referred to feeling the emotions, I mean that you should pay attention to your own emotions at the time of the trade so that you may understand what other traders are feeling who are also trading that stock. Your intuition brought about by your feelings will get you out of a trade before it drops (Or will let you spot a base if you are short). Too many people will stay in a stock just a minute too long. You can get out just under the high of the rally if you harness your feelings and use them to your advantage.
One technique, on a rally, is to load your sell so that it is ready (Lock and load). As it is rallying, move your sell point up incrementally but so that it is a 1/2 a point below where it is currently trading. Super fast stocks require a whole point. When you see the momentum and volume slow, hit the sell. Your broker will have ample room to get you out immediately and you just locked in profit.
Have you taken any formal training?
If not, I commend you on how well you have discovered the truth of the day trading technique. Executing a good trade as compared to the amount made on that trade is the key to prosperity. Realizing that you will lose some of the time but limiting the amount of times you lose will make you independent and wealthy. Analyzing both your successes and your losses and the reasons behind those trades is fundamental to avoiding losses in the future. Understanding when you feel poorly or your mind is not in it (For whatever reason) that you shut down and come back when you can focus more on the trading.
Do you draw channel lines using the trend tool? This will alert you when the ticks have broken resistance or support. Also long term resistance and support is important to tell you where the stock may be headed if it gaps up or down.
I call this 'Dave's Chart'. I named it after a friend who showed me the easiest chart indicators to show the momentum direction on a given stock.
Under chart setup, pick: Plus directional Indicator, Minus directional indicator, MACD, MACD signal line, Volume, and RSI.
Under chart colors, check that the plus and minus indicator are Green and Red (In that order - easiest colors to follow). Choose whatever colors you prefer for the other indicators.
RSI shows the relative strength. RSI under 50 is approaching a buy point. RSI above 50 is approaching a sell point.
MACD and the MACD signal line shows the stock trading range (In distance) relative to the moving averages of the stock ticks. The signal line follows the outside edge of the strength but also alerts to the direction faster (turns and points to the movement direction rather than waiting to see the bar.
Volume is obvious.
The Plus directional line and the Minus directional line are my favorites. The Plus line is for the amount of upticks. The Minus line is for the amount of downticks. They are located at the bottom of the chart with the volume.
When the Plus line comes up and meets the Minus line it is a buy signal (Check the MACD action). (The Minus line will be going down at this time)
When the Minus line comes up and meets the Plus line, which should be coming down, it is a sell signal. Also look at your RSI and see where it is at. Even these indicators can turn right back around on you.
News releases are the wild card unless you have some warning of impending news.
When trading I have found that if you watch the MM action, see when a stock is basing for a run (Multiple people line up on the bid) or getting ready to sell off (Multiple people line up on the ask), then look at your chart indicators, they will tell you if the momentum is changing and you are truly seeing a rally or a sell off. You will also avoid being hypnotized by the chart if you spend more time watching the action of the MM's.
Good trading Donna,
JEB |
