More on this book
Community
Kindle Notes & Highlights
Started reading
December 20, 2019
$49.60, I will define a closer stop loss to have a
technical level. Any stop loss below VWAP is meaningless
traded by computers and institutional traders, (2) have small relative trading volume, (3) are penny stocks and are therefore highly manipulated, and (4) don’t have any reason to move (no fundamental catalysts).
I
am holding around $25,000 in my trading account and I usually choose 800 shares to trade. My daily goal is $500 or $120,000/year.
Three-Step Risk Management Step 1: Determine your maximum dollar risk for the trade you’re planning (never more than 2% of your account). Calculate this before your trading day starts. Step 2: Estimate your maximum risk per share, the stop loss, in dollars, from your entry. I will explain later in this book what the stop loss should be depending upon which specific strategy you are planning to trade. Step 3: Divide “1” by “2” to find the absolute maximum number of shares you are allowed to trade each time.
Successful traders are those who trade for skill and not for the money.
They focus on the perfect execution of a profit target or a stop loss level. Consistently profitable traders take every negative or positive trade they make as an opportunity to improve themselves.
A stock with fresh news A stock that is up or down more than 2% before the market Open A stock that has unusual pre-market trading activity A stock that develops important intraday levels which we can trade off from
most important characteristic of high relative volume stocks is that these stocks trade independent of what their sector and the overall market are doing.
Low float stocks under $10 are often highly manipulated and difficult to trade, and therefore only very experienced and highly equipped retail traders should trade these stocks.
Stocks that in the pre-market gapped up or down at least 2% Stocks that have traded at least 50,000 shares in the pre-market Stocks that have an average daily volume of over 500,000 shares Stocks that have Average True Range of at least 50 cents (how large of a range a stock has on average every day) There is a fundamental catalyst for the stock As a rule, I do not trade stocks with an enormous short interest higher than 30% (the short interest is the quantity of stock shares that investors or traders have sold short but not yet covered or closed out)
Have gapped up or down at least $1 Have ATR of more than 50 cents Have average relative volume of at least 1.5 (the stock is trading at 1.5 times its normal volume) Have average daily trading volume of at least 500,000 shares
They have high relative volume because their sector is under heavy trading by institutional traders. It is important to know that stocks usually trade with their sector.
For a scanner, I use Trade Ideas software (www.trade-ideas.com/).
stocks that have high relative volume, low float, and high activity.
I usually select three Stocks in Play and monitor their charts separately on three of my screens.
This strategy involves taking only the best setups and waiting on the sidelines until we see something worth trading.
typically buy at the “ask+5 cents” and sell at the “bid-5 cents”.
Short Selling Restriction (SSR) mode. An SSR is triggered when a stock is down 10% or more from the previous day's closing price.
Two long-standing trading rooms are Linda Bradford Raschke’s trading room, which emphasizes technical trading across multiple markets (www.lbrgroup.com), and the trading room run by author John Carter and Hubert Senters (www.tradethemarkets.com). You should also take a look at the educational programs run by Jim Dalton and Terry Liberman (www.marketsinprofile.com) as another possible place for connecting with like-minded traders.
If the buyers are strong, you want to be buying and holding. If the sellers are strong, you want to be selling and selling short.
Your attention should only be on price action, technical indicators and chart patterns.
Learning when to have the most size is a skill that new traders must acquire.
800 shares is my usual size if I am trading in the $10-$50 price range. I buy 400 shares. If the trade goes in my favor, I add another 400 shares (note that I add into my winning position, not into a losing one). I sell 400 shares at the first target, bringing my stop loss to break-even (my entry point). I sell another 200 shares at the next target point. I usually keep the last 200 shares until I am stopped out. I always retain some shares in case the price keeps moving in my favor. For a more expensive price range ($50-$100), I reduce my total share size to 400 shares. I rarely trade stocks
...more
rarely scale down into a losing trade. I always scale up; I add to my winning position.
Professional traders aim to enter the trade during quiet times and take their profits during the volatile times.
enter in only during the first and second consolidation periods. Third and higher consolidation periods are risky because the price has probably been very extended in a way that indicates that the buyers will soon be losing their control.
The Bull Flag is essentially an ABCD Pattern that will happen more often on low float stocks.
Instead of buying and holding and waiting, which increases exposure time, scalpers just wait for the breakout and then send their order. Get in, scalp, and get out quickly. That’s the philosophy of momentum scalpers: Get in at the breakout Take your profit Get out of the way
Each Reversal Strategy has four important elements: At least five candlesticks on a 5-minute chart moving upward or downward. The stock will have an extreme 5-minute RSI indicator (Relative Strength Index). An RSI above 90 or below 10 will pique my interest.
RSI readings above 90 indicate overbought conditions and RSI readings below 10 indicate oversold conditions.
Top Reversal
Strategy with an indecision shooting star candlestick formed as a sign of entry.
The first 5-minute candle to make a new high near an intraday support level is the point at which I enter the reversal, with a stop at the low of the day.
having a simple trading method consisting of a few minimal setups will help to reduce confusion and stress and allow you to concentrate more on the psychological aspect of trading, which is truly what separates the winners from the losers.
average volume, Average True Range, important technical levels, short interest, and fresh news for the Stocks in Play.
Make sure to include the following points in your trading journal: Your physical well-being (lack of sleep, too much coffee, too much food the night before, etc.) The time of the day you made the trade The strategy you were anticipating
How you found the opportunity (from a scanner, a chatroom, etc.) Quality of your entry (risk/reward) Sizing/management of your trade (scaling in and out as planned) Execution of exits (following profit targets or stop losses)
