Three Trades to Develop

Three Trades to Develop

Consolidation Break – Swing Trade

·         Stock with significant strength / weakness has now moved sideways with tighter ranges

·         Typically 3 – 4 days

·         Initial entry on close above KEY technical level

·         Alternate entries can be taken based on intraday levels with higher risk reward than closing entry

·         The underlying idea is the higher time frame trend will reassert itself

Important Takeaways

·         Offers very high risk to reward based on intraday analysis

·         Requires patience for short term day traders

·         Stay in trade until breaks below key level (Should be selling partial on way up)

Momentum Reversal Trade

·         Trade should work quickly

·         Stock that traders (momentum) piled into quickly getting in with the trend and are now quickly exiting when momentum shifts

·         One of the more difficult trades to execute

·         Good risk to reward but difficult to build a big position

Characteristics

·         Identifiable seller on the tape tested at least twice

·         Identifiable buyer drops in pre market or on the open

·         Best entries tend to happen pre market

·         Scalp – Look for targets from previous days

·         Requires a very high level of discipline

·         NEVER EVER double down

The Range Trade

·         Uses support and resistance to enter trade

·         Good cash flow trade.  Not going to make your career as a trader

·         Occasionally can walk into a trend if you take the trade with higher time frame trend

·         OK risk to reward

·         Best in range bound markets at key market support or resistance