day trading with low priced stocks

1. STRATEGY ONE : DANGEROUS: This is a every day thing. Do not get into stocks that open very high and move to 40 to 100%. These are very dangerous stocks. During the first one hour they move around 80-150 percent. They the sell off begins at around 7.30 am. It is hard to get out of these stocks because already one might have purchased them at a higher price. Even if one does get into these stocks it is advisable not to put more than 2-3k at the first level. When it mores to second level sell off at 7.30am . Do not expect day trading stocks to move more than 150 percent. That is the limit. People do not want to buy after that limit.

2. STRATEGY TWO: SAFE: The actual stocks that go up 100-200 percent and are safe to play with are the ones that move 20-35 percent by 8 am. These are the stocks that move 100 or more percent by 11 am. That is when they go really high and time to sell off if it crosses the moving average. It always moves above the moving average. It makes several levels and consolidations. It is better to keep buying at each consolidation. These kind of stocks happen maybe once a week. They do not happen every day. 

Keep shorting if the stock price down as per rules

If the stock moves in the right direction after initial shorting of 10k. Short another 20-30K immediately. Wait till the stock moves closer to the Moving average. Cover the stock at this point.

Most of the gains up to 3-8 percent come during this time. Cover the stock when it moves closer to MA. If the stock moves further down after touching the MA, one can short again if necessary.

Day trading needs fast decision especially during the opening half hour. When choosing stocks that are deeply selling or buying one has to understand that the morning is the ideal time and if the stock moves in the right direction then after 5-10 minutes short or long in the same direction. Do not reverse direction and make stupid mistakes. Just follow the rules.

Day trading evolving rules

Buy at CONSOLIDATION POINTS EVEN IN DAY TRADING. EXCEPT FOR THE INITIAL 10K IN THE EARLY PHASE.

1. When the current price of stock crosses the Moving average and comes down, it is better to sell it immediately instead of using a limit order. Because from my observation the stock goes down from high very soon and does not allow one to reach the limit order most of the time and chasing the market price with limit order get more and more costly and loosing game.

I made a mistake on shorting WBMD. When stock is selling at 20 percent opening, and more and more selling causes the stock to drop. the volume is high in the morning opening time. One has to short and wait for the market price comes closer to the Moving average on only then take action to sell.

I lost money because of the stupid decision to buy at that point. But never ever buy below the Moving average when the stock is deeply depressed. JUST WAIT FOR THE MARKET PRICE MOVE TOWARDS THE MOVING AVERAGE. THIS TAKE AROUND 30-45 MINUTES. THEN TAKE A DECISION TO COVER BACK OR HOLD FOR FURTHER DECLINE. OR LEAST CLOSER TO THE MOVING AVERAGE. DO NOT TAKE ACTION BEFORE. WAIT FOR 30 TO 45 MINUTES. TAKE THE MAXIMUM PROFIT.

If you see a  second red block under the Moving average when stock is rising and the second green block when the stock is falling are the limits. Do not ever wait for the stock to go below that . 
Get out even if it is a small lost situation. Other wise it becomes a big loss. 

Because all winning stocks do not go there. One can also set limits at that price to get out. Do not waste time and think that luck will overturn the rules of the game. Stick to the rules. Make the rules better and better to suit the day trading system.

Until now the rules are playing well. One has to be consistent with the rules. Do not overnight or hold when the over all market is moving sidewards. There is not rally. The rally times are over. Most of the stocks are in their highs and other stocks are declining. For most of the stocks it is not the time to hold.  DAY TRADING IS BETTER.

evolving trading rules for Day trading: how to master speculation

1. Buy the first batch of shares for 10 k when the stock consolidates above the Moving average. If the stock moves below the 30 Moving average sell off immediately. Never ever keep the stock. Never ever take a loss more than 500 dollars in the first phase. 

2. If the stock moves to the next level then it is slowing buying power and has a potential to move higher. When the stock consolidates above the 30 day moving average buy another batch of 10-15K. If it moves below the Moving average sell off with out delay. 

3. Buy the 3rd batch of shares if stock moves higher to the 3rd phase of growth and consolidation. 

4. Usually if the penny stock in speculation moves 30-100 percent, then one has to wait till it moves below the moving average to sell all the stocks and get out. 

5. Ideal stocks appear every once a twice a day on yahoo most active section. Look at the one day graph and observe the pattern. 

The reverse holds for stocks in the decline. But stocks below 5 dollars are not allow to be shorted by broker. Anyway one can short other stocks. Look at the Relative strength on the particularly. If the Market moves up it is better to be long in day trading then to be short. And the reverse for short selling if the market is down.  I mean if the market is within 100 plus or minus, the market has no strong direction, but if the market is 100 plus of minus obviously it has a direction and one has to pick stocks to either short or long on them accordingly. 

Even if you wait and make money one stock a week on such speculative stocks it is enough money for the whole month. So save the capital. Do not lose it on useless trades. Do not over trade and lose money. Trade with big money only if confirmed pattern is observed. Otherwise do not worry there is always another day to make money. 

In choppy markets when there is no particular direction day trading is good alternative. Either way there are some good stocks like netflix, fossil and dollar tree that are still showing bullish. Buy them when there a correction and when they are near the  30 day moving average. The bull phase of the market lasted for 2 years now and now the market is going to be choppy for some time now. Here and there you see good stocks with some particular upward direction like the stocks I mentioned above. 

Ideal day trading bullish graph

Keep buying at each consolidation till the price crosses over the Moving average. SSW

GRAPH STUDY OF STOCKS BELOW 30 MA AFTER CORRECTION

SINA UP 35 PERCENT FROM 80 TO 115.


URI  UP FROM 22 TO 25. AFTER CORRECTION





SEASPAN ( SSW)

CLEARLY THEY ARE FELL BELOW THE 30 DAY MOVING AVERAGE. THEN STARTED MOVING SIDE WARDS. FOR STOCKS LIKE SINA IT MOVED UP SIGNIFICANTLY.

ONE CAN BE TROUBLE OF ONE IS SHORT ON SINA.

Two major mistakes after the correction is over

1. After Market correction is over, one has to move from the shorting stocks to the stocks that are consolidating like FOSSIL AND DOLLAR TREE that are above the 30 day moving average. Somehow, I lost the habit of buying stocks. One has to switch or the gains made in shorting will be soon lost.

2. holding margin money overnight is not a good idea. Unless one is sure the next the the stock will moved in desired direction.

3. After correction if one needs to short then it is advisable to be half the money short and half the money long on  good stocks that are consolidation. Completely being short after correction in the market like SINA, that moved from 80 dollars to 111 now is a 30 percent move. Also this stock has a graph like a commodity, highly volatile.
These kind of graph one should not hold overnight.  It moved now 6 days in a row, in the upward direction. That is good dangerous to short these stocks.

Look at the graph, if the stock has these one directional bias, like moves in one direction for too long, then if you are shorting or buying in the opposite direction is a danger. If you are doing with margin money it is even more dangerous. All my profits from last month vanished.!!!!!

Also had to keep a 7 percent loss cap...

Lot of blunders. 

Lost a ton in shorting

Most of the gains from last month are wiped off because of not capping losses on SINA which I shorted at 96. Now it is at 110e. I should have capped the loss at max 7 percent i.e is around 104. That was a stupid mistake especially when the graph of SINA does not follow the conventional graph. This stock is very volatile. For volatile stocks one has to be very careful when shorting and also when the stocks deviates from the standard model graph.

The stock does show signs of lossing demand. The rise is strong. Buying is strong.

Also after the correction it is good to be in stong stocks what were consolidating like dollar tree and fossil. This is a blunder too. 


May be if one is doing day trading and if one gets a loss one can just take the loss for the day and start the new day fresh. That will contain the losses too.