Friday, July 15, 2011

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. 

1 comment:

Markus Heitkoetter said...


A day trade might also be considered a trade initiated and completed within the trading hours of equity markets. You can effectively define a Forex day trade as a trade that is completed during the waking hours of a trader. Thanks a lot...

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