xpertstocktrader
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Trend day
We all know that is much easier make money during trend day than during a consolidation or flat day. Since we trade for profits lets us see how we can recognize this opportunity and take advantage of trend day. How do we look for a trend day on the daily chart? It is a big extreme bar with opening near lows and ending at highs with big range if is upturned trend day, if is downtrend trend day then will be opened at highs and will close near lows with extreme range and high volume. The volume is usually larger than normal or average. Intraday the action you must see is a clear trend with higher highs and higher lows for uptrend and lower highs and lower lows for downtrend. That is the easy part to recognize trend day then we must know when it is over. Around 3-7 times over month we will have trend days in the market and in individual stocks. Every day we will have trend day in individual stocks so it is very important to recognize them. Trend days are also important for risk management, because I will trade with bigger lots then usual during a trend day because that is good way to maximize profits.
We have several ways to recognize a trend day.
One which I really like, is a NR7 or a NR4 day. That means the narrowest day in last seven or four days. That is all in line with reading market and understanding the market. We know from the trading plan class that after a move we need rest and that is our best chance to get good risk reward. That is most the important part if this style of trading to be profitable. All come from words and intraday action. Since we use daily charts for scanning then I will look for NR7/NR4 on daily chart. Mean we must see on intraday charts (60/30/15/5 min chart) consolidation after move what we had before, and that intraday consolidation must bring us one of our patterns (flag, base, triangle). With that situation we can expect to see a trend day. Of course again is very important to have all the pictures on screen. Because if we have strong support/resistance that is very close I don’t want take that trade. Example: continuation pattern near 200ma daily and that is 1st try to break that resistance on move up. I won’t take that trade because most of time 1st try wont break support/resistance area.
Second way to recognize trend day possibility is extreme situation. One is big gap. Bigger is better. That will bring more interest on stock or market. Two reasons this can be a trap or news and in both situations we have an extreme situation. Of course trap can be because of news. The bigger the gap the it is better for us. In that case we can expect trend day in gap direction. That is reason why I like gaps and I immediately start scanning for them.
OK now we know how to recognize them, now few words how to play them.
As I told you before traps can play with 5 min high/low setup. That is more aggressive entry and will be valid if 5 min range isn’t too extended. Then you can go short or long (depend on gap) and generally can stay in it for rest of day if we have trend day in place.
You can also use another tactic. That is long/short above/under 60 min high/low. You just need to mark 60 min high/low and go with that and must move stop under/above previous pivot. If it is a trend day, then you just move stop with higher low, or lower high if is short trade.
If you miss one of those setups you must watch intraday action and can take trade on any breakout or continuation. You must follow intraday charts 5/15 min and watch for intraday setups. 10/20 sma area can help you with that. You all know that I like bounce from 20sma and in trend day you can use 10sma possibility also. There are many times you can see a strong pace and in that case 10sma can help.
What is important to see if we are in a trend day when we took trade? Volume is very important. In trend day volume will be much higher then usual in days before and that will be proving about trend day. If we don’t have strong volume during day then we can get case with strong move in the morning and reversal after that. So volume is another important part of a trend day.
If you are in trend trade you want be positioned the last hour of day because lots of time we will have strong move in that period continuing the move from earlier in the day. If you are focused for trading trend days, you can with few days make enough for whole month and for other days you must use proper risk management to safe profit what you made. The reason for that is very simply, it is much easier is to make money during a trend day then in a consolidation day.
We all know that is much easier make money during trend day than during a consolidation or flat day. Since we trade for profits lets us see how we can recognize this opportunity and take advantage of trend day. How do we look for a trend day on the daily chart? It is a big extreme bar with opening near lows and ending at highs with big range if is upturned trend day, if is downtrend trend day then will be opened at highs and will close near lows with extreme range and high volume. The volume is usually larger than normal or average. Intraday the action you must see is a clear trend with higher highs and higher lows for uptrend and lower highs and lower lows for downtrend. That is the easy part to recognize trend day then we must know when it is over. Around 3-7 times over month we will have trend days in the market and in individual stocks. Every day we will have trend day in individual stocks so it is very important to recognize them. Trend days are also important for risk management, because I will trade with bigger lots then usual during a trend day because that is good way to maximize profits.
We have several ways to recognize a trend day.
One which I really like, is a NR7 or a NR4 day. That means the narrowest day in last seven or four days. That is all in line with reading market and understanding the market. We know from the trading plan class that after a move we need rest and that is our best chance to get good risk reward. That is most the important part if this style of trading to be profitable. All come from words and intraday action. Since we use daily charts for scanning then I will look for NR7/NR4 on daily chart. Mean we must see on intraday charts (60/30/15/5 min chart) consolidation after move what we had before, and that intraday consolidation must bring us one of our patterns (flag, base, triangle). With that situation we can expect to see a trend day. Of course again is very important to have all the pictures on screen. Because if we have strong support/resistance that is very close I don’t want take that trade. Example: continuation pattern near 200ma daily and that is 1st try to break that resistance on move up. I won’t take that trade because most of time 1st try wont break support/resistance area.
Second way to recognize trend day possibility is extreme situation. One is big gap. Bigger is better. That will bring more interest on stock or market. Two reasons this can be a trap or news and in both situations we have an extreme situation. Of course trap can be because of news. The bigger the gap the it is better for us. In that case we can expect trend day in gap direction. That is reason why I like gaps and I immediately start scanning for them.
OK now we know how to recognize them, now few words how to play them.
As I told you before traps can play with 5 min high/low setup. That is more aggressive entry and will be valid if 5 min range isn’t too extended. Then you can go short or long (depend on gap) and generally can stay in it for rest of day if we have trend day in place.
You can also use another tactic. That is long/short above/under 60 min high/low. You just need to mark 60 min high/low and go with that and must move stop under/above previous pivot. If it is a trend day, then you just move stop with higher low, or lower high if is short trade.
If you miss one of those setups you must watch intraday action and can take trade on any breakout or continuation. You must follow intraday charts 5/15 min and watch for intraday setups. 10/20 sma area can help you with that. You all know that I like bounce from 20sma and in trend day you can use 10sma possibility also. There are many times you can see a strong pace and in that case 10sma can help.
What is important to see if we are in a trend day when we took trade? Volume is very important. In trend day volume will be much higher then usual in days before and that will be proving about trend day. If we don’t have strong volume during day then we can get case with strong move in the morning and reversal after that. So volume is another important part of a trend day.
If you are in trend trade you want be positioned the last hour of day because lots of time we will have strong move in that period continuing the move from earlier in the day. If you are focused for trading trend days, you can with few days make enough for whole month and for other days you must use proper risk management to safe profit what you made. The reason for that is very simply, it is much easier is to make money during a trend day then in a consolidation day.
