Those three things are basic questions that you need to answer every day as a day trader.



That is the first question you have to answer. What stocks do you want to trade? There are different reasons for trading stocks. In the best case, you have a stock that has a promising technical setup and an upgrade or some kind of positive news event that could push the stock higher.  Most of the time there are certain groups of strong stocks that move togehter (like the casino stocks at the moment). Then you pick the strongest ones and/or the ones that have the best risk reward.

Also sometimes there is a news event during the day that influences only a few stocks .Then it is not the best thing to jump on those stocks immediately, but to observe them for a few minutes and wait for a good entry. If you dont get a good entry,dont trade those stocks. It is better to lose opportunity than capital ( i cant remember who said that,probably Livermore or some guy on Stocktwits) but I sometimes bought stocks based on news and the first reaction to it,just to be stopped out minutes later.

During the morning session i always look for stocks that had extreme moves on high volume. If they had strong morning sessions, i hope for a pullback and a possibility to get a scalp trade if the stock runs into the close.




Trading directly after the open is very risky, so most of the time i don’t do it. I will wait for the first 5-10 minutes to see what happens. Then it depends on the market. If  i want to trade a stock that had been strong the day before and i am looking for continuation of the move i will not be as aggressive as if i have a stock that i have been stalking for a while and that is just breaking out of a longer term consolidation range. Those are my favorite setups,because they usually work well immediately. After the first explosive move i will sell at least 1/4 or half of my position (depending on the size of that move) and move my stop up as soon as the stock makes a higher low.

Then i just stay in the rest of it until it a)looses the daily VWAP or b)has a parabolic move to the upside, in wich case i have a very tight stop that is underneath the close of the last 1min candle. I do that because i rather sell into that kind of strength,because i found out that intraday those vertical or parabolic moves most of the time are followed by sharp corrections that take the stock back to or below VWAP as soon as the first vertical phase is over. As a swing trader that would not be the best way to trade those,because you could expect the stock to perform strongly the next day. But i am not comfortable holding stocks over night, so i usually don’t care about the next day.



I trade every day, but depending on the direction of the general market i trade with more or less size. If the market is acting well,i will take bigger positions, when the market is very extended i will trade with tight stops and try to get in and out very fast. I also have tighter than usual stops in place when the market is without direction. The ideal situation to take the biggest risks are those,when the market is in a general uptrend, consolidates its gains for a while so that enough people begin to doubt if the move will continue. Then you just have to wait for example for the FED to announce the amount of QE 2 or some event of similar importance. Often events/news are only affecting one group in particular. Then focus on that group. At that moment you have to be there with a plan. Anticipate how the reaction to the event could look like and trade accordingly,when you have good setups,those are the times that i put the biggest risk on. Not necessarily immediately after the announcement, but as soon as there are breakouts from a solid basis on big volume. Then there are times,when there is just nothing tradeable ou there. Then you just have to sit on your hands and wait for opportunities. But as i wrote in an earlier post,that is not one of my strengths. I still have to work on that, because making money is not so hard, not losing it is.





About Schwarzdaytrades

I am a full time day trader. I like to share my opinion about stocks and the psychology of trading.
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