Paleo Trading: How to trade like a Hunter-Gatherer by Karl Oscar Strøm

Author:Karl Oscar Strøm [Strøm, Karl Oscar]
Language: eng
Format: epub
Published: 2021-01-22T20:00:00+00:00

In this section we will go through several types of setups that is primarily suited for intraday trading, or for harvesting a quick overnight move. As such they are gatherer type trading setups, that should be traded with a smaller allocation of risk/capital than the larger hunter type trades of the next chapter. Also beware that the setups I describe can be viewed as examples or archetypes, and no situation is exactly alike. These are all setups that I have in my own arsenal and use in daily trading decisions. The practical examples are intended to give a framework for what to look for in your own daily assessment of market opportunities.

We have touched on daytrading several times in previous chapters. There are however some additional points I would like to highlight before going into the specific short-term setups.

The first is that pure scalping of the type where you are both best bid and best offer is probably not a worthwhile trading strategy anymore. At least not in relatively liquid stocks. Only HFT-players and/or Market Maker computers can realistically hope to make any meaningful profit trading this way now. This does not mean that you will not find yourself doing extremely short-term trades from time to time, especially in the volatility right around the open. It is just not something I will focus on in this text, and it is my general opinion that it is better for most traders to stop focusing on seconds and minutes and start looking at minutes to quarters to hours for a bigger swing.

The second is to underline that to do serious daytrading you must ensure that you have very low trading costs. This means both low direct commissions, but also that you must be careful with trading with volume in stocks that are not very liquid and have tight spreads between bid and offer. Costs can easily eat all your profits if you are active and not careful. Your trading journal will show you this, and if you have high activity you can actually use your journal as a bargaining chip with your broker to get as low commissions as possible.

The third is that you should have access to intraday funding/margin so that you are not too limited by your own capital only. Daytrading is not about buying 100 stocks at USD 100 hoping they go to 105 but buying 1000 stocks at USD 100 and be happy to sell at 101. With tight stops and low costs, it is better to exit and enter again if your timing is not right. Don’t be afraid to change your mind and exit. Be afraid to stay stuck in a losing position.

Finally, I would underline that I view all these setups as valid and relevant setups. It is no point in trying to determine what is “best”, though some do indeed have a higher hit rate than others, and many can function in combination with each other.

So, let’s get started.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.