Points Not Pennies: What Part-Time Stock Traders Can Do Now to Simplify Their Process, Catch Bigger Moves, and Be Profitable. by Anthony Oliver

Author:Anthony Oliver [Oliver, Anthony]
Language: eng
Format: epub
Publisher: Anthony Oliver
Published: 2018-06-02T22:00:00+00:00

CHAPTER 7

MANAGE THE OPENING ACTION AND INTRADAY ACTIVITY

“We do not trade these patterns; we trade the underlying buying and selling pressure that sometimes creates these patterns.”

-Adam H. Grimes

I can’t afford to miss too much of any move. Barring a few outliers, my biggest winning trades top out in the 15-20% range. Which is exactly what I expect since I’m primarily a swing trader operating on the daily timeframe. So, I always need to enter as close to my preplanned trigger point as possible.

My goal is to squeeze everything I can out of any trend on the timeframe I’m trading, whether swing or position trade. That means entering or exiting my positions as soon as actionable levels are hit intraday. Oftentimes, my entries and exits are near the market open. As we’ll examine in this chapter, the open is a misunderstood time. It’s where most of the important activity is—where a majority of the day’s buying and selling pressure is exerted. Because of this, I believe it’s best for traders to use that information to their advantage, and be willing to execute trades near the open, just generally not within the first 5-15 minutes or so when things get too hairy.

Intraday Entries and Exits

I enter and exit trades during the day whenever my resting stop orders are hit. When I’m able, I monitor the open to get a quick read on whether buyers or sellers are taking control of the day’s activity. If neither buyers or sellers are taking control, and we get sideways chop, I may decide to patiently sit in cash or cancel any open orders and be more defensive if conditions deteriorate. Either way, my alerts and stop orders are set and ready to flawlessly execute my plan for me. Now, whether or not my plan is flawless is another story. Nevertheless, because of those tools, I don’t really have to watch the open, but I like to so I can handicap the day’s action early. Watching the open for many years has also helped me to build solid intuition about how stocks move, and the false moves that often occur.

Despite the tendency for gaps and violent shakeouts directly at the open, I do enter and exit a lot of trades within the first half hour of the day. This is mostly due to how much high-volume activity happens then, often pushing price through my trigger points. If I plan to be long a stock, I love nothing more than to see heavy buying pressure trigger me into a position early in the day and then the stock continues on to close strong. It feels good to be one of the first into the trade and in an immediate position of strength.

Some people prefer end of day trading; that is, waiting for the last few minutes of the day to enter or exit their positions, with the close of the daily candle confirming or denying their original plan. Though end of day trading is valid for swing and position traders, I personally don’t want to risk missing the big moves that may occur intraday.

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