Over the years we have found a handful of indicators that help you decide when to jump in a trade. MACD for instance is good, stochastics are good. But to this day, we still find the "tick" and the futures direction to be much more indicative of a move than any other. Tick is a mathematical expression that shows whether the bulk of stocks are being bought or sold at that time. a positive tick means that in the last seconds more stocks were bought than sold. This pretty much has to happen for stocks to move higher right? Right. So, having a "tick" indicator is very important. Next and without a doubt the most loyal message sender is the S&P futures. If the futures inch higher, it is self fullfilling that the stocks in the S&P will move higher. If the S&P moves, so then does the DOW and the NASDAQ. So, when we are daytrading, we keep an eye on the S&P futures, and the DOW and the NASDAQ "tick". If all three are improving, we hop aboard a logical stock and take the ride. But what if you don't have tick and futures? What if you are one of the many who are just sitting there with an Ameritrade account trying to make a move? Well first, you should go to CommandTrading.com and get a much better execution system! But that said, the next best thing you can do is to watch two different indicators. 1) the big guys, and 2) the actual market movement as shown on CNBC or Bloomberg. By watching the big guys we mean this. Set up your screen to keep an eye on MSFT, QLGC, EMLX and maybe BRCM. If you start to see a group like this inching higher, it's a fair bet the stock you are watching will pick up the pace a bit too. Then tie that into the actual NASDAQ and DOW. If you are staring at CNBC and you see the NASDAQ going like this: + 15, + 18, + 19, + 21 etc It is obviously moving. If you watch the "big guys they should be too. Finally, your individual stock you are watching should be ticking up also. The idea is to time these events and get in "relatively" early. No you won't catch the first few inches higher, nor should you try, many are headfakes. But if you see a decent coordinated move, catching a chunk out of the middle of the move and bailing out "too soon" will put a few bucks in your pocket all day long. This "wave" of rolling up and turning lower generally goes on all day long. Sure there are "flat" times where nothing is moving but that's not too often really. In a market like this, where its dangerous to hold onto anything, making well timed day trades is the best it gets. Get a good system and watch the indicators. You won't get rich, but picking off a couple hundred here and there on a daily basis isn't chump change either. |
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