I’ve been up for a while now — I journaled, used the bathroom, had a protein shake — and now I’m starting to look at the markets. I logged in to all of my accounts and immediately am hit with a snag. I’ve got 2 day-trades available right now, so do I take a couple shots at day trading? Do I look for more long-term entries and hope they don’t close me out within the day?
I think the move is to day-trade. I talked about it a bit this weekend, and if I’m swing trading, I seemingly have to take the trades on a, minimum, 4h chart — and I SHOULD do them near the end of the trading day so that there’s less likelihood of exiting them within the same day — From there, I’m more prone to slippage, so I just need to be super disciplined about not taking those trades on time frames lower than 4h.
In the S&P, last week price never really made a push through the highs they made the week prior, and thus formed a short-term lower high. And yesterday, price reached another low, that made a lower one than the previous one. That said, yesterday price closed near the highs, forming a hammer — and closing at the highs of that key area — but overall through February, there’s been a sideways-down-trend. I think I don’t want the markets to drop, so a part of me is looking for reasons that things will push up again, but frankly, other than pushing back to the highs of support/resistance, I don’t see it. So, I’ll be looking largely for Shorts today, but I’m not going to ignore any Longs that look promising.
Alright, I went through my day-trading screener, and pulled out 8 that I liked initially — I also decided to look at them on the 2h chart this morning, rather than day, so that I can get a better idea of the short-term movement rather than longer-term. I think that’s messed me up in the past a bit when day-trading.
Also, I accidentally sorted by least volume instead of most (my min. was 500K, so it’s not no volume, just less) so some of these are lower-volume stocks I’ve never really looked at. Let’s dive in.
SOFI – Short – This gapped down this morning to some lows that it reached a couple weeks ago, and that also held up back at the end of January, but rallied from there to a resistance area from last week. Below the lows of the day, there’s a decent gap to the next key level, so this looks like a great retest opportunity. I dropped down to some lower time frames to see if I could find any entries, but couldn’t, and got frustrated that this was starting to move even though I hadn’t run numbers yet. It looks like something I could/will miss and it’s frustrating, but at the same time the push back down might be really fast and that’s also scaring me.
A few things here already. 1) Instead of doing a full analysis of all the stocks I pulled out. I decided to look for entries here because it looked tradable. It was a clean pattern and started to move already and I didn’t want to miss it, so I found entries and entered an order and set alerts. 2) I need to rely more on my instincts and trusting myself that I understand what I’m looking at, and this is one of those scenarios where I’m trusting a gut feeling and honing my instincts as a trader and 3) This is complicated but I need to find more of a routine.
Already this morning I wasn’t sure if I was going to day-trade or swing trade — and in the future when I have more money in my account my options are just going to expand to Forex and Options etc. — and because of that, I think, I’m starting out the day on the wrong foot. I need to know EXACTLY what I’m going to look at and look for each day. I need to take as much “figuring out” out of the equation as possible, so all the “figuring” I do is pure analysis and (hopefully thus) better/faster/more apt analysis.
At the very least, I need something I look for each day that will steer my direction for the day. I can’t just choose what I’m going to do each morning arbitrarily, especially when I’m not up and at the charts at the same time each day.
In the time it took me to type the paragraph above, my trade has already triggered. I think I’m just going to manage this one, since it’s a 5 min. chart, then either come back here to find some candidates to swing trade later — though if I’m going to pull the trigger later, I should do the analysis later — or just work on my blog some more. Knowing me, It’ll be the latter. I’ll do a full write-up for this trade in a bit when I exit it.
EOD
(I had to double-check to be sure the actual numbers) So far I’ve taken 4 practice trades with the new retest strategy. Two losses and two wins. The wins have both come day-trading on 5 min. charts and both losses have come from longer-term 4h chart trading that lasted for several days. I feel like I already have more faith in this strategy because when I’m wrong, I’ll be wrong the same amount as the prior one, but when I’m right, I’m going to be a lot more right.
I just have to make sure to be patient in finding the setups and quick with the execution. Don’t force the trade, but when I see it, I have to be sure I’m on it. I feel confident I’ll be able to pull it off. I might be more prone to missing trades with this strategy, but I have to continue to remember that there are going to be endless opportunities to make money in the markets and a missed trade here and there will happen. It won’t feel great in the moment, but I’ll try to continue to remember that.
To put a bow on it: Looking for a stock whose 2h chart matches the direction of the S&P, and the direction of the 5 min. chart/retest. The retest will consist of a move in my intended direction, a short break, creating a future resistance area to retest, another short break, then a return to the lows of that base. From there, I’ll enter an order at those lows with a stop at the highs of the base. All of this will be dependent on a target that offers a 2.5+ R:R.