Hi Peter
what is your advice for chasing a share. For example Flt gapped lower on open I had more order in before open and missed out.. Do you adivse chasing it through the day? This happens at times gapping up and down.
Francesca
Peter Mathers
Posts:58
202.7.166.182
06/12/2008 7:49 PM
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Hi Francesca,
There are so many things to take into consideration.
One needs to be clear on the bigger picture first, then look to take the middle path way on the trade.
Firstly, this trade is in no man’s land, it is half way between two major levels TL2 and TL13.
So the risk verses reward is weakened, because we can’t just pop the stop behind a major level keeping the risk distance small also the stock hasn’t got that far to run to TL13.
Thirdly we can expect it to bounce around these MediumLevels, so we would need to accommodate these swings.
On the bigger picture how sure are we that it will get to TL13? This is the first question. Secondly if you think it has reasonable high probability of getting to the target, then the next question is about money, how much. Even though there is a reasonable chance for this stock to get to TL13, it is still in no man’s land regarding price and it could bounce around, so from that point of view, one would only place a much smaller amount into this market, and give it room to move. This doesn’t really answer your question…
Chasing…this opens a window into day trading techniques which are wide and varied. However to start with the times of day are very important, that is, the morning session and the afternoon session. The morning session for me is 10.00 am to 11.30 am and the afternoon session is 2.30 – 4.00pm. the time in the middle is not worth looking at, I would only be interested if the volume in the morning session was excessive.
The next thing is how do you trade these sessions? Reading price and volume from the market depth or the course of sales is first and foremost, then you need to blend the price into the picture, you understand the tradinglevels, so you know what prices will become support or resistance. The volume helps confirm the price action; this confirmation is where the trader takes action. All of this takes skill, however the Robo method is a practical method to trade intra day. The time frame you choose will be important. You could start with a 10 or 20 minute bar and switch over to the hourly bar through the lunch time period. Its all about being in control of your risk.
Any how a few things for the hat…
Rgds Pete