Monday, January 16, 2017

Basics of Trading Part 5: Your Heath and Day Trading the Daily Chart

5th in a series of post's on the basics of day trading for beginner traders. Will be archived so can be used in conjunction with trades I post, and my trading plan which doesn't cover the basics.

PART 5: Your health and trading and a Simple Day Trading Setup Using the Daily Chart.

YOUR HEATH: Everyone needs to take their everyday health seriously and as traders we need to be sharp and alert when our money is on the line. "the preservation of health is easier than the cure for disease" 

Sitting is the "new smoking" and Movement is the key to beating this habit. Set a weekly exercise routine based around walking, mid core, strength training and cardio workouts.

Your daily diet should have an abundance of fruits and vegetables to snack on throughout the day. Supplement intake is almost a must and I highly recommend liquid vitamins that absorb quickly and give you the needed nutrients over the standard hard tablet that absorbs less than 20% into the body. The 2 vitamins I take first thing every morning are Isotonix Vitamin B complex and OPC-3 antioxidant. All natural and keeps me sharp. The follow link I touch more on Your Heath and Trading. http://www.howidaytrade.com/your-health---trading.html

DAY TRADING THE DAILY CANDLESTICK
Step 1: Scan for Bearish and Bullish Engulfing Candlesticks on the Daily Chart. I touched on these in Part 2 of this 5 part series on the basics of Day Trading.

Bullish Engulfing Candles need to be trending up on the Daily and Weekly Chart and bouncing off Support or closing above resistance on the Daily Chart.

Bearish Engulfing Candles need to be trending down on the Daily and Weekly Chart and bouncing off resistance or closing below support on the Daily Chart.
Prefer the engulfing bar has higher volume then the previous day. The engulfing bar must be wider than the average candle and stand out with small wicks near the entry point. When you see this bar you should have zero doubt that it’s an engulfing bar.

Support/Resistance points on the Daily Chart: candlesticks off the 10sma, 20sma, or a multi touch support or resistance area.

Bollinger Bands: can be used to measure the "highness" or "lowness" of the price relative to previous candles using the 20sma and as support and resistance. A tight BB with an Engulfing Candlestick can signal a breakout/breakdown is near. A spread BB with an opposite trend Engulfing Bar can signal the trend is near over. (Example the trend is up with Bollinger bar expanded up and a Bearish Engulfing bar appears off the band)

HOW TO ENTER EXIT AND PLACE a STOP
Entry: For a Bullish Engulfing Bar enter one tick above the high of the bar. Do not chase more than .5 to .10 above the price.

Stop Exit Point: For the Bullish Engulfing Bar place the stop at the low. (I outline in my business plan alternative stop areas - but stick to this stop premise as you learn how the markets trade and become more comfortable) Always exit at end of the trading day if neither stop or exit is obtained.

Exit Point: The same range between the stop and entry point. Add the range to your entry point and this is your profit point. (Example entry is 50 and stop is 49, range is 1.00 – exit would be 51)

Shares to Purchase: Use this calculator to determine the # of shares to purchase based off your risk. New traders don’t risk any more than $25 per trade. http://www.howidaytrade.com/stock-day-trading-plan.html

Video Attached: Here I go through scanning, a few candidates and trades made the previous week to help give you an idea of the process. Will need to click HD on your computer for a clear screen. my find better quality on the Facebook site: https://www.facebook.com/How-I-Day-Trade-163547208984/?fref=ts

video


Of Note: DO not enter the trade the night before - wait until the market opens the next day and hits your entry point. If the stock runs away from you and doesn't trigger your entry then DO NOT CHASE. There is always another trade.

The Daily Candlestick Day Trade will help build a foundation for intraday trading. You can grow your account and learn without the roller coaster ride of quick stop outs, big wins and big losses. Sticking to the trend, using support and resistance and only the trading strong candles will dramatically reduce the number of times you are stopped out and enhance your success rate.

Like any new skill it takes time to learn but most of all you must enjoy it. Trade for the game not for the money.

"A man must believe in himself and his judgment if he expects to make a living at this game." - Jesse Livermore



* You don't have to trade everyday. If the conditions don't feel right or if you're unsure of the current days trading environment then PASS on the trade. Missed money is better than lost money.  Day trading and the stock market is not a "war" that you must win at all cost. Trading should be fun, wait for only the good setups. Follow your rules, stick to your stops, and know that everyday the market presents a new chess board.

No comments:

Disclaimer

I DO NOT MAKE RECOMMENDATIONS TO BUY OR SELL SECURITIES - I JUST POST TRADES I MAKE OR FIT THE RULES OF MY TRADING PLAN ON A DAILY BASIS. DO YOUR OWN DUE DILIGENCE - YOU ARE RESPONSIBLE FOR YOUR TRADES, INVESTMENTS, AND DECISIONS! ALL CHARTS COURTESY OF TRADESTATION, SCHWAb & TD AMERITRADE