This week Watch 10 for 1000 Watch list I am sending out as a free trial. DayTradingRadio.com has moved into a bigger office and will be expanding in the month of November. The site will be offering more coverage of futures trading, Will also be expanding into options based trading. There will also me an over night futures trading alert system activated alerting you to any over night market moves. DaytraderRockstar offers the best market coverage anywhere with live market calls and news alerts. This has always been a free service and will continue to be free. A Premium service is available for precise email alerts and technical setups, A weekly 10 for 100 watch list, A stock chart watch list, Premium education and seminars. The site has been growing rapidly over the last 6 months, and the $ 14.95 price has been kept at a minimum That's less then .50 a day. Signing up at this price grandfathered you in for any price increases in the future. This means this is the most you will ever pay, even if the price goes up to $49.95/ month. So enjoy the site the free education Videos, Live Trader Tv, Day Trader Radio, and more and join to be part of an exclusive team of traders that will expand your knowledge of the markets and work towards your dream of becoming a full time Day Trader.
In This weeks 10 for 1000 watch list I want to start off by discussing how to maintain your sanity in todays markets. I just copleteving my office last week, and now I can look back at the charts of last week and see the total devastation in the markets. It must be hard for a beginner tader envision how to trade these markets. I hope to shed some light and review what is needed to make a career out of trading the markets.
First off, this environment is probaly the bet had in years for inter day moves in both stocks and futures. The traders that are trying to trade this market with less then 25k are the ones that find these the tough conditions and will have the hardest time trading this volatility, always afraid of using up there "daytrades" will force them to hold position longer then they want. This is a major issue that needs to be addressed. Because of the economic news that has been hitting the markets day after day, it is impossible to gauge where the markets will open from one day to the next. When this is the case even technical analysis become more difficult and in some instances totally ineffective. If are holding stocks overnight just because you don't want to burn a trade (pattern daytrader rules) then you are gambling. And some times you will be right and some times you will be wrong. But either way that is not how to run a business and this is what this has to be considered.
So what are you options?
1. Trade the futures markets (ES, YM, NQ) these do not fall under the pattern daytrading rule, and you can trade them in and out all day long. More on this later..
2. Scale back on your trading size. When you are trying to trade a market that is so volatile, and are holding positions that are making you nervous? ( look at that statement and listen, if you are nervous holding a position then the position is too large for you) You need to scale back on your size. Do this whenever you are trading against the trend (looking for a bounce, trying to scale in on a bottom)
3. Step out of the markets. You don't have to be in the markets each and every hour of each and every day, one of the greatest downfalls of a trader is over trading. Step back, know the markets will always be there for you. The stress factor will wear you down and cloud your judgement. Force your self to get up from the desk and get some fresh air, take that needed lunch.
4. Focus on individual stocks or trading vehicles like the futures. By this I mean don't get caught up watching too many stocks, scale down your watch list and become specialized in a few select stocks. Then become one with them, learn how they react off the moving averages and the pivot points, when they show relative strength vs the markets. Learn the charts 5,15, 30, and 60 minute time periods and how each one responds to different indicators. This will keep you from jumping in random stocks that you are not familiar with.
5. Get organized, and have a game plan. Make a check list or criteria to guide you in your entries, when market conditions are not favorable then you tighten it up forcing yourself to become more patient in the markets. Let's go over my checklist.
I trade with a 5 indicator system DTRS 5 Indicators
Feel free to adapt this and modify it to your trading style.
1. Stochastics ( 5 min S&P chart)
2. Moving Averages
3. Chart Patterns (wedges, flags, double bottoms ect.
4. Trend Lines and support and resistance
5. Pivot Points, Time of Day, Relative Strength
Each one of these indicators are used individually, but are more effective when combined. I try to enter a trade when 2 or more indicators are showing a buy signal. The signal becomes even more reliable when 3-4 indicators are lined up. So if you have patience to trade only when the signals tell you too your success as a trader will be unmatched. Again that's why patience is one if not the top prerequisite of a successful trader.
Let's examine the entries based on the indicators below
Here are a couple more examples of how to use the moving averages as an indicator
Doing my scans this weekend I came to realize we are in a very good position in the markets, as you will see below. Friday we had a nice reversal in the markets after congress vote and passed the bail out bill. This just showed us that the market expects more and had already priced in this action. In my opinion I thought this was very obvious scenario and was not expecting a rally at all. I still want to see a couple more days of selling before we get a sustained market rally.
I will be looking to buy this week some very good quality stocks that are setting up for great bounces. Also even though things look bleak for our economy, The situation for investor now entering the market is very encouraging. There has not been a time where i have seen more oversold indicators across the board in the markets. Even looking at some tried and true companies, and see the pounding they have taken in recent weeks, everything points to a reversal in the near future. Today's list is a shopping list of oversold "quality companies" stocks that have a history of coming back strong when the storm clouds vanish. Normally I would put some annotation along with the stocks but this week because of the volatility and oversold conditions I am just posting the charts and notes. Let's start off with what I expect the markets to do.
Let's look at the INDU (Dow Jones Indu):
DayTraderRockStar Shopping List for this week
There are a lot of other stocks that I can list andthis just shows us that the markets seemed to be very over sold, As ofthis writing the futures are Dow futures are down 177 and S&P futures are down 19. This is working into the scenerio i mentioned earlier. It will be extremely hard to call a bottom, but on any gap down there is a good chance of reversal during the day. So if we wake up to Futures down a few hundred points , I will have to step up into this panic. Here are some other great stocks i am watching and looking to BUY
Charts can be seen on Members page
Sunday, October 5, 2008
Posted by DayTrader RockStar at 11:35 PM