DAY TRADING STOCKS - STRATEGY NOTES:

One of the most important strategies I've used for many years, is to quickly decide, during the first 15-20 minutes of the market open, whether that specific trading day is what I call a "breakout trading day" (during which I trade aggressively), or a "maintenance day" (during which I carefully manage open swing trading positions, with far fewer actual trades).

How do I determine this?

#1) I will follow the SPY premarket, to see if it's inside vs outside the prior day's range, and if so, which direction? For example today, as I write this right before today's open, the SPY is gapping up, an "outside open", so I'll be more aggressive (taking profits on open winning swing gaps up, fading shorts, and looking for new breakouts:



#2) During the opening 15 minutes, I then "shift gears" and focus on the 2-day NASDAQ Composite chart, and the two TRINS (one each for the NASDAQ and the NYSE), to see if they're bullish, bearish, or indeterminate:



#3) Finally, I then carefully check my open positions, premarket gaps, open P&L for overnight holds, and develop my strategy for each morning well ahead of time. Here is a screencap of some of my actual trading orders and open positions from today, Feb. 17th 2010, for your review.

The key is, to decide "is today an aggressive breakout day?" or should it be merely a "maintenance day", meaning a day in which I modestly scale in/out and trim/scale up/down open positions (like pruning plants in a garden), vs aggressive trading. Knowing the DIFFERENCE can be a big help in avoiding overtrading choppy days, or undertrading breakout days.

For more, be sure to study the http://www.StockTradingSuccess.com system (updated regularly with members-only live webinars; next one is scheduled for 9am this Friday, February 19th).



Ok market's about to open, I've got to go. Let me know what you think about this strategy, or feel free to post questions - thanks!

__________________
Good trading,

Ken Calhoun, Pres.
http://www.TradeMastery.com (NEW for 2012)
http://www.BreakoutMastery.com
http://www.MomentumDoubler.com
http://www.TradeWebinars.com
http://www.ETFMastery.com
http://www.ADXMastery.com
http://www.ChartScans.com (daily alerts)
http://www.DaytradingUniversity.com
http://www.TradingTelevision.com
http://www.StockTradingSuccess.com (w/Steve Nison)

p.s. per sec/cftc/ftc regs, none of this is to be construed as trading recommendations, it's just for educational use only, so you can "peek over my shoulder" to see what I'm doing with some of my trades. See www.daytradingu.com/disclaim.htm for full disclaimer.
These pages contain excerpts of actual trades I've made; it's not a complete record of every single trade I make. Some days I'll take trading wins or losses that I do not take the time to screencap and post online; it's a partial record of some of my trades. Note that I am not making income nor profitability claims of any kind. Most traders lose regardless of what they do. The majority of my personal income comes from my training business. I try to capture the best highlights of successful days so you can see practical examples of what I'm trading. There are also days in which I incur losses (and wins) which are not shown. This is simply a partial record showing highlights of some of my successful trading days. No representation is being made that other traders, including customers, will be able to trade like I do. Generally expected (average/typical) trader results are that all traders incur trading losses and most do not become profitable, regardless of the training they get. Trading is a speculative, high-risk activity.

Hi Ken,
Is there anywhere I could go on your site to understand what TRIN is? If it is explained in your on-line course, then please let me know as I will be signing up for that within the next week and can learn there. What you sent out today is really helpful as the hardest part is lining up the order of importance of data signals......making sure we have them in the right order. So many thanks and much appreciated. Best wishes, K.

Hi Kaaren,

Great question, it's a FAQ from traders over the years. Yes, I cover the TRIN (Arms' Index) in my various educational materials; the main way I use it for myself is as a barometer of buy/sell bias in the markets, on a realtime basis (which is why both the NASDAQ/NYSE TRINs are in their own updating time/sales windows for me to follow, they update every 30secs).

Though there's much more to it, the basics are that:

a) I try to avoid trading if either TRIN is between .7 and 1.5 (1.0 indicates buy/sell pressure is exactly equal)
b) I have a long bias and primarily look to buy if the TRINs are <.7
c) I have a short bias and look to buy short ETFs and/or short stocks and/or scale out of long positions, if the TRINs are >1.5.

Best wishes with it,

Ken

__________________
Good trading,

Ken Calhoun, Pres.
http://www.TradeMastery.com (NEW for 2012)
http://www.BreakoutMastery.com
http://www.MomentumDoubler.com
http://www.TradeWebinars.com
http://www.ETFMastery.com
http://www.ADXMastery.com
http://www.ChartScans.com (daily alerts)
http://www.DaytradingUniversity.com
http://www.TradingTelevision.com
http://www.StockTradingSuccess.com (w/Steve Nison)

p.s. per sec/cftc/ftc regs, none of this is to be construed as trading recommendations, it's just for educational use only, so you can "peek over my shoulder" to see what I'm doing with some of my trades. See www.daytradingu.com/disclaim.htm for full disclaimer.
These pages contain excerpts of actual trades I've made; it's not a complete record of every single trade I make. Some days I'll take trading wins or losses that I do not take the time to screencap and post online; it's a partial record of some of my trades. Note that I am not making income nor profitability claims of any kind. Most traders lose regardless of what they do. The majority of my personal income comes from my training business. I try to capture the best highlights of successful days so you can see practical examples of what I'm trading. There are also days in which I incur losses (and wins) which are not shown. This is simply a partial record showing highlights of some of my successful trading days. No representation is being made that other traders, including customers, will be able to trade like I do. Generally expected (average/typical) trader results are that all traders incur trading losses and most do not become profitable, regardless of the training they get. Trading is a speculative, high-risk activity.