Under-skilled traders get taken to the cleaners by the momentum game. So we need to get skilled.
“After the bell, stock “ABCD” surprises Wall Street with great earnings. Stock price sky-rockets in after market trading and the stock opens significantly higher the next day.”
It sounds as if this event would be easy to trade, but the competition (market makers/specialists, market insiders, and quantitative mathematics programing traders) will not allow such an easy time with momentum trading. More often than not the impulsive day trader just ends up being the “greater fool”.
Strategy Summary
This day trading strategy involves finding stocks and other markets that have been shocked by news events. Once the stock (or other market) is identified, we allow for momentum to reload as we wait for a significant dip in the price action. After this minor counter-trend is exhausted, we now have a open window for a momentum entry to buy (or sell short) a breakout of any significant level established by the counter trend. For targets and loss cuts, we use support and resistance points as they are tested by both the stock we are trading and the broad market as well.
There is no Holy Grail
I can help you learn how to work towards day trading success, but I want you to understand first and foremost that there is no quick and easy way to day trading mastery. If it were so easy, obviously, everyone would do it. Stop looking for an easy set of rules that will catapult you swiftly off to financial freedom. You must accept that there is no such set of rules. You will not read about it in a book or on the web. Nor will you stumble across it yourself. You must accept this and take responsibility in thinking for yourself – thinking being the key word here. Enough lecture though - let’s get started.
OK, no Holy Grail… Then how to Begin?
Common sense says let’s build a set of solid trading skills by breaking down a day trade strategy that we can learn and improve on, and learn to apply our skills to real time trades.
Momentum Day Trading Skills
- Selecting Stocks for the Momentum Day Trading News Events Strategy
- Charts and Tools for the Momentum Day Trading News Events Strategy
- Intraday Price Direction for the Momentum Day Trading News Events Strategy
- Counter Trend Exhaustion and Reversal for the Momentum Day Trading News Events Strategy
- Finding Entry for the Day Trading News Events Strategy
- Setting Profit Targets and Stop Losses for the Day Trading News Events Strategy
more coming soon to the day trading strategy guide