Many people who are beginning to learn how to day trade typically will find themselves with the identical challenge. What is the best way to discover stock trading ideas in real time. The trouble isn't merely identifying a few decent ideas, it is finding sufficient of them to produce a profit on a regular basis. Trading mostly a probabilities play. To come out on top you want plenty of choices to let the probabilities work for you because a specified percent will most likely wind up as a loss regardless of what level of proficiency you possess. The primary aim is to seek to finish every day with a profit. This means we likly have to identify at least 5 trading patterns every day. Not all trade setups are going to be traded. Missing trades happens regularly as well, especially if you are using limit orders to place your trades a lower risk spot and the order does not get executed.
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Among the easiest methods to identify trades is to make it uncomplicated. Put up a five min chart of a stock price, preferably one that has reasonable volume and volatility. Put up both Bollinger bands and a 13 period SMA on the chart. We are going to utilize the two of these to pinpoint a trend and then get in the trend at a low-risk area. The blueprint to this method is to never guess when a price trend will start - that means do not anticipate price action. When looking to buy, we are planning to wait until the upper band is sloped up and the bottom band is sloped up for a minimum of 5 bars. We would like the price to have touched or pushed above the top band recently. Next we watch the 13 period moving aveage. Anything price this area as soon as the price is in a trend is fair game for placing an order. In some strong trends there may be no opportunity - meaning no retrace to the average or a bit lower.
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To find the short chart setup we are planning to do just the opposite with a minor tweak. Short trends tend to be quicker and have a lower ability to carry on the price trend. As soon as price trades above the 13 period simple average the downtrend is done most of the time. So we want the upper and lower band to be angled down for at least the last 5 price bars. We will look for the price to be on or beneath the lower band for a couple of bars currently. The entry in the down trend is will be about 50-75 % in between the 13 period average price and the bottom Bollinger band. When attempting to place a short trade utilizing this method is likely to result in smaller profits than the long entries.
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Another thing to keep in mind when utilizing this technique is to run it on dozens of stocks at the same time. Check that that you get many varied sectors included so there will be a variety of trade options to choose from. Most of the decent profits making use of this technique will happen in the first 3 or 4 hours of trading. After some experience, you should find that this method can get around a 65 % win ratio with no substantial losses. If you find yourself a long or a short and the Bollinger bands begin flattening out and you have'nt exited at a profit, you should aim to get out of the trade at the best price you can, even if that is a small loss. The average trade time from entry using this method is about 20-30 minutes or so. Anything beyond this time in the absence of nailing down a gain increases the chances of a losing trade.
