Hey Bella,
Big fan of the SMB Blog and have been trading for about a year now. I engulf myself in as much helpful and educational trading literature but seem to struggle figuring out afternoon trading.
My style is that I only follow and trade the same couple stocks every single trading day. These stocks typically have small gap moves in the morning and the style I trade is based off of the Opening morning range, EMA’s, previous day close, low, highs, inside bars, adx, and RSI trends.
JPM (one of my stocks) is great in the morning but tends to give me trouble in the afternoon. So to not be too general as asking how do I play gaps but how do I trade a stock like this in the afternoon on: trending up days, down days, fed number days, earnings season, since I’m strictly intraday do I stay out of the last 15 minutes, etc…
Bella Responds
I sit and respond from The Cafe at The Hotel at Mandalay Bay eating my lunch though it is more brunch West Coast time. I am also doing some prep for my presentation to the great Tickerville tribe. I love starting the day flying east to west. I banged out 6 hours of work already and where I am it’s still breakfast.
Thxs for following SMB Blog. Your question is one with which many traders struggle as evidenced by my inbox, phone calls and talks with our guys. Let me break this down.
For intraday traders stocks are easiest to trade if they move away from prices of consolidation AND trend for the day. Stocks in your basket are not as likely to do this as Stocks In Play (stocks with fresh news), especially midday. What is the catalyst for the stocks in your basket to move away from prices or trend if there is no fresh news? The overall market will contribute but then aren’t you just trading SPY or QQQQ or the futures?
If your stocks are not near important technical support and resistance areas, the tape doesn’t clearly define an opportunity, or the market isn’t clearly starting to move in a direction, then what edge do you have? And how often will this happen midday? Perhaps about as likely as me ordering the warm chocolate cake for dessert after a big bowl of pasta- or not very (working on my Steve Nash no sugar game).
Stocks In Play offer more trading opportunities. They trend more cleanly. They move away from prices. So I would suggest you fire off an email to [email protected] about a free 2 week trial for our SMB AM meeting. You will start to pick up how to find the stocks we trade and how.
If that does not interest you then start to understand when you have an edge with your basket of stocks. And when you definitely do not during the midday. Trade with more size when you have an edge and avoid those midday setups certain to turn the market into the house and you just the gambler certain to lose in the end.
Gotta go work on my tan by the pool. BTG (blog, tan, gym). But thxs for the question. Let us know how you move forward.
Mike Bellafiore
Author, One Good Trade
