Old stuff, but maybe there will be new thoughts for someone, I don't remember who the author is. Found in archives. I'll post a couple more later.
I think, that most of the money, which i did in day trading, comes from consolidation trading. This is one of the few professions, where you can accurately predict your growth potential. It mainly works in all markets, but it is extremely effective in a strong market. This is most common in promotions, which are very strong in the morning.
Abstracts:
1. The stock exchange will have a strong rally in the morning trading session
2. Promotions will return mid-day
3. After a pullback, it will trade sideways in a fairly narrow range for a long period of time.
4. Look at volume from earlier up versus pullbacks.
5. The uptrend begins again
6. Find the middle of the daily range. If stock moves along the top edge of the range, then she must challenge the maximum of the day
7. Where to set the position? Once the consolidation range is set, you may want to get a small position near the bottom. To the extent, how it starts to develop, add your position.
8. Make sells close to resistance levels from the beginning of the day
9. If stocks move easily through resistance, then, probably, it will cause a high level.
10. Set alerts at intraday high and at the top of the consolidation range
11. After your morning trading session, take a look at the top winners of the day. They are, probably, are candidates for the consolidation game
How to trade consolidation
First scenario:
The scenario includes a promotion, which went to 1 dollar off its lunchtime high. Traded in a ten cent range.
1) Set Allert Behind 1 dollar over the top of the range and 1 dollar below the bottom of the range
2) If the stock falls below the range, watch, if he moves down. If it moves quickly above the bottom of the consolidation range, you need a lot of time. Breakout attempt. Now, when she failed, the stock should start to move up.
3) Place your entry bid as close to the bottom of the range as possible
- If support falls again, then sell your share.
- If prices start to rise, watch
- If after that, how the position will be obtained, it will be followed by another order at the same price or higher, after which the stock will move to the top of the consolidation range
- When the top of the range is violated, you must use a market order to buy
4) If the stock doesn't rise at all, sell 1 of your 2 lots
5) If the stock returns below the top of the range, sell the lot, which you bought at the bottom of the consolidation range. If it falls slowly, than trying to sell it or close an offer.
If the alert is triggered, when stocks break the top of the consolidation:
1) If the price has moved to the top of the consolidation range, then put the limit one dollar higher
2) If your order does not hit, see prints. If the promotion prints out an offer, then you must enter with a market order
3. If prices rise rapidly and supply begins to rise, then the shares, probably, are in the early stages of an uptrend. Stocks can now be traded as an uptrend
Where is the profit?
- You trade it like an uptrend game (previously taught)
- You are looking for resistance levels since the beginning of the day as extra points to sell
Second scenario:
Scenario two includes promotions, which took off the previous day, but there morning is not a serious uptrend
and. Consolidation in this promotion, probably, happen at the start of the day
b. Promotions, who gape and move sideways in the morning, tend to move higher. Because if the gap up hasn't attracted enough salespeople for a significant rejection, then, when a big buyer or buyer step into the stock will move higher.
with. The best way to find these stocks – look at the winners premarket
This is the hardest way to start your trading career.. It's like trading with one hand behind your back.. Study of, how to read order flow, important for most, to be profitable traders. Reading graphs is best used, to supplement the reading of the feed for new traders.
