This article discusses three entry strategies for day traders :
(1) KEY BUY :-
It is designed to help trader come into market as a buyer , precisely when the group gripped by fear and fright is anxious to leave the game .The key buy set up involves three simple steps :-
(a) New high -This criterion calls for a stock that has recently made a higher high than it prior rally . High does not imply all time high ,it means that stock should have made a new high no longer than 8 days ago.
(b) Three or more consecutive lower highs – This criterion calls for the stock to experience a 3-bar decline i.e. the high of each down bar must be lower than the prior bar’s high . This concept is applicable in intra day time frames , as well as daily and weekly time frames.
(c) The action – Buy the stock whenever it trades 0.25 to 0.5 above a prior bar high.
(2) 30-minutes Buy :-
In todays volatile market gaps are very common occurrences , and the trader who lacks the ability to deal with them is playing a distinct disadvantage.The first 20-30 minutes is the trickiest time period of the day , particularly when the market is poised to open up very strongly .If the stock that has gapped up and is able to trade to a new high after 30 minutes of trading , the strength demonstrated at the open was not artificial but real.The strength in this case is real because it is being confirmed by continuous buying .
Working Procedure :-
Set Up – (a) – The stock must gap up at the open by 0.6 or more . It is best if the stock does not rally much from its opening price , although stock which gap and stall immediately make the very best candidate for this strategy .
Action – (a) – Once the stock has gapped open , trader must let it trade for a full 30- minutes .
(b) – Once 30-minutes has transpired , the trader sets an alert 0.25 above the high of the day , which is not too far away from from current price.
(c) – Once the stock breaks to a new daily high the trader buys with a protective stop 0.25 below the day low .
(d)- Then the trader would use the trade management and profit taking steps.
(3) Late day breakout description :-
The latter part of the trading day offers the trader one of the best opportunities for picking up micro trading gains . It is because the , the market often continues where it left off before the start of mid day doldroms , providing the traders with new possibilities of trading . The latter part of the day imply time 2.15 onwards .
Set up :- The setup is based by viewing 5-minutes charts.
(a) – Stock must be up on the day .
(b) – The stock must be trading at or above its opening price.
(c) – The stock must be near day’s high .
(d) – The stock must be in sideways base at least 1 and 1/2 hrs.
Action :- (a) – The trader looks to buy 0.25 th above the recent high price , but it is preferable to enter the stock below the daily high . The assumption are made by analyzing 5-min price chart.
(b) – The traders put stop loss just below the lowest price.
(c) – Sells the stocks when its moves higher .
