I mentioned yesterday that I have been using a very simple trading strategy to trade mid's of late. Here's how the sausage is made. Comments welcome.
I need to state at the outset, the central tenet of my trading strategy when going long, is I trade the uptrend and sell when the uptrend ends, whether it be on the 1minute or 10minute timeframe.And everyone trades differently, according to experience, risk capacity, strategy, maturity, etc.
My trading day starts with viewing screenshots of previous trades, with charts and market depth. It's heavily geared towards pattern recognition for me.I no longer read pre-open announcements. I no longer start the day with preconceived notions of what will likely run today. It's all about the starter's gun for me. That's when my asx trading 'day', really early morning, starts.
I trade with both an iress platty and ig's platty (for different instruments).One of the screens I use for the staggered asx open (10.00-10.08, a-e, etc) has iress market activity, mid's, value, at the bottom and four 1minute charts, showing candles and volume only, above.Stocks that start uptrending from the get-go are inputted into the 1minute, with a very quick daily eyeball carried out, then back to the 1minute.Another screen has 4 market depth panels, with only about the first 10 lines bids/asks and total bid/ask vols visible. Any potential quick early scalps are identified on the 1minute, with a quick scan of any potential targets in bids/asks on a maximised market depth.If I like what I see, quick entry into the uptrend. Immediate exit when the uptrend ends, or when I see stalling momentum, all on the 1minute, always paying attention to volume. Position sizing for these trades are relatively small.
These are my unsophisticated trades made 'around the open'. I don't scalp if my head is not in the right place, as these trades, being more unsophisticated, are instinctual, requiring speed for the entry/exit.If I have been having a good night scalping indices or spot, these trades come naturally, as I'm still in the scalping mindset.A great scalp earlier this week was opy on tuesday (sorry this is a 5minute from tradingview charts, am currently away from my charts, not the 1minute). Literally 25% move from low to high in about 15minutes from the open, note did not scalp the entirety of this move.
I should add I don't always use a stop loss with a quick scalp, due to my discipline re trading the uptrend, selling the break and the speed required here. I always use a trailing stop with the longer timeframe trades, always.
It is not uncommon for these mid's to be re-entered, later in the morning, as my longer, larger position sized trades.That's the simple sausage behind my early scalp trades around the open, note scalp opps do arise during the day, just that I have found these types of trades arise most often for me in the first 15minutes.
Once 2 x 10minute candles have established a trend the 10minute chart comes into play in unison with the 1minute chart for the potentially longer timeframe trades.With the longer timeframe, larger position size trades, I will always pay attention to support/resistance lines on the daily, supply zones, breakout zones, whilst trading on the 10minute. Market depth targets tend to mirror these if they are applicable.For me these trades mostly emerge from a stock that trends up on open, slows momentum into a lo-volume sideways trend, with minimal pullback and a volume push to the upside on the 10minute. Uptrend lines are crucial. Bwx was a good example of a sweet uptrend trade on friday, it traversed up the intra 10minute practically all day (note below is the 5).
I don't read pre-open announcements, as what I think of an announcement is irrelevant. Stocks really run on an announcement when the market likes the announcement and that will become obvious to me in the charts after open. If a stock is really going to run, I don't need to buy it on the open to trade it successfully.I don't trade smalls, with the exception of that crazy 1000% week - that couldn't be ignored, traded with very small position sizes. Mid's provide me with regular daily income, with the occasional large cap traded.I always pay attention to the volume in candles, the direction of the volume as the uptrend progresses, the stopping volume with an uptrend, they're all signals.
I always pay attention to market depth, as targets on both the bid side and ask side can be easily apparent. Some traders only see targets on the ask side and are surprised when stocks dump down (to a target on the bid side). Market depth also clearly shows whether bigger players are around and when they leave.An example of a successful market depth target trade was fzo on wednesday, where all day a target at .40 was clearly visible, over a million at .40, whereas ask lines below would vary around 30-70k and occasionally above 100k. The volume in the chart at .40 is clearly shown. Two good trades where offered in fzo that day.
I also pay attention to the total bid/ask volume, which may seem surprising to some, in a typical 2-3 day pump n' dump, it is a very quick pointer to the position in the p&d cycle. Yep, mid's get pump n' dumped too. Watch what happens when they go from disparity to closing the gap to disparity. I can't recall recently ever having entered a trade where bid/ask was in favour of asks and I don't enter trades where the bid favour disparity is quickly closing.An example of the total bid/ask volume as a quick pointer to a potential trade was opy on friday afternoon (also other reasons to trade it btw), where the ask favour disparity closed the gap to a bid favour disparity for the afternoon spike.
With market depth, I like to see total volumes favouring the bids, with the closest 4 lines of asks larger than the closest 4 lines of bids (that's right) and a sizeable target visible in the asks column. Trades don't always go my way, that's why I sell when the uptrend ends.
That's a brief spiel on my sausage. Yours are likely more sophisticated, maybe using more technical indicators, maybe more successful, maybe tastier, just thought I would share with the thread roughly how I approach a trade, particularly for the newer posters. I could have expanded a little more on the role of volume, as it's crucial, however others here likely have a better grasp and way of explaining it.
When it comes to trading, to each their own. I welcome any observations, suggestions, alternatives on any of the above brief points, as I'm still learning and honing my trading strategy, irrespective of the overall success, so far.
