daytrade diaries... september 2, page-10

Phat,

Some of the shares I have in mind are thinly traded and the more of us who fish in the same pond, the fewer the fish there will be to go around!

However, a few of the heavily-traded shares I have in mind are AIX (buy 1.46/1.47 - nice bounce trade yesterday), AIO (low 150s), APN (low 170s), BTA (low 190s), GUD, (low 800s), MGX (usually a reliable bouncer - low 90s), WTF (low 20s/teens). There's no guarantee that any individual share will reach those targets but setting price alerts will tell you which ones are there and worth your attention.

The best bounce trades are where:

1. Share is in an uptrend (= strong buyer interest).

2. Share has been retracing for a day or two and is ripe for a reversal.

3. Share falls hard = capitulation as nervous hands scramble to get out at any price. The best set-up is the "waterfall" where an intraday chart looks like the share price fell off a cliff.

4. Share reaches a support level. This is always the most important consideration in bounce trading because this is where buyers are most likely to step in.

5. There is no news to justify the fall. This is crucial - if a company just announced a profit downgrade or abandoned a drilling program, all bets are off and it's safer to stand aside.

Ensuring these conditions are met doesn't guarantee success in any individual trade but it greatly increases your chances of a profitable day's trading. Have a stop loss below the support level and exit quickly if the support breaks.