daytrade diaries tuesday

Morning all

I rarely buy at the open, and strictly speaking I am not a daytrader as I sometimes hold positions overnight.

Those two comments are both relavant to yesterdays trading, and to my 'trade and money management' plan.

I generally only buy at the open on days with a very strong US lead. On these days I look to sell the position quite quickly after the open and then re-enter on the first pullback.

Yesterdays strong open took me by surprise and I made the assumption that many of the gains could quickly evaporate, so I stayed out. Of the three charts I posted, SIP and TEL gapped up and then quickly retraced and DXS opened flat, then made small gains but also quickly retraced.

My decision to stay out was the correct decision on the day, and I then began looking for an entry on the pullbacks.

I pulled the buy trigger on SIP at 1.05, which turned out to be premature, and then decided that providing support held, I would keep the position overnight and look for another buy lower down. That second buy may or may not eventuate today – depending on whether support holds.

I have found that I can salvage a lot of trades where my initial buy is mistimed, by averaging down later in the day or on the following day. The proviso of course is that support holds and stops are not hit.

This strategy works particularly well in stocks that are in consolidation patterns such as TEL.
We'll see how SIP travels today.

The chart below is yesterday's 5 tick intraday chart of GMG and is typical of my 'bread and butter' daytrades.
In summary, I let the open go, bought on the first pullback, sold the rally and then back in on the next pullback, which turned out to be the last trade opportunity and left me holding a position overnight.
The GMG daily chart is looking quite bullish, but the instos are clearly driving this stock so it's anyone's guess if they'll let it run, or sell into any interest.