I Love Down Opens – Here’s How To Make Money Day Trading Today

Posted 9:30 - The market is searching for direction. There is no pace from one day to the next and the price action is random. You can see in the chart below that the SPY is chopping around in a range. Swing trading is difficult, but there is good news for day traders. The long-bodied candles in the chart show that once the direction is established each day there is follow-through. Here are some guidelines that I'm using for my day trading. Market Opens Lower - Look for relative strength and wait for support. Once the market decline stalls, get long. Market Flat On Open - Be patient and wait for the direction to be established. Usually on flat opens the market will try one direction and if it can't break out of the first hour range it will reverse. That is our opportunity and our best days are when the downside is tested and it holds. That gives us a nice entry for longs. If the first hour range is breached, go with that direction Market Opens Up - These are our toughest days. All stocks rally and it is hard to separate the gems from the fakes. Wait for a small pullback. The strongest stocks will compress on the high and they will be ready to pop. Once you know that the market dip has ended - get long. We are finding better longs than shorts so our game plan is designed around the long side. Until the market breaks below the 100-day moving average, we will favor the long side. I have tried a few shorts each day and the price action is very fickle. Stocks gradually drift lower and they rebound violently. This makes it difficult to hold the position and you always have to have stops in place. The price action on the long side has been much steadier. Stocks with relative strength continue to power higher and the dips a relatively minor. We have been setting targets on all of our trades and we are taking profits along the way. The market does not have any direction and without that tailwind we need to constantly take profits when the momentum stalls. The downside will be tested early today. We will be looking for relative strength and when the market finds support, we will buy. Down opens have provided our best trading days and I'm looking forward to the action today. If you are a day trader, take the one-week free trial and see what we’re trading in my chat room. . .

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