Archive for the ‘Intraday Swing Trading’ Category

Intraday Swing Trading Strategies – The “3Down” Chart Pattern

Thursday, December 13th, 2012

Intraday Swing Trading Strategies – The "3Down" Chart Pattern

This morning we were on the watch (as always) for one of our favorite chart patterns…the "3Down".

We had a few stocks on our list this morning but one stock that stood out like a sore thumb was $MON.

$MON was showing unusual relative strength this morning as the overall market tried to find its way.

Both the DJIA and S&P both sold off early and hit NEW LOWS on the third 5 minute bar of trading today.

Here is the chart of $DIA…

$DIA - Intraday Swing Trading Strategies

And now take a look at $MON for comparison…

$MON - Intraday Swing Trading

The strength is obvious.

So now that we know we have a strong stock in a relatively weak market what do we do?

We watch and wait.

As the $DIA finds a bottom and start to retrace $MON starts to pullback.

We know at this point that the chances are high that the strength in $MON will not continue if the market starts to push lower again.

If however the overall market transitions from weak to strong then $MON could make its next move higher.

The 10:15am bar is where all the action took place for this trade.

Here is the setup and the countdown chart for the "3Down"…

$MON - Intraday Swing Trading

Notice the first attempt to begin our countdown on the chart above.

The bar before the "XX" on the chart is the first "1" bar.

The next bars high is higher than the previous bar so we start over.

The bar after the "XX" starts our new count over at "1" since its higher is lower and its low is also lower than the previous bar.

The next 2 bars do exactly the same thing giving us our "3Down" setup!

Notice also how bar "3" has lower volume than bar "2". This means the selling is drying up.

Now that we have a valid "setup" we wait to see if we get an entry signal.

The 10:15am bar (marked with the BLUE arrow) provides us with a text book entry.

The volume starts pouring into this bar early so we can figure the price action will move one way or the other.

This bars low never trades below the low of the previous bar…bullish!

This bar trades above the high of the previous bar…bullish!

As the bar develops BUYING volume increases…bullish!

We are in the trade at $90.27 (.02 above the previous bars high) and we set our stop at $90.12 (.01 below the previous bars low) for an initial risk of .15/share.

Our STS profit target is at 2x the initial risk (2 x .15 = .30) so we set it at $90.57 ( $90.27 + .30 = $90.57).

Three bars after our entry $MON hits $90.57 (trades up to $90.61) and hits our target before beginning another pullback.

Intraday Swing Trading with PVT

Tuesday, December 11th, 2012

Intraday swing trading 

As day traders we use the PVT method (price action, volume and trend lines) day in and day out.

Yesterday we saw some great examples of PVT in action.

PVT - Price Action Trading Example

On the chart above you can see a nice up trending stock. Let's focus on the area highlighted in the box on the chart below.

PVT - Price Action Trading Example

In this chart you can see one of the text book set ups of the PVT method.

The stock has already made a NEW HIGH for the day so we now that so far we are dealing with a strong stock.

The box on the chart above shows you the first retrace after the high was made.

We look for these retraces to flush out the sellers. 

Once we know the retrace is in effect we look for the clues that price action and volume give us to let us know if the next move will be higher.

In this example the retrace begins one bar after the daily high was established. We marked this as "1." on the chart below.

PVT - Price Action Trading Example

This bar is followed by 2 more bars (marked 2. and 3.) which gives us our "3Down" chart pattern that we love.

After a "3Down" we watch to see if price action AND volume work together to give us an entry signal.

The next bar after our "3Down" pattern (the blue arrow on the chart) we see the tell tale signs of the next UP move.

We notice that as the bar progresses it never trades below the low of the previous bar…a bullish sign.

We also notice that volume is increasing and as this 5 minute bar comes to an end we KNOW that we have increased volume.

We also see this bar trading higher than the high of the previous bar.

As of this together is a text book entry using the PVT method.

Once the entry is made we simply manage our position and watch as price action/volume continue to tell a story.

 

Swing Trading Week in Review – June 15,2012

Sunday, June 17th, 2012

Swing Trading BLOG – Swing Trading BOOT CAMP

DIA - Swing Trading BLOG

A nice week for the major indicies this week.

That being said was probably better to be a day trader this week instead of an overnight swing trader.

The intraday moves were very nice and offered reliable chart patterns to trade while the over night moves were less predictable.

See how we trade our Intraday Swing Trading Strategy here.

After a BIG GAP UP on Monday morning the sellers stepped in to bring the market down to end the day.

Tuesday didn't draw much excitement but starting on Wednesday the market started to show signs of moving higher.

Fridays close brought the DJIA right up to its 50 day SMA while the S&P and Nasdaq aren't far behind.

A few of the sector ETF's showed signs of life as well while others are showing extreme relative weakness.

The Gold ETF's continue to trade above their 50 day SMA's and although Silver hasn't quite caught up just yet it looks to be showing signs of strength.

GDX - Swing Trading Blog

As next weeks trading begins things could change in a hurry.

With all the news coming out next week be prepared for the markets to move very quickly. One side will win the "tug of war" and you will miss the moves if you aren't ready.

Look for stocks bucking the down trend (i.e. $WFM $EQIX) to add to your LONG watch list.

WFM - Stwing Trading Blog

Look for those stocks that did not hold up well this week to add to your SHORT watch list.

Have a plan in place so whatever the market decides to do from here you will be prepared to act (and hopefully profit).

Until next week…Good Trading to YOU!

Day Trading Strategies – Intraday Swing Trading Strategy

Thursday, June 14th, 2012

Swing Trading Boot Camp – Day Trading the Intraday Swing Trading Strategy

We thought we would take this opportunity to walk you through one of our day trades from this morning.

Our Intraday Swing Trading Strategy is very similar to our overnight swing trading method.

We use relative strength to locate and trade strong stocks (or ETF's) when the overall market is strong.

This morning was a good example of locating a sector ETF ($XLE) that was showing signs of relative strength AND also had a great chart pattern to trade.

Here is the first chart for $XLE

XLE - Day Trading Strategies - Intraday Swing Trading

Notice how on the chart above $XLE broke out to new highs in the early morning and rallied up until a little after 10am.

After a brief pullback $XLE was setting up again for a nice LONG trade. A move to the upside on increased volume was the confirmation we needed (BLUE ARROWS).

Our trend line was drawn in and we let the trade progress.

XLE - Day Trading Strategies - Intraday Swing Trading

On the chart above you can see how $XLE rallied to new highs again putting in 2 channel expansions before the "stall" (equal bar high) marked in orange.

This entire move happened on decreasing volume so we were on high alert looking for the signs of this move reaching its potential.

The"stall" was followed 2 bars later by a new high but this bar quickly reversed course and put in a bullish engulfing candlestick.

This bar combined with the failure to reach the top of the channel is a good sign that the move has come to an end and a good time for us to exit our trade.

The next bar followed through to the downside but we noticed that volume was drying up.

XLE - Day Trading Strategies - Intraday Swing Trading

The bar after the bearish engulfing bar reversed and closed near its high. Two bars later a new breakout was underway.

We didn't want to enter into a new LONG trade at this point since the move in $XLE was already extended a bit.

Below you can see how the new breakout stalled and basically traded sideways for the next 6 bars before finally breaking down and out of the upward trending channel.

XLE - Day Trading Strategies - Intraday Swing Trading

Even if the new breakout would have continued we aren't really concerned about it.

We are NOT trying to catch  every single bit of every move.

For our STS trades we typically set our target at a 2:1 risk/reward ratio and are very happy taking our profits at this level just as we did here.

As day traders our intraday swing trading strategy helps us locate (and hopefully profit from) price "swings" in the market just like you see here.

We hope this sheds some light on the strategies and tactics we use to trade the market day in and day out.

Until next time…Good Trading to YOU!

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